E-learning initiatives that did not reach targeted goals

E-learning Initiatives That did not Reach Targeted Goals

by Desmond Keegan, Jüri L�ssenko, Ildikó Mázár, Pedro Fernández Michels, Morten Flate Paulsen, Torstein Rekkedal, Jan Atle Toska, Dénes Zarka

E-learning initiatives that did not reach targeted goals 1

E-learning initiatives that did not reach

targeted goals

Desmond Keegan, Jüri Lõssenko, Ildikó Mázár, Pedro Fernández Michels,

Morten Flate Paulsen, Torstein Rekkedal, Jan Atle Toska, Dénes Zarka


© Megatrends Project 2007 1st edition. Publisher: NKI Publishing House, Hans Burumsvei 30, N-1357 Bekkestua, Norway

P.O. Box 111, N-1319 Bekkestua, Norway Telephone: +47 67 58 88 00/ +47 67 58 89 00 Fax: +47 67 58 19 02 E-mail: [email protected] Homepage: www.nkiforlaget.no Project Homepage: www.nettskolen.com/in_english/megatrends/

Copyright © Megatrends Project 2007. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission. This publication was produced with funding from the Leonardo da Vinci programme of the European Commission. The sole responsibility for the content of this report lies with the authors. The Commission is not responsible for any use that may be made of the information contained therein. ISBN 978 82 562 68276


Table of contents Foreword .................................................................................................................................... 5 Introduction ................................................................................................................................ 6

Overview of the analysed institutions .................................................................................... 8 The Alliance for Lifelong Learning ......................................................................................... 12

Historical context ................................................................................................................. 13 Technical issues.................................................................................................................... 14 Courses ................................................................................................................................. 15 Management, strategy and attitudes ..................................................................................... 15 Economy............................................................................................................................... 16 Conclusion............................................................................................................................ 16 References ............................................................................................................................ 18

CVU – California Virtual University ....................................................................................... 19 Historical context ................................................................................................................. 20 Technical issues.................................................................................................................... 20 Courses ................................................................................................................................. 21 Economy............................................................................................................................... 21 Management, strategies and attitudes................................................................................... 22 Conclusions .......................................................................................................................... 22

IT Fornebu Knowation (and Bedriftsuniversitetet) .................................................................. 24 Historical context ................................................................................................................. 25 Technical, organizational and economical issues ................................................................ 25 Evaluating what went wrong................................................................................................ 26 Some words on Bedriftsuniversitetet ................................................................................... 27 Success and failure: Lessons learned ................................................................................... 28 References ............................................................................................................................ 29

The Competence Network of Norwegian Business and Industry ............................................ 31 Historical context ................................................................................................................. 32 The NKN vision ................................................................................................................... 34 Technical issues.................................................................................................................... 36 Courses and services ............................................................................................................ 37 Management, strategies and attitudes................................................................................... 38 Economy............................................................................................................................... 39 Conclusions .......................................................................................................................... 40 References ............................................................................................................................ 43

The Scottish Interactive University.......................................................................................... 45 Historical context ................................................................................................................. 46 Technical issues.................................................................................................................... 48 Courses ................................................................................................................................. 48 Management, strategy and attitudes ..................................................................................... 49 Economy............................................................................................................................... 50 Conclusion. Why did it fail? ................................................................................................ 51 References ............................................................................................................................ 52

Scottish Knowledge.................................................................................................................. 53 Historical context ................................................................................................................. 54 Online courses ...................................................................................................................... 54 Technical issues.................................................................................................................... 55 Management, strategy and attitudes ..................................................................................... 55 Economic aspects ................................................................................................................. 56


Conclusion. Why did it fail? ................................................................................................ 56 Reference.............................................................................................................................. 57

SWI freeweb............................................................................................................................. 58 Contextual factors ................................................................................................................ 59 History.................................................................................................................................. 59 Technical issues.................................................................................................................... 60 Courses ................................................................................................................................. 60 Management, strategy and attitudes ..................................................................................... 60 Economy............................................................................................................................... 61 Other factors......................................................................................................................... 61 Conclusions .......................................................................................................................... 61

The United Kingdom e–University .......................................................................................... 63 Historical context ................................................................................................................. 66 Technical issues.................................................................................................................... 68 Online courses ...................................................................................................................... 70 Management, strategy, attitudes........................................................................................... 72 Economic aspects ................................................................................................................. 72 Conclusion. What were the causes of the failure of the UKeU?.......................................... 73 References ............................................................................................................................ 75

The Open University of the United States ............................................................................... 77 Historical context ................................................................................................................. 78 Technical issues.................................................................................................................... 78 Online courses ...................................................................................................................... 79 Management, strategy and attitudes ..................................................................................... 80 Conclusion. Why did it fail? ................................................................................................ 81 References ............................................................................................................................ 82

Analysis of trends and characteristics ...................................................................................... 84 Reasons for failure ............................................................................................................... 85 Conclusions and recommendations...................................................................................... 94 Rating of success factors ...................................................................................................... 97 References ............................................................................................................................ 99

About the authors ................................................................................................................... 100


Foreword This is one of four books published as a result of the Leonardo da Vinci project “Megatrends in e-learning provision”. The first book, The Provision of e-learning in the European Union (ISBN 978 82 562 68177) presents data gathered from Norway and the 25 members of the European Union as an introductory overview of the provision of e-learning in Europe. The second book, Megaproviders of e-learning in Europe (ISBN 978 82 562 88184), includes 26 case study articles of European megaproviders of e-learning. The third book, E-learning initiatives that did not reach targeted goals (ISBN 978 82 562 68276), provides case study articles and analyses of nine prestigious European and American e-learning initiatives that did not reach their targeted goals. The fourth book, Analyses of European megaproviders of e-learning (ISBN 978 82 562 68191), presents important success factors identified by the in-depth analyses of both the megaproviders and the discontinued initiatives identified in the project. All four books, a comprehensive bibliography and a set of recommendations can be downloaded free of charge from the project’s web-site at: www.nettskolen.com/in_english/megatrends The partners in the ‘Megatrends in e-learning provision’ project are:

• NKI Fjernundervisning (NKI Distance Education), Bekkestua, Norway • Distance Education International, Dublin, Ireland • Universitat Oberta de Catalunya (The Open University of Catalonia), Barcelona, Spain • Eesti Infotehnoloogia Sihtasutus, (Estonian Information Technology Foundation), Tallinn,

Estonia • Norgesuniversitetet (Norwegian Opening Universities), Tromsø, Norway • European Distance and E-Learning Network, Milton Keynes, UK • Budapesti Műszaki és Gazdaságtudományi Egyetem (Budapest University of Technology and

Economics), Budapest, Hungary


Introduction ‘We learn by our mistakes’ is an old adage in the English language. Unfortunately, there is little learning from mistakes in education. There is little scientific research on educational mistakes. Research in the area of educational mistakes is notoriously difficult. Documentation is hard to access. Key figures disappear or refuse to be interviewed. Access to vital sources is denied. Where government use of taxpayers’ money is involved the secrecy is even more pronounced. Successful online education should be robust and sustainable. It is therefore of great concern that too much of the online education that has been offered so far has been transient, unsuccessful and far from sustainable. Several examples of online education initiatives that have not been robust and sustainable are described in the article Online Education Obituaries (Paulsen 2003)1. The examples are organized according to the following statements:

1. Many governmental online education initiatives have not been sustainable 2. Online education consortia are often not sustainable 3. Many commercial and investor-driven online education initiatives have failed 4. Boardroom initiatives often fail 5. Several high profile international ventures have been discontinued because of an

unhealthy economy This book provides an analysis of a number of case studies of e-learning initiatives, which did not reach targeted goals. The reason for choosing the case studies that are included in this book is first of all that the researchers had some knowledge about the cases through their professional work, and that the researchers were fortunate to find people who were involved and willing to share their knowledge about the cases. The case studies presented in this book are listed in Table 1, and a short introduction to the institutions is provided in the following.

