Lessons to be learned from the failure of the UK e-University

by Paul Bacsich, Middlesex University

The original document is no longer available at http://www.unisa.edu.au/odlaaconference/PDFs/32%20odlaa2005%20-%20bacsich.pdf.

Abstract

The UK’s attempt to develop a global e-university ended in public failure in 2004. The main focus of this paper is to exploit the failure as a case study to update the literature on ‘critical success factors’ for virtual universities and so provide lessons for e-universities worldwide. However, since much of the public comment was superficial or ill-informed, it is also inevitably in part a critique of the public view. Although several alleged reasons for failure were incorrect or specific to the era, some of the real reasons still have much relevance to the worldwide scene.

A brief history of UKeU

The UK e-University was first proposed by the UK Secretary of State for Education in February 2000, as a vehicle to deliver online the best of UK higher education across the world. He asked the Higher Education Funding Council for England (HEFCE) to take the lead. By August 2000, key studies on business model, tools and markets had already been done. By July 2001, many follow-up studies were complete and the operating company UK eUniversities Worldwide Limited (UKeU for short) had been incorporated with an Interim Management Team. By March 2002, a chairman and CEO were in post and the Framework Agreement had been signed with Sun Microsystems for development of the e-learning platform. By March 2003, two courses had been launched with a dozen more following in September 2003. By January 2004, some twenty-five courses were recruiting students.

However, in September 2003, HEFCE had become unhappy with progress, and commissioned PA Consulting to carry out a Business Review of UKeU. As a result of this review and other consultations, in February 2004 HEFCE announced that they would ‘restructure’ UKeU, which duly closed in July 2004. Thus, the overall concept of a ‘UK e-University’ lasted four-and-a-half years, while the operational phase lasted just over two. Even by the standards of e-learning burn-outs, this was fast.

What went wrong?

The failure was extensively discussed in the press and analysed later by the Education and Skills Select Committee (2005a) of the House of Commons. Its key conclusions are in Select Committee (2005b):

the UKeU project failed largely because it took a supply-driven rather than a demand-led approach to a very ambitious venture in an emerging market. Sufficient market research into the level or nature of consumer demand was not undertaken, and the project failed to form effective partnerships with private sector investors.

Some experts observed that two years of operation was not long enough to judge a dot-com. The vice chancellor of Middlesex University (who run a Global Campus offering blended learning) pointed out in Guardian (2004): ‘The honest reason? It hasn’t been given long enough.’ Business experts pointed to the difficult conditions for internet start-ups compared with the heady days of 2000. Technocrats dwelt on the large sums that had been poured by UKeU into an e-learning platform which to general agreement lacked functionality, performance and reliability. Marketing experts pointed out the dangers of drawing conclusions from the US market for higher education and applying them to the global market.

HEFCE’s view was that universities were now more interested in ‘blended’ learning to meet the diverse needs of students. This conclusion had its origins in the consultative exercise (HEFCE, 2004) that HEFCE used to refine their e-learning strategy. It was supported by UK gurus, such as Professor Steve Molyneux, Director of the Learning Lab. To Computing (2005), he said: ‘I will always be a strong advocate for elearning, but am wary of those initiatives that try to replace, rather than supplement, the face-to-face learning option.’

Insider information

Few staff who worked for UKeU were, or are, prepared to comment. However, one of the few (not the author) that did had his views taken into account by Garrett (2004). This paper focused on five points. Apart from the first, these are still germane.

1. Timing – just before the dot-com crash.
2. Focus – wholly e-learning rather than blended.
3. Brand confusion.
4. Platform issues to do with the costs and risks of developing a new platform.
5. Impatience of government.

It is argued later that the last four are not the only factors of general interest.

The literature on critical success factors

The author has since the late 1990s been researching the area of critical success factors for virtual universities, with extensive case study work and literature review. (His initial impetus came from Joanne Curry, via her workshops on business models for e-learning.) The following distillation of the author’s earlier views is taken from Bacsich (2001):

1. ‘If a consortium … has high binding energy – then it is more likely to succeed. Binding energy can be generated in many ways.’
2. ‘The best guarantee of high binding energy is homogeneity or managed diversity (e.g., the OU-BBC partnership). The greater the diversity, the more power there may be to surmount obstacles, yet the greater challenge in mobilising resources.’
3. ‘In particular, consortia will work better if they are ‘stratified’, i.e., take in universities at a similar level in the rank order.’
4. ‘Linguistic diversity is a particular problem, although it may be the cultural baggage coming along with the linguistic.’

