Extract from "Update on the future of the UK eUniversity - finished as an independent organisation, but did it have to be this way?"

This is an extract from a longer piece published by the Observatory on Borderless Higher Education. If you work for a member-organisation, the full article is accessible directly from the Observatory.

So what went wrong? The first problem was timing. UKeU was announced in February 2000, just a few weeks before the dotcom crash. During the Internet boom, the potential for new technology to transform many aspects of society, including higher education, in the short-term, was dramatically overstated. Concern that if the UK did not "do something" its international student market would be overrun by aggressive online universities from the United States and elsewhere was based on fear rather than fact. The second problem was focus. The dotcom boom presented online delivery as an alternative to the conventional campus rather than (as has more often turned out to be the case) a supplement. UKeU's business model was centred on wholly online provision with very little evidence of a secure market. Wholly online higher education has taken off in the United States - with US analyst firm Eduventures estimating around 350,000 enrolments in 2003 - but elsewhere take-up appears to have been much more limited. This is partly because online delivery outside the US has generally yet to attain sufficient status, scale and sophistication. This lead to a third problem - branding. There was arguably 'channel interference' between the mainstream 'UK Education' brand (emphasising tradition, place and quality), and marketing by UKeU that attempted to marry the 'best of UK higher education' with online 'convenience'. This might be characterised as trying to market UK higher education without being able to utilise three of the strongest elements of the brand. This is not to say that online delivery is low quality, but rather that its novelty, and some critical comment in the media, have led many to question its potential. Leading US providers such as University of Phoenix Online were arguably better placed because of a strong alignment between the convenience branding of the parent body (University of Phoenix itself) and the convenience branding of online learning. Of course, many UK universities might be characterised as convenience institutions, but this is not a strong part of the image of UK higher education abroad.

A fourth problem was platform investment. Early on the company took the decision that existing commercial and other platforms were inadequate, and that competitive advantage lay in developing a 'world class' platform in-house. On one level this was sensible. If the UKeU could run on a widely acknowledged superior platform this would go some way to reducing the aforementioned channel conflict - i.e. there would be a better alignment of the traditional UK higher education brand and 'high quality' online provision. The UKeU platform may indeed be among the best in the world, but this is very difficult to demonstrate to potential students. Recent years have witnessed significant platform convergence, with vendors focusing as much on third party interoperability and support services as core functionality. Only so much can be done to improve core functions such as online discussions, authoring and customisation. Given that the UKeU platform remain incomplete, it is difficult to assess its full significance, but it is unlikely that it will be significantly and qualitatively different from the latest version of commercial/ open source rivals. In retrospect, the company might have saved significant sums by using an existing platform, allowing programmes to be up and running more quickly, and leaving more funds for marketing. This would also have permitted the venture to grow more slowly. Platform innovation might better have come later once any drawbacks of third party systems had been demonstrated in practice, and healthy recruitment had prompted private investment.

This leads to the fifth problem - impatience. The HEFCE press release on April 22 states that one reason for UKeU restructuring was that "student recruitment had not met planned targets in the first year". This serves as a reminder that in terms of recruitment, the company has only been operational for a single year. In other circumstances, the 900 students recruited by November 2003 (the only figures ever released) to the handful of programmes then available would have been judged quite respectable. That said, the underlying difficulty was that the venture took three years before it was even able to recruit, and had not attracted any cash support from the private sector. Again timing was the problem. Many of the firms trying to carve out a place in higher education during the dotcom boom- the very firms UKeU imagined would invest- quickly retreated to their core business once the bubble burst. If announced just one year earlier, things might have been very different - at least in the short-term. There is little doubt that wholly online delivery (and the various in-country support models UKeU was beginning to experiment with) will emerge as a sizeable market in Europe, Asia and elsewhere, and branding can work at both the high and low ends of the market, and much in-between. There is no reason to think that the convenience of online provision will only appeal in North America. Prestigious UK universities such as Liverpool appear to have combined 'traditional' UK reputation and online convenience to good effect - and through Sylvan have now attracted the all important private investment (see breaking news for 8 April 2004. Moreover, the notion of a single UK 'quality' brand still has potential, allowing students to cut through multifarious random providers to a trusted institution. Massive upfront investment, lack of private sector cash, low enrolments, channel conflict and incomplete/untested platform meant that by 2004 UKeU was doomed. But taking short-term funding out of the equation, and the venture would likely have covered its costs in another five years or so and become a major online brand - only much more slowly and at much higher cost than first envisaged.

Along with NYU Online, Scottish Knowledge and Fathom, UKeU is now a fourth major online university product of the dotcom boom to fall over. Others such as Universitas 21 Global and Global University Alliance stumble on, but with no evidence of particular success. Meanwhile, universities across the world are gradually moving online - both on and off-campus - to varying extents, building slowly and learning all the time. This may be the end for UKeU, but for online higher education it is only the beginning.

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Posted at 20:50 on 3/5/2004

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