1 www.studymentor.com/studymentor/Obituaries.pdf


Table 1. List of institution sorted by money spent Institution Country Years in

operationNumber of years in operation

Total amount spent

Type of initiative

Educational level

UK E-University UK 2000-2004

4 £50M Political University

United States Open University

USA&UK 1998-2002

4 $27M Institutional University

Alliance for Lifelong Learning

USA&UK 2000-2006

6 $12M Consortium Further education

NKN Norway 2000-2002

2 €7-14M

Political All levels

IT Fornebu Norway 1998-2001

3 €9M Political Further education

Scottish Knowledge UK 1997-2002

5 £5.75M Consortium University

California Virtual University

USA 1997-1999

2 $6M Political Consortium

Further education

The Scottish Interactive University

UK 2002-2007

5 £2.3M Political University

Bedriftsuniversitetet Norway 2000-2003

3 €2M Consortium Further education

SWI Hungary 1999-2005

6 ??? Institutional All levels

The researchers are the first to admit that the selection of case studies by no means intends to be representative of the situation in Europe. However, each of the case studies includes ample opportunities for learning that other initiatives can benefit from. The table shows that the analysed institutions represent only Hungary, Norway, the United Kingdom and the USA. It would be relatively easy to include more cases from the USA, but the focus of the research is European experiences. One could wonder why Norway and the United Kingdom are so heavily represented among the European cases, but the researchers have no reason to believe that these countries are more prone to launch dubious initiatives than other European countries. It is more likely that these countries were early adopters of online education and that the researchers are more familiar with the situation in these countries than in other countries. One may also acknowledge that there could be more willingness to share information about discontinued initiatives in these countries than in other countries. The table also shows that the analysed initiatives in average were in operation for 4 years, ranging from 2 to 6 years. Many of the initiatives claimed that the dot-com hype helped initiate the projects and that the subsequent dot-com demise was an important reason for discontinuation. This is probably a correct observation, but the Megatrends project has also identified a number of successful initiatives that succeeded in establishing robust and sustainable e-learning operations in the same time frame. It should also be noted that many of the initiatives were based on enterprises with limited history and experience in e-learning.


The table further shows that the initiatives spent a disturbing amount of primarily public money. About €150M has been spent, on only the few cases analysed in this study. As tax payers, we should all be concerned about how public educational initiatives have wasted money on dubious initiatives and how hard it could be to reveal details about them. Finally, the table indicates that one should be aware that political initiatives and consortia seem to dominate the discontinued initiatives represented in this study. Several of the consortia were actually perceived as competitors of their mother institutions.

Overview of the analysed institutions Governmental and political initiatives Many governmental online education initiatives have not been sustainable. These initiatives are often very visible and expensive. One reason for the problems might be inconsistent policy due to changing governments and political disagreements. Compromises and lack of market knowledge may also contribute to sub-optimal decisions as indicated in these examples described by Paulsen (2003a):

Winix was an LMS system that the Norwegian Ministry of Education initiated in 1988. According to a 1994 article in Computerworld Norway4, the Office of the Auditor General (Riksrevisjonen) showed that the project spent more than € 10 million in the nineties. In 1992, it was clear that the project had failed. The software was not finished on time, and several companies that depended on Winix lost much money. The Danish Ministries of Education and Research initiated a Danish Virtual University in a mission statement on March 27, 2000. The € 5 million budget for the period 2000-2003 was intended to support the development of Web-based courses and provide information about the courses. The next government shut down the initiative, partly as a result of lacking support from the affected institutions. The only remaining result seems to be a portal providing information about further and continuing education (www.unev.dk) that was initiated by the Danish University Rectors’ Conference and scheduled to open in August 2003.

The Megatrends project has studied some political initiatives in more detail. A short introduction of them is provided in the following: The UK e–University was launched in February 2000 by the Secretary of State for Education who appointed the UK Government’s Higher Education Funding Council for England to take charge of the project. The project was effectively wound up in 2005 after spending £50 million of public money but having succeeded only in attracting 900 students. IT Fornebu Knowation was a result of the controversial political decision to establish a world-class research and development center for information and communication technology when the old Oslo International Airport was shut down in 1998. The project was the subject of continual political and bureaucratic quarrelling. Some critics claimed that the project’s main objective was to secure valuable real estate properties in an attractive area. The center needed educational enterprises and IT Fornebu Knowation was a key player to attract educational activity. A number of video-conference studios were located and planned around the country. The opponents of the project claimed that the selected technology and locations were chosen


to get the necessary support from local members of parliament. The company experienced a difficult economic situation, and has more or less disappeared after several reorganizations and mergers. The Competence Network of Norwegian Business and Industry (Næringslivets Kompetansenett (NKN)). NKN (www.nkn.no) was a commercial company established in August 2000. It was owned by the Confederation of Norwegian Business and Industry (www.nho.no), the Norwegian Confederation of Trade Unions, and Telenor, which is the largest telecommunication company in Norway. The powerful owner institutions wanted to show their vigour and dedication to supporting further and continuing education in the workforce. The dot-com hype also helped the initiation of NKN. It was primarily a provider of LMS services to companies (customers) in collaboration with course and content providers (partners). But NKN was never able to cover its costs and the shareholders lost nearly € 10 million. To avoid the bad publicity of a bankruptcy, the owners decided to pay off the creditors with about € 1 million and to sell NKN to the CEO for a symbolic sum in 2002. The Scottish Interactive University was started in Scotland on 15 October 2002 and was closed four years later on 17 April 2007. It was born as Scottish Knowledge collapsed, and Heriot-Watt University and the Scottish Enterprise development agency of the Government of Scotland were the major promoters of this consortium of Scottish universities.

Consortia Online education consortia are often not sustainable. It is easy to find good reasons for collaboration between educational institutions, but in real life individuals and institutions usually are much more committed to themselves than to the consortium. In general, one may suspect that a consortium of prestigious institutions hardly can be whole-hearted. A relatively weak external consortium secretariat could easily be overlooked or opposed by powerful factions within the institutions. There is also a chance that individual institutes, departments, and even institutions could compete with the consortium in bids for external contracts. This is obviously not a viable environment for a consortium. The following consortia are studied in this book: The Alliance for Lifelong Learning was established on 28 September 2000. It was founded by the four prestigious universities: Stanford University from California, USA, Oxford University from Oxford, England, Yale University of New Haven, Connecticut, USA and Princeton University of New Jersey, USA. Princeton withdrew after a few months. The alliance ceased activities in late 2005 and was officially closed in March 2006. The budget was $12M, and it is clear that the initiative failed since only 600 enrolled. Bedriftsuniversitetet (www.bedriftsuniversitetet.no) was a consortium established as a company in 2000 by four prestigious Norwegian institutions: the University of Oslo, Norwegian University of Science and Technology, Norwegian School of Management, and the SINTEF research institute. The aim was to offer both traditional education and e-learning to corporations and organizations. In April 2003, the general assembly decided to shut down the operation. A message posted at Bedriftsuniversitetet’s homepage referred to a decreasing market for tailor-made competency building at the college and university level, and stated that there was no basis for continuation of a company at the costs a consortium requires.


California Virtual University (CVU) was a high profile venture with a dismal history. It was launched in April 1997 as a joint project of the University of California, California State University, California Community Colleges and the Association of Independent California Colleges and Universities. In April 1999, Stephen Downes wrote an interesting analysis claiming that the CVU dream lay in ruins. In his analysis2, he stated: “While on the one hand this is just another story of an unprofitable enterprise biting the dust, on the other hand it is a story of wider impact because CVU was seen in some quarters as a model for the future. The failure will affect online learning in general, and the reasons for the collapse attributed to weaknesses in the medium as a whole”. Scottish Knowledge was a short-lived partnership between Scotland’s 21 higher education colleges and universities which offered online courses and distance education courses to students around the world. It was founded in 1997 and closed in 2002. It had offices in the United Arab Emirates, Malaysia, the USA and in Edinburgh, Scotland.