It will be argued that the first three of these affected UKeU but are of general interest also.

High binding energy

UKeU appeared to have this. It was one organisation. It had a forceful CEO who exercised strong control over it, and a staff who were loyal to an extreme (many working long hours). However, there were concerns (Bacsich, 2005) about the unsuitability of the building for a postmodern organisation, and evidence of a ‘mismatch between those with more of a business-orientated vision for UKeU and those more interested in the academic aspects and the potential educational innovation’ (Conole, Carusi & De Laat, 2005).

More significantly, many would argue that the binding energy criterion should be applied also to the loose consortium of universities around UKeU who were the academic partners. Over the last few years, the coherence of UK academia has largely broken down, with separate subgroups jockeying for position with government. On that basis UKeU did not score much better than other consortia.

Homogeneity or managed diversity

The internal structure of UKeU was remarkably homogeneous compared with the lack of homogeneity across the UK university sector. However, the powerhouse of the operation was the Sun-UKeU joint venture. This was by its nature not homogeneous and the evidence is that the diversity was not in reality managed. This clash of culture and mission remains a live issue for e-universities who want to partner with companies.

Stratification

The original vision of UKeU was that it would deal with the ‘best of UK higher education’, perhaps fewer than six organisations. This vision did not last long – a wide range of universities became partners of UKeU. While many of them were prestigious at home, rather fewer were well regarded in overseas markets (where reputations tend to lag some years behind UK views).

The stratification criterion is one of the most dangerous to break. Universitas 21 and the Worldwide Universities Network have made great strides in collaborative research and elearning. Both of these have rigid stratification in terms of the uniformity of type (not only brand level) of institution involved. It has been noted in several quarters, however, that the Global University Alliance, with a much more varied membership, has not been so successful.

Linguistic diversity

This was one area in which UKeU had no problems. All teaching was in English. The downside was of course that this restricted the market.

The Garrett diagnosis and the Select Committee critique

For conciseness these are bundled together as the two main deeper analyses published so far.

Timing

Timing covers three issues:

• A start-up just before the dot-com crash.
• The impatience of government.
• The failure in its life to form effective partnerships with private sector investors.

The dot-com crash certainly had an effect on sentiment but this, even if true (and there is evidence that its effect was over-rated), was a factor ‘of its time’ and not relevant now.

Regarding the impatience of government, evidence around the world is that government agencies can be very impatient. The apparent haste with which HEFCE closed down UKeU is surpassed by the way the UK Department of Health closed down the NHS University before it had even offered any courses. Nor is it just a UK issue, as is obvious from the rapid elearning policy changes in British Columbia around TechBC and OLA, or in the Netherlands around the Dutch OU. In some ways shareholders are more patient, perhaps because it is their own money locked up in a company. This is a warning to those who think that being a public e-university protects one from problems.

Regarding partnerships with private sector investors, this was one of the basic tasks given to UKeU. In brief, it failed utterly. The partnership with Sun was not effective and in reality confined to technology. There were two other failed attempts to form effective partnerships, both of a marketing nature: including one in 2003 involving a large consultancy company. Some would question whether partnering activity was in fact a distraction from core business; arguing that as and when the operation was successful, commercial partners would have appeared. However, the partnering mission was politically necessary in the UK politics of the early 2000s, with its heavy focus on public-private partnerships. Perhaps other countries will be more pragmatic – but the lure of private sector funds is tempting to many governments, who tend to forget the downside.

Focus

This covers three issues that continue to affect e-universities:

• Pure or blended e-learning.
• Supply-driven or demand-led approach.
• What is ‘sufficient market research’?

UKeU took the view from its operational start in 2001 that it would offer only pure e-learning. It was not until autumn 2003 that any courses were launched which were blended. This focus flew in the face of the advice from the specialist consultants, several of whom were experienced in these issues. In particular, Bacsich et al. (2004), written in 2000, had recommended a gradualist move to pure e-learning:

One can expect to reduce the proportion of face-to-face teaching in the e-University as technology advances and social conditions change .. In the first three years of operation, face-to-face tutorials (1 hour in length) should also be offered via a network of learning centres; this policy to be reviewed at the end of that period.

