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IV. Market Environment

Flawed Assumptions of Early E-learning

The Thwarted Innovation report by Zemsky and Massy (2004) suggests that educational technology and e-learning have not delivered on the promise of revolutionizing the classroom and making higher education more profitable. Zemsky and Massy examine three assumptions that defined the promise of e-learning as well as analyze some ways those assumptions have proven to be flawed.

1. "If we build it they will come …."
   Despite many institutions’ substantial investments in ambitious e-learning programs, along with the IT hardware and software needed to support them, a large market for e-learning products has yet to emerge. Only presentation software like PowerPoint or course management systems like Blackboard or WebCT are widely employed in actual teaching.
   
2. "The kids will take to e-learning like ducks to water …."
   The report found that students want to be entertained by technology and choose e-learning primarily for its convenience. Schlosser and Anderson (1994) concluded that students appreciate the flexibility of distance learning classes but still preferred the traditional classroom.
   
3. "E-learning will force a change in the way we teach …."
   Good distance teaching practices remain fundamentally the same as good traditional teaching practices (Distance Education at a Glance: Guide 9). Most faculty remain comfortable teaching as they were taught, standing in front of a classroom. That explains the relative success of course management systems that focus on the distribution of materials rather than on teaching itself. Until faculty become comfortable with the use of technology and understand its strengths and weaknesses, prospects for wider use remain limited. “E-learning will become pervasive only when faculty change how they teach – not before” (Zemsky & Massy, 2004). In other words, e-learning does not “force” a change in teaching, but instead should be treated by teachers as one of many tools they can use to deliver education. As with any teaching methodology, effective e-learning programs must therefore begin with careful planning and a focused understanding of course requirements and student needs.

Further support for Zemsky and Massy’s findings come from a recent survey of 4374 freshmen and seniors at 13 colleges of different types conducted by the Educause Center for Applied Research (Young, 2004). The survey asked students how much information technology they wanted professors to use in class (Kvavik, Caruso & Morgan, 2004; Young, 2004). Their results indicate that a large majority of students prefer the middle road between the extremes of offline classrooms and all-online courses:

• "Limited IT" – 22.7%
• "Moderate use of IT" – 41.2%
• "Extensive use of IT" – 31%
• "Entirely online courses" – 2.2%

Roughly thirteen percent (12.7%) of students surveyed felt that improved learning was the greatest benefit of classroom technology, while 48.5% claimed convenience as the biggest benefit. While this survey shows that e-learning has not yet reached its full potential for transforming teaching and learning, it does provide additional information about which students enroll in online courses and why. Online students are generally older, work more hours, and have childcare and other family responsibilities to contend with (Dutton, Dutton, & Perry, 2002; Qureshi, Morton, & Antosz, 2002). These students are very similar in demographics to Augsburg’s WEC student profile. These students generally enroll in online courses for convenience of scheduling and travel arrangements.

Successes and Failures in E-learning

The e-learning industry is very young (Matkin, 2001), and we do not precisely understand all of its structures or the dynamics of those structures. However, we can begin to understand what is happening to this industry by analyzing some of its successes and failures.

There are a number of failed online universities, including NYUOnline, Virtual Temple, Jones International University, and Fathom (Guri-Rosenblit 2003). Matkin (2001) describes several sources of failure of online endeavors, including what s/he* calls “content production failure” and “system integration failure.” Content production failure refers to the idea that universities often try to produce the best course possible in an attempt to drive competitors out of the market. High quality content production is, however, extremely expensive. For example, UNext produces courses at a cost of $750,000 per course (Matkin, 2001). It is difficult to generate returns to recover such an investment, and UNext is now in the process of a fourth makeover (Zemsky & Massy, 2004). The second major source of failure of online universities is system integration failure. University policies and technology make it difficult to integrate new management systems or learning systems into their overall operations (Matkin, 2001). Leadership by administration to ensure cooperation and buy-in among administrative units becomes critical for success (Sherry, 1996).

A number of schools have been successful in e-learning, however. The University of Phoenix Online is the largest accredited private distance teaching university in the U.S. It began operation in 1976, and online programs constitute 10% of its student population (Guri-Rosenblit, 2003). The University of Phoenix does not appear to intend to downscale its physical e-learning centers in favor of online provision. “On the contrary, a bricks and clicks model, offering both online and distributed face-to-face option is regarded as the best solution for the working adult market” (Guri-Rosenblit, 2003). Other successful schools include the University of Maryland University College (UMUC), and Devry University. Both the University of Phoenix and UMUC create very small virtual classrooms of 9 to 15 students (Guri-Rosenblit, 2003).