Institutional initiatives Many commercial and investor-driven online education initiatives have failed. E-learning was depicted as a lucrative investment during the dot-com period. Numerous speculative projects attracted investors with high expectations and many of these projects vanished when the dot-com bubble burst. The dot-com initiatives initiated unrealistic hype of online education; unfortunately their demise resulted in an equally undeserved pessimism. Many universities have also failed in their commercial online education ventures. In a May 16, 2003, Times Higher Educational Supplement, Stephen Phillips wrote:

“In March, Columbia University cut its losses on Fathom.com, having run up a $25 million (£15.5 million) investment tab on the online education portal. The New York-based venture was perhaps the last vestige of the brash 1990s when a slew of universities tried to cash in on their intellectual capital to corner the nascent e-learning market. The universities of New York, Cornell, Temple and the University of Maryland University College have folded commercial internet education arms or scaled back ambitions amid poor enrollment and tough economic conditions.”

Two institutional, but very different, initiatives are included in this study. The United States Open University (USOU) was established in 1998 by the British Open University (OU) as an independent US-based institution. Ranked in the top ten among British universities for the quality of its teaching, the British OU sought to develop a sister institution in the US. The OU had achieved quality at scale, enrolling over 200,000 students in the UK and Europe. However the US market was more competitive and the OU brand identity was little known in the US. USOU offered baccalaureate and master degrees in business, computing and IT, and the liberal arts. It developed nationally recognized programs with community colleges and joint degree programs with major US universities. However, not all British aspects of the academic or business models worked successfully in the US. USOU evolved from producer-driven, largely undergraduate courses and systems derived from the UK to a US-market-led institution based on partnerships and graduate programs. Marketing shifted from students to institutions. Enrolments increased considerably every semester from fall 2000 to fall 2001, but revenues failed to grow fast enough. So, the British OU decided to terminate the project and shut down the activity.

2 www.newstrolls.com/news/dev/downes/column041499.htm


SWI. In the first decade of the second millennium a Hungarian educational site called okta.to (EDUCATOR) made visible progress towards online learning with many courses offered at a reasonable price. The site was owned by the free web-service provider SWI, and after a very promising start-up, it closed down in 2005. At the time of operation, it was Hungary’s largest publicly accessible online learning opportunity. SWI is not regarding the discontinuity as a failure, since it was the only “mega” activity in Hungary during this period, and it generated substantial income which helped the company to still be in operation.


The Alliance for Lifelong Learning The Alliance for Lifelong Learning was founded on 28 September 2000, it ceased activities in late 2005 and was officially closed in March 2006. It was founded by the prestigious Stanford University from California, USA, Oxford University from Oxford, England, Yale University of New Haven, Connecticut, USA and Princeton University of New Jersey, USA. Figure 1. The AllLearn homepage

Retrieved 02.09.07 from www.allearn.org


Historical context The Alliance for Lifelong Learning was founded in September 2000. Its role was described thus: Oxford, Princeton, Stanford and Yale universities announced today that they would each provide $3 million to launch their “distance learning” venture to provide online courses in the arts and sciences to their combined 500,000 alumni. The Alliance will offer non-credit courses to the alumni, taking advantage of emerging technologies to give the graduates convenient access to their schools' extraordinary resources. The four universities recognize the potential appeal of the Alliance's educational opportunities to other audiences seeking ongoing personal enrichment, and they plan in the future to make their offerings available to a wider public. The Alliance will provide online courses and interactive seminars; multi-media programs; topical Web sites that include links to research information; live and taped coverage of campus speakers, exhibitions, and other events; lectures on tape; and other offerings. The member universities and their faculties will control the content of the courses and other educational products offered, ensuring that they meet the highest standards. Four of the world’s leading educationalists spoke of its importance: President Harold T. Shapiro, President of Princeton University said:

At Princeton, we believe the alliance with our peer institutions will assist us to extend and enhance our central commitments to teaching and learning. Our two primary objectives are to provide the best learning experiences that we can to our students and alumni and to enable faculty members to explore new methods which may enhance the teaching and research they are able to carry out. The use of electronic and other media offers the promise of extending in exciting new ways the University's commitments to develop and disseminate knowledge. We want to insure that our faculty and students have the opportunity to take full advantage of instructional possibilities -- and, indeed, to imagine and develop new possibilities.

Dr Colin Lucas, Vice-Chancellor of the University of Oxford stated:

We believe that a service such as this -- offering access to the educational resources of four of the world's top Universities -- will have global appeal. The internationally acknowledged pioneering work of our Technology-Assisted Lifelong Learning Programme will underpin Oxford's contribution. The Alliance offers us exciting opportunities to expand the services we offer and we look forward to developing this partnership to its full potential, in the context of our wide range of distance learning programmes.

The President of Stanford University, John L. Hennessy added:

We are delighted to be a part of this new initiative to expand the boundaries of distance learning and provide our alumni with the experience of intellectual vitality and creativity that our four universities can provide. From the beginning, Stanford has sought ways to extend the power of education to those who might not otherwise have the opportunity. Furthermore, Stanford has been one of the pioneers in using the Internet as yet another means to share that knowledge. I am hopeful that the extraordinary courses and programs that our four institutions offer will find an even broader audience through the Alliance.


Dr Richard C Levin, President of Yale University stated:

Yale's success has always relied significantly on the guidance and support of its alumni, and we are eager to meet their strong interest in lifelong educational enrichment. They are our partners in this new effort, and they will help us determine the most rewarding course for distance learning -- not only for them, but potentially for students on campus as well as for a wider public across the country and around the world. We expect this Alliance of four great universities to play an important role in setting the standard for distance education in the arts and sciences. By cooperating, we believe we can contribute far more than could any one institution acting alone.

The first difficulty came within a few months of the foundation with the withdrawal of Princeton University. The loss of such a prestigious partner at such an early stage was a warning sign. Princeton’s reasons for withdrawal were given as: The Alliance was launched at a time when there was a belief that online education was going to be a very important vehicle for distributing learning. Because of the economic situation today, that hasn't turned out to be the case--at least not yet. The next change came in autumn 2002 when the initial targets for the courses, the alumni of the four (three) universities, was changed to the general public – a sure sign that the Alliance was not reaching its enrolment targets. About this time it tried to rebrand itself and traded under the name AllLearn. In March 2005 AllLearn widened its target audience again to include high school students and launched its first courses in this area in summer 2005. AllLearn ceased its operations in December 2005 and was officially closed early in 2006. Jokivirta (2006) comments: After almost five years in operation, the three universities released a joint statement concluding that “the cost of offering top-quality enrichment courses at affordable prices was not sustainable over time.” Following a series of collapsed e-university ventures from U.S. universities (e.g. NYU Online, Fathom, Virtual Temple, and University of Maryland University College Online); AllLearn is another major product of the dot-com boom to fold.

Technical issues Oxford, Princeton and Yale were not well known as distance education providers, though Stanford had been a leader in the US distance learning field for many years. Jokivirta comments: Starting small and focusing on a more receptive alumni market, AllLearn exhibited several important characteristics as a potentially successful online venture. Over the past five years, AllLearn offered 110 online courses to more than 10,000 students from 70 countries. The median age of learners was around 47. The business model was based on a flexible approach to delivery and technology. AllLearn offered shorter duration courses lasting from five to 10 weeks. In order to ensure access to students with a slow internet connection, AllLearn provided the option of substituting high-bandwidth features such as rich media.