It is not the focus of this paper to analyse why the advice was not taken. In a sense, whatever consultants had recommended, the market should have decided. Fielden et al. (2004), written in 2000, noted that the e-University should: ‘Vary the scale of virtuality in its products; some offerings may be suitable for 100 per cent virtual delivery, while others may need face-to-face support, text-books, or direct teaching of different kinds.’ But Fielden’s team was not involved in the later discussions about setting up UKeU. By the time UKeU realised that blended learning was required by the market, it was too late.

More generally, to what extent was UKeU supply-driven rather than demand-led? Was ‘sufficient’ market research done? This may shed light on what market research should be done by other e-universities.

The Select Committee (2005a) notes in paragraph 35 that: ‘there was a distinct lack of marketing and use of market research’ (our italics). It carefully does not state that there was a distinct lack of market research. However, later (paragraph 44) it notes rather inconsistently: ‘UKeU did not undertake any market research or give sufficient emphasis on marketing’ (our italics). What are the facts?

Prior to UKeU becoming operational, there were two main phases of market research. The first was the study done in early 2000 by Fielden et al. (2004), with a follow-up in summer 2000 to produce figures for specific countries. All this was fed into the business model and initial plans. The second phase were the ‘Impact of the Internet’ studies commissioned by HEFCE in spring 2001 – however, these were not quantitative market research but a mixture of competitor analysis and thematic ‘country’ studies.

In March 2002, when UKeU was fully operational, further market research was set in motion. Market entry studies on each main target country (Hong Kong, Singapore, etc) reported in autumn 2002. A country study was commissioned on Japan (a gap in the earlier HEFCE studies), but this was qualitative only. In early 2003, a systematic study by Curbishley (2005) reported, which involved interviews with a cross-section of UK universities and the British Council HQ and Singapore office. A magisterial report on pricing was produced by Ngo (2005). As well as market research, several competitor analysis studies were commissioned in spring 2003, including a study by Bristow (2005) of Phoenix, which closed another gap in the earlier HEFCE studies.

In summary, the market research now published in the e-University Compendium and the UKeU Reports appears to the author to be the most comprehensive recent market research on e-university e-learning done in recent years – and there is more in the archives. (See Bacsich, 2004a and 2005 for entry points to this material.) Yet it was still insufficient. On this basis, the author suspects that there are many e-universities whose market research needs to be strengthened.

So what were the main problems with the market research, despite its volume? Again, timing is a key factor. It seems unarguable that in an era of rapid change the delay was too long between the 2000 pre-UKeU market research and the 2002/2003 UKeU quantitative market research, and that the HEFCE studies of 2001 did not fill this gap because they were too general, too unfocused to UKeU and too incomplete. Quantitative market research and systematic competitor research should have reported in early (not late) 2002 after it was realised that the 2000 material was too out of date and the HEFCE studies too general to be useful in realistic target-setting. Bacsich (2004b) has more on this, especially the gaps in the HEFCE material.

There were also weaknesses in the use made of market research. The Director of Sales and Marketing was not on the Board of UKeU – a strange omission given his CV and subsequent career. Bacsich (2005) notes the ‘functional silo’ issues that affected the flow of information within UKeU. Worse, when the author arrived in March 2003 at UkeU, it was evident that the 2000 and 2001 market research (whatever its demerits) was unknown to UKeU senior managers – most when alerted seized on it avidly.

Thus even in an organisation with such strong business rhetoric, there were failures of market research and status issues over marketing more typical of a traditional university. If that can affect UKeU it is likely to affect other e-universities of a less commercial nature.

Branding

Though seemingly a monolith, UKeU suffered from a variety of branding issues relevant to euniversity consortia, plus national–regional branding clashes, a live issue in many Commonwealth countries. Garrett (2004) observed:

Confusion existed between the mainstream UK education brand emphasising the three elements of tradition, place, and quality and marketing by UKeU that promised ‘the best of UK higher education with online convenience’ without being able to utilize these elements ... convenience is not a strong part of the image of UK higher education abroad.

Since UKeU as a newcomer was not well known overseas, and most partner institutions of UKeU were actually in a similar situation, there was no reputation for UKeU to leverage on. However, for the few UKeU partners who were offering e-learning overseas and were to some extent known, it was unclear what was the added value of UKeU.

In terms of national brand coherence, since the funding for UKeU came only from England, there was no incentive for Scottish universities to join in. Furthermore, Scotland has its own euniversity, the Interactive University, thus UKeU could not claim to be ‘The UK e-University’.