In addition, MBA programs are offering hybrid courses such as the Global MBA from Duke University Fuqua School of Business, where e-learning is used to reinforce face to face interactions (Guri-Rosenblit, 2003).

Costs and Benefits of E-learning

E-learning programs are a high priority for many institutions (Arabasz & Baker, 2003). For some, the emergence of these programs is an institutional response to evolving faculty interest in applying technology to instruction. For others, the phenomenon is part of an overall strategy to enhance learning, reach a dispersed population, increase enrollment, or respond to increasing student demand for convenience.

The graph below, developed by Ruth and Shi (2001), relates yield and costs in implementing various distance learning approaches. Program cost includes all the materials, technology, advising, infrastructure, rent, travel, software and hardware,
etc.., paid by an organization or donor to achieve the desired result. The second variable is yield—the aggregate result or outcome obtained for the investment. Yield can be measured in graduation rates, new approaches developed for further improvement, job success after training, etc.

Contrary to the expectations of many of e-learning’s promoters, distance learning costs and yield seem to be related in inverse proportion. As one moves along the graph to the right from correspondence courses, radio, television, internet/cd-rom to the virtual university, costs to an institution increase dramatically while expected yield falls.

Estimates costs vs. yield points for implementation of various Distance learning approaches (Stephen Ruth and Min Shi, Distance learning in Developing Countries: Is Anyone Measuring Cost-Benefits? TechKnowLogia, May/June, 2001, p36)

Although the costs of offering distance education courses may be high, there are also high costs associated with offering conventional courses. It is important to examine the costs and benefits of e-learning in the broader context of overall costs and benefits.

Benefits
The range of benefits spans costs, student reach, educational connections, flexibility inherent in the model, and faculty roles.

Cost benefits

1. 1. E-learning can be cost effective and can provide economies of scale (Guri-Rosenblit, 2003). Research suggests that as programs become more efficient, program costs should decrease (Distance Education at a Glance: Guide 9).

Student reach benefits

1. E-learning can reach a wider student audience (Distance Education at a Glance: Guide 2). The question institutions must answer is whether it is part of their mission as educators to offer programs to those who might not be reached without distance education. The primary benefit of distance education for many educational institutions may be the increased number of non-traditional students they are able to attract and serve.
   
2. E-learning can meet the needs of students who are unable to attend on-campus classes. It can provide accessible training to students in rural areas (Distance Education at a Glance).

Educational connection benefits

1. E-learning can involve outside speakers who would otherwise be unavailable. Students can be exposed to the expertise of the most qualified faculty (Distance Education at a Glance).
   
2. E-learning can link students from different social, cultural, economic, and experiential backgrounds (Distance Education at a Glance: Guide 2).

Benefits of flexibility inherent in the model

1. E-learning can allow students to complete their course of study without suffering the loss of salary due to relocation (Distance Education at a Glance: Guide 9). The U.S. Department of Education found that students who chose distance education programs were those with family responsibilities and limited time, and were more likely to be enrolled in school part-time and to be working full-time while enrolled (Guri-Rosenblit, 2003).
   
2. E-learning can enable students to pursue fields of study different from their professional careers (Guri-Rosenblit, 2003).
   
3. E-learning allows professionals to upgrade their professional knowledge and expertise on an ongoing basis (Guri-Rosenblit, 2003).
   
4. E-learning allows students to adjust their needs and learning styles to a variety of learning settings and media combinations (Guri-Rosenblit, 2003).

Benefits of new faculty roles

1. E-learning allows for teaching to be distributed among several actors (Guri-Rosenblit, 2003). For example at Grinnell College, a hybrid? course on the arts is taught by a professor, a librarian and a multi-media teaching specialist.

Costs

There are numerous costs that must be accounted for in the design of a distance education system. The University of Phoenix Online keeps its online class sizes 20 to 25 percent smaller (about nine students per class) than for its campus-based instruction. For that reason, current costs for online instruction are actually higher at University of Phoenix Online than at any of the campus facilities (Alva & Slobodzian cited in Twigg, 2001, p. 17). “Although we believe that technological advances will likely result in a long-term cost reduction for our distance delivery, we are cautious to balance these “efficiencies” against our desire to ensure student achievement and our need to guarantee the highest-possible level of customer service.”( Alva & Slobodzian cited in Twigg, 2001, p. 17).

