eLearning’s Promise with New Business Models

We at SSG Advisors are currently incubating a new approach to the delivery of higher education services that leverages both new technology and disruptive business models. We presented this model at last week’s eLearning Technology Salon and I am very grateful for all of the thoughtful and useful input received
The Salon was a great chance to get very practical advice from leading experts in the fields of both education and ICT4D. Here are key points I raised in my opening remarks and input received from participants:
Why we’re exploring eLearning solutions

  • Skyrocketing Demand for Higher Education. Demand for higher education is expected to rise from 48 million seats in 1990 to 159 million seats by 2025 in Asia and Africa.
  • Emergence of Affordable and Appropriate Technologies. Low-cost netbooks and Nettop PCs and the proliferation of broadband and 3G networks transform the economics of providing access to e-learning solutions.
  • Potential for Disruptive Business Models. Over the last several years, SSG has developed some innovative business models for delivering broadband sustainably in rural areas of developing countries, like SSG’s experience with the USAID Last Mile Initiative in Sri Lanka.

A disruptive business model for eLearning

Based on that experience, I put forward the idea of a disruptive business model for higher education delivery that had 3 characteristics:

  1. A key element of the business model is the idea of moving away from per credit hour tuition and towards a monthly subscription fee. Monthly subscription fee service with 24/7 instructor support available online. Using a subscription fee structure would benefit students by encouraging them to complete coursework as quickly as possible. The availability of instructor support at any time enables students to fit their studies around work, family and other commitments. From a business standpoint, a subscription revenue model also better reflects the cost structure of maintaining a platform that includes instructor support on a 24/7 basis.
  2. Both direct and shared access network for users. Here the idea is that better off students in urban/peri-urban areas would be able to access courses from home using a Netbook and a broadband connection. While that might be workable in Rural and lower-income students would have access through a network of franchised shared access centers.
  3. Focus on General Education requirements. One way to ensure that such a model does not compete directly with developing country HEIs would be to focus on general education requirement courses rather than creating a degree-conferring program. The idea is that this both reduces costs for the student, who can complete a significant portion of degree-related work before matriculating to a bricks and mortar university and it also expands the number of available university seats. This is the model of straighterline.com and it enables the company to partner with universities and expand their reach rather than directly compete with them.

We received some great feedback from the audience on both the underlying assumptions and the business model itself.

The technology of eLearning

On the technology side, it was pointed out that caching or USB sticks may offer an additional cost-saving mechanism for delivery of content in rural areas where the cost of broadband access may still be prohibitive. This makes a lot of sense as it is very easy to upload lectures, text and even exercises on to a USB stick and then rely on broadband connections only for chats, email and discussion boards. Another important point raised was the use of 3G phones (perhaps uploaded off of DVDs) to offer the delivery of lectures so that students can watch lectures while traveling to/from work each day.

I think these are very important points. For this model to work, it needs to be low-cost, but also offer the prospect of a consistent experience. USB drives would allow a student to use an icafe or telecenter PC, but still have the same learning experience as someone using a dedicated netbook. Also, the advantage of having course materials available in a mobile environment (whether through downloads or off of DVDs) is a significant benefit for students who may prefer to listen to a course lecture while riding the bus to work.

Infrastructure for eLearning

We also discussed whether a franchised shared access center was necessary or worth the investment. It was pointed out that the use of USB sticks would allow for a standardized learning environment, irrespective of the machine or its location. In this case, it may be more cost effective to have a distributor-style (or authorized retailer) relationship with existing icafes and telecenters rather than build new franchises. This approach makes a lot of sense in peri-urban areas where there may be fully commercial icafes. In rural areas where no current icafes or telecenters exist (or are too expensive), it may make more sense to have a franchised operation to ensure that rural students can affordably access coursework and materials.

The buyer demand for eLearning

While we assumed that there is a global demand for higher education, it became clear through the discussion that the proposed model may be more appropriate for Asia as opposed to Africa. Asian cultures tend to place a higher value on education so they may be more receptive to this model. Also, as a rule, most Asian countries have a higher teledensity and higher ICT skills base, so technology may be less of an impediment. Another key point is that in Africa there is a tradition of students being paid to attend university – obviously our model depends on a willingness for students and families to pay.

I think these are absolutely critical points and not ones we had considered when including Africa as part of our model. Our experience in this space is largely in South and Southeast Asia, so our assumptions are built on those markets. I do not think this model is viable in countries where there is no tradition (formal or informal) for paying for education services.

Accreditation and eLearning

Another key point in the discussion revolved around the importance of both regulatory and ‘market’ accreditation. In our model we propose addressing the regulatory accreditation issue through partnerships with national and US universities. With regard to the market accreditation, close relationships with key employers will be critical to success. If the employers feel that students who take courses through our proposed model are well-prepared for the workforce it will greatly increase our model’s legitimacy.

It was pointed out that in some professions, eg nursing, there may be a preference for a degree-conferring program with specialized coursework. Here, I think we would need to see what the level of demand actually is. Becoming a degree-conferring institution is a major investment of time and money, so there would have to be a very high level of demand to justify that investment. It would also put our model in direct competition with host country universities, which could create further complications in obtaining the necessary accreditation.

Concluding Thoughts:

The feedback from the Technology Salon has been invaluable as we seek to develop and refine this business model further. I think the input shows we may be on the right track, but we still have quite a ways to go before we have a business model that we can translate into a bankable business plan.

Steve Schmida is the Managing Director at SSG Advisors, a small consulting, training and project management firm.

3 Responses

  1. Meerika says:

    Completely agree. Having an in-house tool to develop e-learning helps save on cost and time. Saw these real life examples of big brands using Lectora software for reducing e-learning costs. http://go2see.it/acy

  2. Jide says:

    This is a novel business model that can work in some parts of Africa despite the observations you have made in your writeup. I have been thinking of how one can replicate the Straighterline model in an African setting.

  3. implant dentar says:

    I believe that the brainstorming is a good way to obtain interesting results in the new business models. In fact the only engine which make the new business to evolve is the human mind and the options we have.