Even the full name was not well chosen, as Bacsich (2004a) and the Select Committee document. The author’s own experience was that that outside the UK ‘UKeU’ was often confused with ‘UKOU’ – not helpful.

Platform

Like others both before and after, UKeU decided to develop a brand-new learning environment (platform) rather than use one of the existing widely-used commercial products. However, this strategy completely flew in the face of the recommendations of both the business consultants and the specialist consultants.

Thompson (2004), in a paper written in late 2001 as a reflection on the business plans of 2000, did not even cite platform specifics as one of the critical success factors for UKeU. Second, the specialist consultants (Bacsich & Davies, 2004) advised:

All technical input and much exemplar input suggests that an e-University can start now [presenter’s italics], including with an initial LMS [learning management system].

Whatever the reasons for UKeU ignoring such advice, by summer 2003 inside UKeU the confidence in the brand-new platform was beginning to seep away (outside agencies had already made their negative views clear). In fact, the UKeU CEO had earlier quietly commissioned some competitor research on platforms in order to re-check the earlier assumptions, and by September 2003, UKeU was indeed offering blended learning and courses using both WebCT and Blackboard. But this came at major cost to brand integrity, as Bacsich (2005) notes:

[this] made it intellectually impossible to justify the ‘third generation’ rhetoric of the brochures concerning the UKeU Learning Environment. Around the world, many large distance e-learning HEI programmes (Capella, Hong Kong OU, Ulster, Middlesex, etc) now use WebCT and quite a lot also use Blackboard …

A new synthesis

So how does one draw out a new synthesis from earlier research work and the fate of UKeU that would provide guidance for future e-universities – and maybe prevent some current ones spiralling down to destruction?

One cannot now focus only on private-sector operations. The failure of many private players and of several public-private operations (linked to the culture shift against this ‘third way’) means that there is renewed interest in public-sector operations. Thus a new synthesis must try to cover both ends of the spectrum.

Recommendations mainly for private-sector organisations

Eight more criteria to add to the classical list of four critical success factors are the following. Links are given to the earlier work.

1. Understanding and leveraging the brand is crucial.
2. The right market research, and the willingness to act on it, is crucial.
3. ‘Time to market’ must be kept short.
4. Cost of marketing must be kept low.
5. Realism about differentiators is necessary: ‘quality’ is not a differentiator; price is; platform functionality is not.
6. An e-university must be a university and a company – doing that well is hard; it affects every aspect.
7. Good management and staff are essential – ensuring them is hard.
8. (For English-language organisations) it is not really an ‘English-speaking world’.

The first two have been discussed; brief notes follow on the others.

Time to market

This is the operational aspect of the general theme of timing. Once an e-university is set up, its ‘sponsors’ (government, shareholders, etc) can become impatient soon (because of elections, changes of key ministers, etc). Thus nothing can be allowed to get in the way of launch. The best cannot be the enemy of the good.

Cost of marketing must be kept low

In a non dot-com way, UKeU offered a weightless product that was sold by ‘weighty’ techniques – Bacsich (2005) documents the panoply of local business managers and international partners. However, a purely weightless approach is suspect – there are sound political and regulatory arguments at present for in-country presence, and the problem is actually worse for blended learning (a fact which its advocates often ignore). The implications are that in-country presence must be carefully organised, with a bias towards the most ‘fruitful’ countries, and carefully managed within these countries.

Differentiators

There is little evidence from the years of evaluation literature that students (in contrast to academics) value specific platform features for their own sake. A number of leading players in distance e-learning (private and public, including the Open University) deploy somewhat minimal systems or one of the commercial mainstream platforms, without apparent detriment to their business. The consultants to UKeU (as noted above) did not regard the platform as a differentiator. Future e-universities should bear this in mind.

Similar considerations apply to quality. Unless a provider can turn quality into a benchmark to get it adopted by the press and influence student choice, it is foolish to start a reputation battle in this area.

An e-university must be a university and a company

This is a key special case of the general critical success factor of ‘homogeneity or managed diversity’. Maintaining this balance is essential but tricky, and is an area where UKeU did not manage it well. Aspects of this are reviewed in Bacsich (2005) and Conole et al. (2005). The issues below are the ones most relevant to future e-universities.