A range of delivery modes (e.g. CD-ROM) were made available, although the internet was the central medium of instruction. The AllLearn brand was backed by its association with three elite universities and gained visibility through extensive marketing initiatives such as advertising in specialized and general interest magazines, pre-established links with university networks, etc. What set AllLearn apart from other online ventures was also the direct involvement and support of the partner universities. Top-level professors and subject-area experts from all three institutions were active in course content creation. AllLearn courses were also more cost-effective than the online continuous study program offered independently by the three universities, although there was a rise in costs over the five-year period.

Courses The online venture was initially established with alumni as the target audience, but in the autumn of 2002, the online venture adopted the name AllLearn in an effort to improve brand visibility and opened its provision to the general public. The courses were initially destined for the past-students, said to be 500.000 in number of Oxford, Stanford, Princeton and Yale. The course provision was not-for-profit in an educational sector that is normally for profit. The course provision was in the field of ‘edutainment’, that is the highly prestigious degree courses and awards of Oxford, Stanford, Princeton and Yale were not available. Provision focused on general interest courses rather than conventional higher education qualifications, primarily in humanities and social sciences. The venture's website claimed to offer the full range of academic subjects from “archaeology to zoology,” with sample courses including “The History of Spies,” “Understanding Beethoven” and “Poets of the First World War.” Course content was developed by faculty members of the three universities, and free public access was made available to a unique online library of some 12,000 academic websites.

Management, strategy and attitudes The support of world leading educationalists, the Presidents and the Vice-Chancellors of the constituent universities has already been indicated. The development of course materials by faculty members of the constituent universities is another indication that there was backing for the venture by the universities concerned. Another indication of the support of senior management is the lack of information on the university websites indicating that AllLearn had closed. This brief indication is from The Chronicle for Higher Education. A non-profit venture by the University of Oxford, and Stanford and Yale Universities to provide online non-credit courses to the public has closed, citing financial woes. The enterprise, known as the Alliance for Lifelong Learning Inc., or AllLearn, posted a message


on its Web site this month saying it had folded because “the cost of offering top-quality enrichment courses at affordable prices was not sustainable over time.” S. Kristin Kim, who had served as president of AllLearn since November 2002, reiterated that message in an interview.

Economy The official reason why the four prestigious universities closed their e-learning operation was ‘the cost of offering top-quality enrichment courses at affordable prices was not sustainable over time’. It is known that AllLearn commenced with a budget of $12.000.000 with each constituent university providing $3.000.000. Tuition fees were initially set at a standard rate of $195 for alumni and $250 for the general public, plus variable "material fees" ranging from $11.95 to $49.95. Courses are reported to have cost between $10,000-$150,000 to produce--which based on tuition income alone would have required between 40 and 600 enrollments per course to break even. By 2004-05, tuition costs had risen significantly and varied by course, but examples include $975 plus $83 in materials' fees for an eight-week “Travel and Adventure Writing” course or $895 (up from $249 in 2002-03) for a 10-week course on “Encountering Homer's Odyssey.” By June 2005, AllLearn had incurred a deficit of $783,410, with a revenue of $2.5 million and expenses totalling $3.28 million. The project's founders appear to have underestimated the costs of designing online courses and overestimated the number of students willing to pay tuition costs, writes Jokivirta. Lack of interest, rather than lack of status or brand visibility, has been cited as the primary reason behind AllLearn's failure to meet enrollment targets. Some argue that AllLearn's demise can be in large part attributed to its non-credit course offerings. Many who enroll in online courses are vying for jobs in a competitive market. They are seeking university qualifications, particularly from "elite universities," such as those involved in the venture. AllLearn was backed by the prestige of its partner institutions, but the company might have been hard-pressed to “sell” the value of the non-credit courses rather than a degree with the “elite university” seal.

Conclusion This report carries a warning note for all those thinking of starting an e-learning initiative. If four of the world’s most famous, most prestigious and most successful universities have failed to reach targeted goals and failed to find sufficient student numbers, what chance is there for less famous, less prestigious and less successful institutions? In the Stanford Daily Online Denise Sohn comments:

Thanks to the Alliance for Lifelong Learning, several hundred members of the public have been able to take noncredit courses through Stanford, Oxford and Yale over the last six years. But due to recent financial complications, the venture has been discontinued.


The Alliance for Lifelong Learning (AllLearn) was a “nonprofit venture by Oxford, Stanford and Yale to provide online noncredit courses to the public,” according to a recent article in The Chronicle for Higher Education. AllLearn was described as an “online learning consortium” by Associate Provost for Continuing Studies Charles Junkerman. The program ran into financial troubles because the “courses needed to be priced at a certain level,” Junkerman said. “The general consensus is that students will pay for an online course if it will contribute to professional development or has measurable benefits.” He added that online courses in applied fields, such as engineering or business, were generally much more successful, while attempts at liberal arts courses were typically not. Junkerman compared AllLearn to the Continuing Studies program offered through Stanford. While both programs target the same audience and focus principally on liberal arts, Continuing Studies has enjoyed considerably more success. The Continuing Studies program offers 90 to 100 courses per quarter, and involves 7,000 to 8,000 students per year. The difference, Junkerman said, was that the Continuing Studies courses were on campus and included a social and community experience.

McLeod, from the United Kingdom sums up the situation: An e-learning venture by Oxford University, with Yale and Stanford in the US, has folded after failing to attract enough students. A joint announcement was slipped out quietly by the three universities, which face an embarrassing blow to their prestige. The failure follows the collapse of a series of American university ventures and the £62m debacle of the UK's e-University. Oxford today declined to disclose how much money it lost on the AllLearn project, launched in the heady days of the dotcom boom in 2001. By June 2005, AllLearn had incurred a deficit of $783,410, with a revenue of $2.5m and expenses totalling $3.28m, according to the London-based Observatory on Borderless Higher Education, which monitors international developments in distance learning. In a statement on the AllLearn website, S Kristin Kim, president of the company, said it had offered 110 online courses from Oxford, Stanford, and Yale universities to more than 10,000 participants from 70 countries during the past five years. "As we looked to the future, the cost of offering top-quality enrichment courses at affordable prices was not sustainable over time." AllLearn offered courses in general interest subject areas, such as archaeology or First World War poets, originally targeted at alumni of the three universities. The universities then tried to broaden the appeal to the general public and school students. Ms Kim said the experience gained by AllLearn would be used by the individual universities to improve their own online courses. A spokeswoman for Oxford said today: "Oxford remains fully committed to providing high quality online learning through the university's department for continuing education. In fact, over the next 12 months, 18 new courses will be launched, from statistics for health researchers to northern Renaissance art, and the origins of human behaviour to nanotechnology.”


Lisa Jokivirta, of the Observatory, said: “From the outset, there were signs that AllLearn's enrolment targets were not being met.” Princeton University had initially been an institutional partner, but backed out within a few months following an initial intake of 600 students. The optimism about online learning at the time has not been fulfilled and Oxford follows a series of American universities in getting its fingers burnt following the collapse of NYU Online, Fathom (set up by Columbia University and the London School of Economics), Virtual Temple and University of Maryland University College Online. Unlike them, however, AllLearn was not intended to generate large profits. Fathom closed in 2003 despite attracting 65,000 students to more than 2,000 online courses and $25m in investment. New York University invested $25m to establish the for-profit distance learning company NYU Online, but this collapsed in 2001. Very few financial details have been disclosed, but AllLearn is reported to have been backed by $12m in start-up funding and “operated on a budget that is much smaller than many other online education ventures”, noted Ms Jokivirta. She added: “The project's founders appear to have underestimated the costs of designing online courses and overestimated the number of students willing to pay tuition costs. Lack of interest, rather than lack of status or brand visibility, has been cited as the primary reason behind AllLearn's failure to meet enrolment targets.” AllLearn attempted to tap into both the pre-university and business markets, but with limited success, said Ms Jokivirta. “As 'edutainment', online learning still finds it difficult to compete with television for consistency and familiarity. Evidence suggests that those enrolled in continuing learning programmes want to watch television-quality broadcasts online, and might find the more cost-efficient audio-taped lectures generally used by online providers less exciting and engaging. "Institutions offering non-credit courses must generally charge lower tuition fees than providers operating credit courses leading up to a qualification, and the shorter duration of courses compared to degree programmes suggests less tuition revenue. AllLearn's closure suggests that the 'general interest' market for online provision remains unproven, although this may change over time as the educational value of broadband is further explored.”

