Many leaders from the traditional, nonprofit education sector decry the growing incursion of for-profit education and training service providers. In doing so, they misunderstand the competitive issues confronting their own organizations. Those competitive issues derive from the possibilities of anyplace-anytime service delivery models (virtual service models) and from the leverage of partnerships (virtual overhead operating models) enabled by the Internet. And these issues confront both the nonprofit and the for-profit provider of any service. Learning services are not exempt from these challenges of "virtuality." Indeed, the Internet is changing the competitive environment in which both nonprofit and for-profit providers of learning services operate today.
The Virtual Reality: Many service goals associated with education and training can be achieved by agile education and training providers that outsource many of their overhead functions from partner organizations virtual overhead operations and that connect learners to virtual learning opportunities learning opportunities delivered dominantly in anyplace-anytime mode with little recourse to somplace-sametime, someplace-anytime, and anyplace-sametime modes.
The place-time services taxonomy used above is depicted visually in the following two-dimensional place-time continuum, while the accompanying three-dimensional continuum adds the third dimension -- leverage from partnerships undertaken to deliver overhead functions to those services. The "sweet spaces" of virtuality are boxed in as four-star spaces -- the "dot.xxx spaces."
In any service offering, there is a service receiver and a service provider -- a buyer and a seller in commercial terms. A service receiver is likely for reasons of convenience and access to find favor in virtual (anyplace-anytime) service offerings, while not caring much about a service provider's return on investment in the overhead model used in the provision of service(s). The service receiver, however, may be sensitive to pricing differences among competing service offerings. And that is why service providers operating in competitive service markets have to consider their operating (overhead) costs relative to the operating costs incurred by competing providers. In the context of education and training, this simple observation translates to the challenge facing all providers of learning services -- to what extent to be an Internet organization (front, upper, right octant), whether as a dot.edu, dot.org, dot.net, or dot.com.
The Dot.xxx Challenge to Education and Training: Every provider of learning services, whether nonprofit or for-profit in its mission, must develop an enterprise strategy for virtuality that strikes the right balance between virtual overhead models and traditional in-house overhead models, and, in its use of virtual (anyplace-anytime) technologies, strikes the right balance between offering virtual learning opportunities and enhancing more traditionally delivered ones.
Any education or training provider can benefit from the leverage of other, external organizations' technology investments and service expertise. In doing so, the provider minimizes both the internal need for investments in technology and the internal need to hire, develop, and/or maintain a staff to provide services that enable and support the provider's essential core education or training service(s). For example, many institutions and companies are turning to "application service providers" to host and support mission-critical software applications such as a human resources system, a student information system, or an instructional management system. These externally acquired services might extend beyond the purely technical to include, for example, instructional design services to add value to a hosted instructional management system or web integration services to provide a seamless "portal" interface to these various applications. In any case, this dimension of virtuality -- the leverage of a virtual overhead model -- has its origins in the work of Nobel Laureate Ronald Coase, and it can be as essential to a successful virtual service offering as is virtual technology.
Coase's Nobel Prize in economics, in simplified terms, derives from his observation dating to the 1930s that companies exist to reduce transaction costs between buyers and sellers. Or, in nonprofit terms, service organizations exist to reduce transaction friction between service receivers and service providers --- between learners and instructors, for example. In their book, Unleashing the Killer App (Harvard Business School Press, Boston, 1998), Larry Downes and Chunka Mui reformulate Coase's work. They observe that the Internet makes it possible to lower many transaction costs and to reduce the inconveniences and distracting friction involved in many transactions -- often by outsourcing required overhead infrastructure, expertise, and services.
The Internet therefore enables new competitors to enter the education and training market considerably unencumbered by the front-loaded investments in capital and human assets required by traditional education and training models. The Internet can give learners control of the process of navigating the full range of choices available to them, a process heretofore controlled primarily by education and training providers and thus serving as friction in the learner's access to available education or training choices. In "Getting Real About Virtual Commerce" (Harvard Business Review, Vol. 77, No. 6, Nov.-Dec. 1999, 84-94), Philip Evans and Thomas S. Wurster argue that "navigation is the battlefield on which competitive advantage will be won or lost." In terms of education and training, their three dimensions of navigational advantage translate as:
- Reach: access and connection
- Richness: the depth and detail of information given to or collected from the learner
- Affiliation: whose interest the navigator represents -- traditionally the education or training provider's, increasingly the learner's
Some colleagues and I left higher education to form a company, Eduprise. Our service company contributes to a value chain of virtual services available to education and training providers. We provide technologies, technology support, and professional services to help education and training providers tap the potential of the Internet to enhance or to deliver their learning services. Our key in-house assets are our corps of education, technology, and business professionals who deliver professional services directly to client institutions and our ability to manage infrastructure and technology support in partnership with other companies. In partnership with companies such as SCT Corporation, COLLEGIS, and PSINet, we provide comprehensive "e-learning solutions." Through partners such as TrainingNet, we offer our client organizations an extended reach and an affiliation with learners or their employers. One of our client organizations illustrates an interesting virtual-campus approach to the Dot.xxx Challenge.
The nonprofit Kentucky Commonwealth Virtual University (www.kcvu.org) is designed to increase access (reach) to higher education for the benefit of Kentucky's citizens and economy. KCVU's instructional model is dominantly anyplace-anytime, and KCVU is highly leveraged. It relies on existing public and private investment in the state's universities and community and technical colleges for instructors and degree and certificate programs, having neither instructors nor degree and certificate programs of its own. Beyond the academic function of sanctioning and offering curricula, its small staff (20) is focused on marketing and on assuring the quality of student services from an anyplace-anytime and anyplace-sametime student-centric perspective (richness). For the virtual technology infrastructure that underpins its dominantly anyplace-anytime instructional model, KCVU outsourced (from Eduprise) a hosted instructional management system (with 24x7 systems and help-desk support for students and instructors) and, equally important, the professional expertise required to support participating student-service personnel, instructors, and academic programs with their professional development and course and service development/migration needs. KCVU also outsourced the implementation (from Cambridge Technology Partners) and operation (from the Kentucky Community and Technical College System) of its own student information system (from PeopleSoft). In its first semester, the agile KCVU had over 350 course enrollments and now has over 2,000 enrollments in its second semester.
I expect the Dot.xxx Challenge to Education and Training to have a great impact across the continuum of society's life-long learning needs. As a provider of learning services, is your organization prepared?
Dr. William H. Graves is Chairman of the Board of Eduprise, a successful e-learning services company that he founded with some of his university colleagues after thirty years as a professor and academic administrator at the University of North Carolina at Chapel Hill and as a national leader in the transformational applications of technology to academic programs.