• Only one of the internal Board Directors of UKeU (including the CEO) had had recent university senior-level experience. The overall ‘tone’ of UKeU was non-university, sometimes defiantly so, and yet also rather unknowing in detail of how universities work. Bringing in a CEO from business is common with governments faced with e-universities in trouble.
• The Learning Programmes department (which was the main department liaising with partner universities) had very few university staff – this probably contributed to the lack of trust between UKeU and universities. UKeU had a thorough approach to contracts, but as argued in Kelly (2004), this may have been because it had to compensate for this lack of trust.
• Sales and Marketing had no university staff at all – this probably led to a lack of understanding of the subtle ways in which universities ‘sell’ courses.

New e-universities should ensure that staff from traditional universities are used where appropriate, rather than a rhetoric of ‘business good, universities bad’ being applied to recruitment. However, an additional problem was that UKeU had a corporate pension scheme which ‘could not (by 2002) compare with the final-salary schemes ... used for UK HEI staff …’ (Bacsich, 2005). This discouraged key middle-level people from universities applying for jobs at UKeU.

Good management and staff are essential and should be valued

Despite being wholly dependent on e-learning know-how, UKeU appointed few staff with good knowledge of e-learning. The Select Committee notes that: ‘UKeU did not have anyone with e-learning expertise in a senior management position’. That was also true at middle management and lower levels (with the notable exception of the Learning Technology and Special Projects departments). In particular, on a senior management team of around ten, there were only two people with good knowledge of e-learning – which led to many discussions starting from first principles.

There were several personnel changes in the top managers and key staff within UKeU and consultant teams advising UKeU. This led to a lack of continuity of know-how and a drift of expertise from the core organisation to consultants and ex-employees. A small but growing number of good staff began to leave from August 2003 (Bacsich, 2005). Some other e-universities have suffered similar problems.

It is not really an ‘English-speaking world’

English skills may seem to be prevalent across the world, but at the levels required for university study they are much less prevalent than many university staff believe.

Recommendations mainly for public-sector organisations

There are three further recommendations, one general and two technical:

• There still must be a ‘business model’ even if not a commercial one.
• Open source is part of an answer – but no one is yet ‘betting the farm’ on it.
• Interoperability is getting closer but is not there.

Business model

What this criterion means in essence is that the so-called private sector criteria should be read (and appropriately re-interpreted) by public-sector e-universities, rather than being ignored as irrelevant. There are considerable differences between public-sector e-universities in this regard, even within Europe.

Open source is part of an answer – but no one is yet ‘betting the farm’ on it

There is currently great interest especially in the public sector in the use of open source solutions for e-learning. In the past, many of the agencies and experts promoting this were rather far from the sharp end of large-scale operational services. However, this is changing – many have noted the recent decision by Athabasca University to ‘bet the farm’ on Moodle. Nevertheless, there is still much detailed and rather dull work to be done to ensure that open source solutions are treated ‘fairly’ and realistically, in particular within procurements.

Interoperability is getting closer but not there yet

Ensuring full interoperability between different e-learning systems remains an elusive goal: many of the supposed ‘minor details’ of implementation differences take much effort to resolve. Slater (2005) notes:

industry work on national issues has recently slowed dramatically with standards bodies making less headway and software teams downsized ... industry is waiting for more uptake before investing further.

The last phrase in the above quotation is a natural point on which to end this revised analysis of critical success factors for e-universities.

Note on methodology

The general approach to this evaluation is ethnographic, supported by documentary analysis. No specific interviews or questionnaires were used. The evaluator was also a participant in the organisation, thus had the added difficulty of maintaining ‘evaluator’s distance’. However, he had it in mind from 2002 to ‘write the history of the e-university’, so that his files are particularly comprehensive, and UKeU was a complex, rapidly evolving organisation largely hidden from outsiders, making it hard for an external evaluator to ‘lock on’.

A good general introduction to evaluation methodologies can be found in Oliver (2000). However, there are few exemplars for evaluation of a failed e-university – normally the company files are dissipated or locked up indefinitely in an archive, and former staff will not comment on record.

Copyright © 2005 Bacsich, P.

The author assigns to ODLAA and educational non-profit institutions a nonexclusive license to use this document for personal use and in courses of instruction provided that the article is used in full and this copyright statement is reproduced. The author also grants to ODLAA a nonexclusive license to publish this document in electronic or print form within ODLAA publications and/or the world wide web. Any other usage is prohibited without the express permission of the author.

References

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Acknowledgements

The author gratefully acknowledges the support of HEFCE and the Higher Education Academy for the selection, editing and publication of key documents from the UKeU archives, on which some of this analysis is based.

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