References MacLeod, D (2006) Oxford online project folds. http://xinkaishi.typepad.com/a_new_start/2006/08/guardian_oxford.html Sohn, D (2006) Alllearn program shuts down The Stanford Daily (4 April 2006) http://daily.stanford.edu/article/2006/4/4/alllearnProgramShutsDown Jokivirta, L (2006) What went wrong with Alllearn? www.universitybusiness.com/viewarticle.aspx?articleid=57


CVU – California Virtual University In the year 2004/2005 California had more than 600 postsecondary educational institutions, both public and private. The total fall enrollment in both public and private degree-granting institutions in 2004 was almost 2.5 million.3 Figure 2. The CVU homepage (www.california.edu; the URL does not work any longer)

Retrieved 02.09.07 from http://web.archive.org/web/20010926193948/http://california.edu/ The California Virtual University is an example of an e-learning consortium in which consortium members delegate the tasks of advertising and offering their online courses to a predominant entity. It represents a low level of institutional integration where revenue sharing, adapted scheduling, common admission criteria, comparable quality standards and transferable accreditation criteria are not relevant. Every consortium member keeps full independence and deals with the whole range of academic services and obligations once

3 California Post Secondary Education Comission


students have made their way through the CVU-Website and arrived at the members enrolment system.

Historical context California Virtual University started its activities in September 1997 with the aim of featuring the online distance education for all California accredited colleges and universities. The project was a result of the efforts undertaken by the Californian administration already in 1989 to define a State Policy on Technology for Distance Learning, directed by the California Postsecondary Education Commission. Due to funding cutbacks, distance learning plans could not be contemplated until 1996 when economical figures improved. The initiative was also moved by the problem of gaining 450.000 students over the following ten years and the difficulties of addressing their needs. A California Virtual University Design Team was established in 1997 “with the charge of recommending a blueprint with somewhat vague needs: “… by which California-based institutions of higher education may serve the needs of California students and employers through emerging technology-enhanced educational programs, as well as reach national and global demand for such programs and content (State of California, 1997).”4 The declared aim was meeting changing student and business needs, providing access for the increased student population, and increasing the quality of distance format courses. After cutting back public financial support and trying to turn the CVU into a non-profit foundation, the institution failed in maintaining private funding. In March 1999 the University of California agreed to “keep CVU’s homepage running on the Internet on the condition that the other public and private segments of higher education in the state would maintain and update their course offerings and information pages that are linked to CVU.”5 Today, the CVU’s homepage does not exist any longer.

Technical issues The CVU-project was designed as a Web-based platform (a searchable catalogue) featuring online courses offered by other institutions. Detailed information about the technological implications of the project could not be found. An article in CNET-News mentions the corporate sponsors as advisors from a technology standpoint. It also points out that “the estimated cost to keep the catalog running and enhanced with more automated features is about $2 million per year”6.

4 Berg, G.A. (1998): Public Policy on Distance Learning in Higher Education: California State and Western Governors Association Initiatives. [online article]. Education Ploicy analysis Archives, Vol. 6, Nº 11. [las visit: March 16th, 2007]. < http://epaa.asu.edu/epaa/v6n11.html> 5 Colvin, T. (1999): UC to maintain Virtual University Website [online press release] University of California; Office of the President News. [last visit: March, 16th 2007]. <www.ucop.edu/news/archives/1999/cvu.html> 6 Macavinta, C. (1998): "Virtual University” gets boost. [online article]. Cnet News. [last visit: March 16th, 2007]. <http://news.com.com/2100-1023-213885.html>


Courses In July 1998, the CVU launched its online catalogue with a total of 1600 courses, pulling together the the Web-based distance-learning courses offered by 95 public and private universities in California7. “Students logging on to CVU at www.california.edu will select from the four educational segments: UC, the California State University, the California Community Colleges system, and the Association of Independent California Colleges and Universities. A mouse-click on one of the links will take students to the courses and information maintained by each of the segments.”8 According to accreditation, the CVU was completely dependent on the member institutions so that students studying via this institution would receive credit not from the CVU but from the university or college that offered the course or program on the CVU linkup.

Economy The creation of the CVU was backed by a 6.1 million dollar injection from the State’s 1998/99 budget. Stephen Downes9 calls this a considerable amount taking into account the fact that the CVU had no design or delivery expenses regarding the courses offered on its Website. In the context of the Californian State Policy on Technology for Distance Learning, the private sector was encouraged from the beginning to collaborate with the educational institutions in the use of technology, but this approach created considerable criticism by faculty groups and parties concerned with the business ties that could be established as a result of such joined ventures. “In a separate but related effort called the California Educational Technology Initiative (CETI), the CSU (California State University) system proposed an agreement with corporate sponsors to provide an infrastructure for distance learning at CSU campuses.”10 The proposal had to be revised and Microsoft pulled out of the venture.11 Also the CVU was supposed to be turned into a non-profit foundation without any further public funding. Instead, a number of private sponsors like Sun Microsystems, Microsoft, Pacific Bell, KPMG Consulting, and International Thomson Publishing and Oracle12 agreed

7 Macavinta, C. (1998): "Virtual University” gets boost. [online article]. Cnet News. [last visit: March 16th, 2007]. <http://news.com.com/2100-1023-213885.html> 8 Colvin, T. (1999): UC to maintain 'virtual university' Web site. [online article]. University of California, Santa Cruz; Currents. [last visit: March 19th, 2007]. < www.ucsc.edu/oncampus/currents/98-99/04-05/ucop.virtual.htm > 9 Downes, S. (1999): What happened at Californai Virtual University? [online article]. Author’s Website. [last visit: March 19th, 2007]. <www.downes.ca/post/270 10 Berg, 1998 11 Burdman, P. (1998): Microsoft Abandons CSU Venture But plan to link up college campuses still on drawing board. [online article] SFGate – San Francisco Chronicle.[las visit: March 16th, 2007]. <www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/1998/04/17/BU104630.DTL> 12 Macavinta, C. (1998): California Virtual University gets boost from tech giants. [online article]. Cnet News. [last visit: March 19th, 2007]. < http://news.com.com/2110-1023-207190.html


to join the project which was announced as a good example for partnership between industry and education. Nevertheless, this joined venture between companies and the CVU did not succeed due to the resistance of the educational institutions against any possibility of “locking them into exclusive providers or one kind of technology”13. Instead, private colleges and the three Californian public universities were approached to help out with financial support, again without any success. In a final attempt, the CVU was supposed to support itself by e-commerce and advertising through its Website. In 1999, the institution suspended its activities.

Management, strategies and attitudes The role of the Californian State Administration in the CVU initiative was intended to be minimal and the project should be directed by teams of teachers from UC, California State University, California community colleges and the Association of Independent California Colleges14. The CVU worked as a sort of administrative centre outside the actual university or college structure, with the only function of advertising and administering the courses or degree programmes provided by the member institutions of the centre. The CVU could therefore save money on staff, development and delivery costs, student administration, accreditation and all the other tasks and responsibilities that are traditionally related with a higher education institution. Richard Bothel describes this model, sometimes named “broker model” in the following way: ”A limited staff maintains the "University," but extensive dollars are spent in advertising and promotion. Some type of infrastructure will be established to exhibit courses, but it does not necessarily include extensive hardware and networking infrastructure.”15 Stephen Downes mentions a lack of strategy in the sense that it was never really clear what the CVU was intended to be. The range goes from just a database to “the Amazon.com of the technology-mediated education in California16.