Several cost components factor into the design of a distance education system (Distance Education at a Glance: Guide 9):

Physical

1. Technology – hardware and software
   
2. Transmission – on-going expense of leasing transmission access
   
3. Maintenance – repairing and updating equipment
   
4. Infrastructure – the foundational network and telecommunications infrastructure located at the originating and receiving campuses.
   
5. Getting rid of outdated hardware turns out to be an unexpected additional cost, and poses financial, environmental and ethical challenges (Guri-Rosenblit, 2003).

Time and personnel costs

6. Production – technological and personnel support required to develop and adapt teaching materials.
   
7. Support – miscellaneous expenses needed to ensure the system works successfully, including administrative costs, registration, advising/counseling, local support, facilities, and overhead.
   
8. Personnel – to staff all functions previously described.
   
9. New roles for faculty.

Competitors

The following data were compiled from the U.S. News and World Report college search website (http://www.usnews.com/usnews/edu/college/cohome.htm) during summer 2004. These numbers were obtained through a series of searches and queries using size of the institution and whether they had a distance learning programs as criteria.

These numbers need some interpretation and qualification. If U.S. News requires only one online course or program to count a school as having distance learning offerings, then larger institutions are more likely to report that they do, in fact, offer such programs. One way of looking at this is to look at groups of 5 of the smallest schools and compare that with a single large school. What are the odds that among 5 randomly chosen small schools at least one will offer a distance learning program of some kind? This turns out to be 81%. One possible interpretation is that at all institutions the odds that some particular faculty member might offer an online course are roughly the same, independent of size. Thus, the fact that smaller colleges tend to not have distance learning programs may not be a result of any particular institutional focus or plan, but rather is a result of essentially random participation by individual faculty regardless of size of institution. The implication for Augsburg is that we should make our decisions about online learning on the basis of its perceived costs and benefits to Augsburg rather than as a response to what institutions of our size may or may not be doing.***

The arrival of the University of Phoenix in the Twin Cities has generated much discussion in our community about how the College should respond. As we considered this issue, the E-Team has come to the conclusion that University of Phoenix attracts a different student than does Augsburg. These students do not differ demographically, but rather by what they value and are looking for in their education.

Augsburg’s Weekend College was developed as a new outlet of the day college program, not as a separate institution. Major requirements are the same, general education requirements are close to the same, there are nineteen majors, and students can create an individualized course schedule. This is far different from Phoenix’s cohort model that offers students only a single path to a degree in a set period of time.

Augsburg’s new MBA program follows a cohort model similar to Phoenix’s model, and might more reasonably be considered to compete directly with Phoenix. However, MBA director Robert Kramarczuk, considers Augsburg’s main MBA competitors to be the University of Minnesota and St. Thomas. The Augsburg MBA competes for a different set of adult students for whom Augsburg’s reputation, especially its focus on service and values, are important attributes.

It is difficult to analyze who our competitors are because of the many courses, programs and degrees offered by Augsburg. Our Weekend College program competes with programs at Bethel University, St. Mary’s University, The College of St. Scholastica, Concordia University St. Paul, Northwestern College, Crown College and The College of St. Catherine. St. Catherine’s WEC program is most like ours, although it awards course credit for “life experience.”

Both Hamline University and The College of St. Catherine already offer courses online, while The University of St. Thomas and the University of Minnesota have developed taskforces on e-learning to study its implications for their own institutions. Macalester College does not currently offer any online courses, but performed a survey this summer of students and faculty attitudes toward online courses.

Implications of the Market Assessment:

What we have learned from these investigations into markets and the business environment of e-learning is that successful institutions use e-learning not as an end in itself, but as a means of pursuing good teaching and overall institutional goals. Initiatives should be developed with these goals in mind.

1. The rapidly changing environment of higher education requires that we monitor the market regularly. Our competitor today may not be our competitor tomorrow. Also, schools that we have never considered competitive with us may become so.
   
2. Visibility is key. With all the competition in the market, it is important for Augsburg to maintain its visibility. The Augsburg brand names need to be promoted.
   
3. An institution must identify its current competitive advantages and participate in markets that require its strengths.
   
4. Technology can be used in many different ways. Convenience is an important characteristic for students choosing a school, especially in the nontraditional adult market. Technology can and should be used, for example, in posting course outlines in a course management system and providing feedback quickly via e-mail.