Conclusions From the gathered information it seems possible that the reasons for suspending CVU’s activities can be:

• A lack of definition: What was the CVU intended to be? 13 Downes, 1999. 14 Raine, G. (1998): A study in success State's virtual "university” graduates to a new level. [online article]. SFGate – San Francisco Chronicle. [las visit: March 16th, 2007]. <www.sfgate.com/cgi-bin/article.cgi?file=/examiner/archive/1998/07/30/BUSINESS15111.dtl> 15 Bothel, Richard (2001): Bringing It All Together. [online article]. Online Journal of Distance Learning Administration, Volume IV, Number I. [last visit: March 19th, 2007]. <www.westga.edu/~distance/ojdla/spring41/bothel41.html> 16 Macavinta, C. (1998): "Virtual University” gets boost. [online article]. Cnet News. [last visit: March 16th, 2007]. <http://news.com.com/2100-1023-213885.html>


• A lack of quality and coherence: The “broker model” offers “one-stop degree shopping and tends to involve less interinstitutional conflict”17 than other models that broker courses but award degrees and offer centralized student and academic services at the same time. On the other hand it increases the risk of duplication of courses offered by different member institutions. A result of this approach could be what Berg describes as a “hodgepodge catalogue of previously existing courses with great differences in format and quality.”18 Dependence on the member organizations resulted in the fact that the CVU “did not have the institutional autonomy to set its own direction or develop policy appropriate to its medium.”19

• Inadequate prevision and planning of the financial and business aspects: Without external funding, the CVU approach was not sustainable. The negative response of California’s private colleges and public universities regarding CVU’s needs of funding20 might be related with the relatively weak position of the institution due to its own structure and relation with its members: With each institution offering courses from its own site, students did not have any reason to return to the CVU’s portal once they had started a course. In addition, this lack of need to use the CVU-site any further than to establish the contact to a member’s site made it very difficult to develop a successful e-commerce segment.

17 Hill Duin, A./Bear, L. (2000): Virtual U. Creating the Minnesota Virtual University – Assessing Results and Readiness Criteria. [online article]. Educause Quarterly, Number 1, 2000. [last visit: March 19th, 2007]. < www.educause.edu/ir/library/pdf/eq/a001/eqm0012.pdf> 18 Berg, 1998 19 Downes, S. (1999): What happened at Californai Virtual University? [online article]. Author’s Website. [last visit: March 19th, 2007]. <www.downes.ca/post/270 20 ”[…] when Stanley A. Chodorow arrived as the virtual university's first CEO, he found it without any financial means of support. So he asked private colleges and the three public segments--the University of California, Cal State and community colleges--to collectively chip in $1 million a year for three years while he built up advertising and book-sales revenues. The colleges and universities balked, and CVU, with no money for its operations, folded up its tent, leaving only the directory.” (Downes, 1999)


IT Fornebu Knowation (and Bedriftsuniversitetet) In October 1998 a new main airport was opened at Gardermoen, north of the capital of Norway. When Oslo Airport Gardermoen opened, the area of the old airport at Fornebu, on the Oslo Fjord, was free for other purposes. The decision by the Norwegian Parliament to move the main airport from Fornebu to Gardermoen started an intense period of planning and discussion on how to develop the area of Fornebu after the closing of the airport. Fornebu is an extremely attractive area, nicely situated by the fjord and close to the capital. A lot of potential stakeholders were interested in the area for property development. The Norwegian telecom company Telenor, decided to move its headquarters to Fornebu, and other companies were expected to do the same. Figure 3. The IT Fornebu Knowation homepage

Retrieved 02.09.07 from http://web.archive.org/web/20020603124146/www.mml.no/index_eng.html


Historical context The closing of Fornebu airport happened in a period of very high expectations of what information technology could achieve in business, learning etc. It was the time of “dot com” and IT hype, both in Norway and elsewhere. In the late 90s the dominant theme in the Norwegian educational policy was the Competence Reform. This reform stressed the importance of lifelong learning and cooperation between institutions of secondary and higher education and industry. E-learning was regarded as a key element in realizing the new lifelong learning policies. In 1995, ship owner Fred. Olsen and a group of investors proposed to create a world-class centre for information technology and research at Fornebu. This centre was to include top level education, research and business innovation. Fred. Olsen and the investors also wanted to attract international businesses and researchers. These plans stirred up a lot of debate and controversy, both politically and in education and business. Some critics claimed that the main objective of the proposed project was to secure control over a neighbourhood of extremely attractive real estate properties. However, in the autumn of 1997, the plan of creating the IT Fornebu centre was supported by a majority in the Norwegian Parliament as a part of the 1998 national budget determination. The development of IT Fornebu was financed by a combination of private and public capital. An important element of the planning was to create alliances with existing businesses, universities, etc. IT Fornebu Knowation (ITFK) was the e-learning part of IT Fornebu. ITFK was established as a limited company in October 1998. The company managed to obtain a total of 9 million euros in capital. The company also planned to buy some existing course providers, like Telenor Competence, and to establish collaborations with other providers of education and training, such as universities. ITFK did not succeed. In June 2001 ITFK went bankrupt and closed down its activities.

Technical, organizational and economical issues The ITFK initative never really managed to develop and deliver many courses. Their vision was based on the idea of developing a network of study centres with video-conferencing studios in the various regions of Norway. These centres were referred to as “electronic classrooms”. One such centre was established in Vadsø in northern Norway, in collaboration with the town council. The ITFK study centres were to have their own special design in furniture, video-conferencing and ICT facilities. Because of financial problems the ITFK had to abandon their plans of building a nationwide network of study centres. The ITFK stressed the importance of F2F meetings for students and teachers, in combination with pure e-learning. This combined or blended learning approach is the dominant form of open and distance learning in Norway. The focus on video-conferencing and “electronic classrooms” with a special design was a more distinctive element in the ITFK pedagogical thinking. This way of organizing learning was criticised by many in the established e-learning and distance education community for being “pedagogically old-fashioned” and inflexible. The plans for building a network of study centres were criticised for being a waste of money. Norway already had a lot of study centres and video-conferencing facilities in libraries, schools and regional study centres. “Why not use these?” the critics asked.


It was important for ITFK to establish collaborative relations with both providers and customers in the competence market. ITFK managed to sign some contracts for collaboration with some municipalities. They also tried to buy some existing private course providers. Regarding large providers like universities, ITFK did not manage to establish any collaboration. The reaction of existing institutions of higher education towards ITFK was rather hostile. Universities and colleges, both public and private, did not see the point of ITFK. ITFK found it hard to explain why institutions of higher education should provide content to the ITFK activity. What would be the added value provided by ITFK? Wasn’t it better for universities and colleges to provide courses themselves, thereby interacting directly with the customers? Failing to address these questions, ITFK never managed to establish a good working relationship with the educational system. Institutions of higher education regarded ITFK as a redundant organization established by businessmen with little competence in both information technology and education, supported by equally incompetent politicians.

Evaluating what went wrong Both ITFK and the broader IT Fornebu Project have been analysed and evaluated quite thoroughly. In a report from the board of IT Fornebu ltd. in February 2004, the following reasons for the failure of ITFK were presented:

1. The Competence Reform (on continuing education and lifelong learning) failed and the market for continuing education was reduced rather than increased.

2. The general ICT market failed by 30-40 % during the period of ITFK’s existence, resulting in an even larger reduction in the ICT continuing education market than in the general continuing education market.

3. The costs of developing electronic classrooms and study centres were higher than the original estimates, thus making it more difficult for the centres to be profitable.

In 2003, the Norwegian Parliament asked the government for an evaluation of the total IT Fornebu Project. The consultancy organization, Oxford Research, performed the evaluation and the report was presented in February 2004. The government then wrote a White Paper to Parliament about IT Fornebu. The report from Oxford Research pointed out that IT Fornebu was based on a grand vision of a world-class research and development centre for information and communication technology. However, there was no analysis to show that the need for innovation and business development in Norway could best be served by establishing just this kind of centre at Fornebu. Except for the real estate property development part of the project, the vision was rather vague. The IT Fornebu approach had been without any clear priorities and few specific strategies to maintain a clear focus in executing the project. The result was “a loss of visionary focus”. Oxford Research thought that this partly was a result of a) international marketing activities being dropped b) failing to attract research and education activities to the Fornebu centre (except for the Simula centre, a centre for basic research in information technology) and c) giving up the plans for a national centre for continuing education and e-learning. The government’s White Paper on IT Fornebu was discussed in Parliament in December 2004. The end result was that Parliament decided to terminate the Norwegian government’s involvement in the IT Fornebu Project. A strong majority in Parliament stressed that IT


Fornebu ltd. itself had to be responsible for realizing the vision of a world-class knowledge centre. Having already allotted about 50 million euros to the project, the Parliament did not want to use any further public funding on IT Fornebu.

Some words on Bedriftsuniversitetet As described above, the reactions of the existing institutions of higher education towards ITFK were hostile. Universities and colleges did not see the point of the ITFK concept. As an alternative, three of the largest and most prestigious institutions of higher education in Norway and a well-known research institute established a limited company in 2000, to be located in the Fornebu area. The aim of the company was to offer tailor-made online and continuing education to corporations and businesses. The institutions involved were the University of Oslo, the Norwegian University of Science and Technology, the BI Norwegian School of Management (one of the Norwegian megaproviders of e-learning) and SINTEF research institute. The institutions funded the company with a registered share capital of NOK 15M. The company was called Bedriftsuniversitetet, which means “the business university”. Bedriftsuniversitetet received some funding from the Norwegian Ministry of Education and Research. The Ministry wanted to help existing institutions of higher education establishing activities in the Fornebu area, thereby contributing to the vision of a knowledge centre. In spite of the powerful and prestigious institutions’ involvement in Bedriftsuniversitetet, the company’s general assembly decided to shut it down in the spring of 2003. A decreasing market for tailor-made continuing education was singled out as the main reason for shutting down the company. The company had also met some internal criticism among the participating institutions, the main point being that the courses offered by the company to a certain extent were in direct competition with continuing education courses being offered by the four institutions themselves. Bedriftsuniversitetet competed with existing universities and colleges, including the very institutions that owned it, in a decreasing market for online and continuing education. It was therefore a short-lived initiative.


Figure 4. The BedriftsUniversitetet homepage www.bedriftsuniversitetet.no

Retrieved 08.09.07 from www.bedriftsuniversitetet.no

Success and failure: Lessons learned I will try to relate the discontinued experiments at Fornebu to the list of success factors put forward in the Megatrends Project, trying to identify the main reasons for its failure. I will also present some additional factors. Regarding IT Fornebu Knowation, the following important success factors were inadequately fulfilled: 1. Long history in online/distance/flexible education: ITFK was a completely new organization with no history and experience in the field. 2. High competence in online education: ITFK had rather limited knowledge and competence in online education, its main concept being based on study centres and electronic classrooms. Eventually ITFK hired some experts with high competence in the field, but by then it was already too late to succeed.


3. Evolutionary development: ITFK was not the result of an evolutionary and incremental development process. ITFK was established on the basis of a vision by a small number of investors and entrepreneurs with little or no experience in the field of e-learning. 5. High competence in ICT: The same applies here as it does for factor 2. 19. Collaboration with other institutions: ITFK did not succeed in establishing collaboration with a lot of other institutions. Universities and colleges were hostile and refused to provide content to the ITFK operations. Universities and colleges established a common anti-ITFK front, almost like a boycott, headed by the Norwegian Rectors’ Conference. 20. High credibility with the government: The IT Fornebu initiative, including ITFK received support from the government. However, this support was controversial and the Norwegian Parliament was divided on the issue. The minority government at the time was forced by Parliament opposition to support IT Fornebu. There was also a lot of negative press coverage on the IT Fornebu issue. A very important additional factor has already been mentioned: A decreasing market for continuing education and for ICT. The IT Fornebu initiative had unfortunate timing and when the “dot com” bubble burst in 2001 the road ahead became very difficult. Bedriftsuniversitetet had a lot more history, competence and available content than ITFK, being owned by three of the largest institutions of higher education in Norway and a well renowned research institute. Yet, this initiative was also discontinued. The main explanation here seems to be the decreasing market for continuing education. An additional explanation might be that the idea of creating this company from the start was not a very good one. Some critics of Bedriftsuniversitetet asked questions such as: “What is the point of establishing a company for continuing education that would actually compete with the educational activities of the very institutions that own it?” As the market failed to grow and even decreased, it became impossible to find an adequate answer to this question.

References “Anecdote 4. Online Educational Obituaries” in Flate Paulsen, M. (2003) Online Education Rapport om IT-, Kunnskaps- og innovasjonssenteret på Fornebu (February 2004) – Report from the board of IT Fornebu ltd. evaluating the status of the project Statusrapport for IT-, kundskabs- og innovationcenteret på Fornebu (February 2004) – Evaluation report on IT Fornebu made by Oxford Research for the Norwegian Business and Trade Ministry St. meld. Nr. 42 (2003-2004) Status for IT- og kunnskapssenteret på Fornebu – White Paper on the status of IT Fornebu from the Norwegian Business and Trade Ministry to the Norwegian Parliament Innst.S. Nr. 80 (2004-2005) Innstilling frå næringskomiteen om status for IT- og kunnskapssenteret på Fornebu – Report from the Parliament sub committee for business and trade on the White Paper on IT Fornebu


Minutes from Parliament session on December 16 2004 discussing IT Fornebu (www.stortinget.no/stid/2004/s041216-01.html) The web site of Bedriftsuniversitetet: www.bedriftsuniversitetet.no/ The web site of IT Fornebu: www.itfornebu.no/default.asp?V_ITEM_ID=133


The Competence Network of Norwegian Business and Industry The Norwegian name of the institution was Næringslivets Kompetansenett (NKN). Figure 5. The NKN homepage

Retrieved 02.09.07 from http://web.archive.org/web/20021201230907/nkn.no/info_english.html This article is based on a literature search, information originally supplied on the web pages of NKN, the author’s experience as director of research and development at NKI Distance Education, and as board member of Norwegian Executive Board for Distance Education at University and College Level (SOFF), The Norwegian Higher Education Network for


Lifelong Learning (the ‘old’ Norgesuniversitetet) and the Norwegian Opening Universities (the ‘new’ Norgesuniversitetet), and also informal talks with representatives for working life organisations, prior employees of NKN and course providers to NKN. It has been the intention that the result of this research should be as objective as possible. However, the result may be viewed as subjective and is the author’s responsibility only. NKN was established in August 2000 with a high profiled event in Oslo attended by top representatives from the government, the Ministry of Education and the Ministry of Trade and Industry, from the employers’ organisation, Confederation of Norwegian Enterprise (NHO) and the workers’ association, the Norwegian Federation of Trade Unions (LO), and from prominent educational institutions, business and industry. NKN was established as a limited company to operate as a main instrument for providing ongoing, personalised online education and training for employees in the private and public sector, owned by the two largest parties in the working life, NHO and LO, with NHO as the driving force behind the establishment, and also the main financial contributor. The company aimed to become the hub and main centre for competence development services supplied over the Internet for the Norwegian work force. After about one year of operation, the Norwegian Telecom, Telenor (to a large degree state owned), joined NKN as strategic owner buying about 20 percent of the company. NKN was strongly supported by government initiatives (such as the Competence Reform) and by investments from the owner organisations. In spite of the support from owners and agreements with nearly 40 educational institutions and content suppliers, the NKN did not at all succeed. It never became able to cover its costs. After only over two years of operation, the owners, mainly NHO, LO and Telenor, had spent over € 7 million on the project (unofficial estimations say € 14 million (Larsen 2004)). To avoid the bad publicity of a bankruptcy and let the creditors take the costs, many possible members of NHO, the owners decided already in 2002 to pay off the creditors with about € 1 million, and to sell NKN to the managing director for a symbolic sum (NUV 2002). The new owner never managed to make NKN profitable and it was quietly closed down after some time.

Historical context The establishment and fate of NKN have to be understood in the light of its historical context. Firstly, Norway was like the rest of the western and industrial world in the late 90’s largely influenced by the IT optimism and ‘dot.com’ hype. It was established just at a time of extreme expectations concerning growth in the information technology business and what this technology could achieve in all areas of society, including education and training. Secondly, specifically in Norway, there was great attention towards the needs of competency development, education and training in the workforce and also for people outside working life. The committee, which was set up for proposing new politics for a complete national system for adult education and competence development in work and society, presented its final report late 1997 (KUF 1997). The report proposed a ‘competence reform’ with the intention of raising the competence of the whole population, specifically in working life. According to the committee, to reach the goal of general and necessary competence development for the Norwegian workforce the “educational institutions had to adapt to users’ need for flexibility, accessibility, openness, quality and connected to working-life”


(KUF 1997 p. 17 (author’s translation)). Among a number of recommendations, the committee proposed that employees’ rights for leave of absence for education should be established by law and that a public development program for application of online education was needed. The committee presupposed that the working life parties would give priority to find solutions to make it possible for all employees to take part in further and continuing education (ibid. p.19). The white paper to the parliament (Stortinget) on the Competence Reform (St.meld 42 1997-98) Kompetansereformen (KUF 1998) followed up the committee’s work. The white paper suggested efforts for stimulating and strengthening competence development in working life – with specific emphasis on small enterprises. It was also mentioned that the government would consider establishing a funding program for the support of competence development. The resulting reform and the so called Competence Development Program were based on the white paper and the income settlements in 1999 and 2000. In connection with the income settlement in 1999 the government indicated it would allocate up to 400 million Nkr (€ 50 mill.) over 2-3 years to partly finance a competence development program for further and continuing education and training in working life. The program was established from the first half of 2000. One basis for setting up the program was the assumption by the working life parties that the market for further and continuing education did not function as well as it should. Thus, for receiving financial support from the program, it was required that projects were based on cooperation between supplier and user of competence development, and that the projects were planned in cooperation with the working life parties, i.e. formally supported by both the employers’ and employees’ side. The projects should also be concerned with or include innovations or new teaching/training/learning practices valuable for transfer of experience within the competence market. Although it is not directly related to NKN’s lack of success, it should be noted that the competence development program itself was not deemed a great success. After 6 years, 400 million Nkr had been distributed to over 700 projects and 80.000 persons had participated in training programmes (VOX 2005, Norgesuniversitetet 2007). The program was evaluated by the research institute, Fafo (2006). The main criticism of the program was that the main target groups for the reform, people with low basic education, were underrepresented, while people with previous higher level education were highly overrepresented among the participants – a result that was not at all intended.

The Norwegian University Network for Lifelong Learning (Norgesuniversitetet) As part of the historical context of the NKN initiative one should also note another initiative, which resulted in the establishment of another organisation, the Norwegian University Network for Lifelong Learning (Norgesuniversitetet) at nearly the same time (May 2000). It is noteworthy that this organisation was initiated by partly the same interest groups as the NKN. Norgesuniversitetet was profiled as “a unique collaboration between institutions of higher education and employers' and employees' interest organisations in Norway. It is organised as a joint venture and is governed by a board elected by its partners.” (Norgesuniversitetet 2002) The establishment of Norgesuniversitetet was a result of a long process started by an initiative taken by NHO (Brækken 1997). This initiative was also prompted by the political work


behind the competence reform mentioned above. NHO had a strong opinion that the traditional higher education institutions were neither interested nor able to satisfy the needs for competence development in Norwegian industry and business that were necessary for future international competition. Primarily, NHO wanted a new institution competing with the ordinary higher educational institutions based on similar principles as the British Open University, with open access as a fundamental principle. The associations of universities and colleges saw the initiative as a threat and met the initiative by inviting the social parties into a cooperative project developing the network for higher education. The result of this common endeavour was Norgesuniversitetet, which very similar to NKN, intended to:

“- ensure that information on continuing and further education at a higher level, offered by accredited providers, is easily available to all: individuals, companies, and organisations; - strengthen industry's and the public administration's access to new skills to assist competence development and improvement of competitiveness; - contribute to the development of relevant, high-quality courses for industry and the public service; and to - support the continuous building up of our democratic society.” (Norgesuniversitetet 2002)

The main services included:

“… a database containing several thousand courses, and a marketplace where industry and public organisations can find providers to help them develop new courses or training schemes (ibid.)

While Norgesuniversitetet was meant to be a non-commercial operation, NKN was intended to compete commercially in the same field. There can be little doubt that, specifically on the higher education level, the Norgesuniversitetet and NKN could be seen to be in direct competition. It is difficult to understand if this situation never came up as a controversial issue in e.g. NHO and LO. As a commercial enterprise NKN could also be seen to be in competition with its course providers. It should also be clear that cooperation with both these two bodies and adapting courses, information and systems to each one represented great costs in time and money for the educational institutions. (To avoid misunderstandings: In 2004 this organisation, the (‘old’) Norgesuniversitetet (Norwegian University Network for Lifelong Learning) was merged with the state body, SOFF (Norwegian Executive Board for Distance Education at University and College Level) and named (‘the new’) Norgesuniversitetet (in English Norwegian Opening Universities). This merging was backed by both organisations and the government to get stable funding, to consolidate the two and to gain synergetic effects.)

The NKN vision The NKN was founded as a great effort to support the goals of the competence reform and the competence development program. Indeed, NKN was also involved in a number of projects that received grants from the program. The NKN was launched by the working life parties “as a portal for learning” to contribute to the success of the competence reform (Fossen 2000) after an intense trial period of Internet based learning in a number of selected companies. A visit to Silicon Valley by the working committee of the board of the employers’ organisation, NHO, had resulted in strong beliefs in the potential of e-learning (Onarheim 2000). NKN itself viewed the competence network as much more than a portal for e-learning – as a


comprehensive overarching system for supporting learning activities and support in directing, developing and structure right and relevant competence development for the Norwegian workforce in a life long learning perspective. Reports from the opening ceremony express great visions of the potential of NKN. These visions presented by various speakers were well illustrated by a report from the editorial director of Learning & Performance, Stuart Rock (2000):

“Nothing has happened quite like this before. In a grand coalition, an entire country is embracing e-learning. …The plan is to provide more than four million Norwegian citizens – including government offices, trade unions, colleges and universities, as well as the private and public sector – with access to ongoing, personalised online training.”

The following citations are partly this author’s English translations and partly cited from Rock (ibid.) from speeches held at the opening ceremony (originally presented at NKN’s web pages): Grete Knutsen (Minister for Trade and Industry):

“…Norwegian trade and industry has to learn to live with …change. We have to transform our wealth creation. We will face special challenges as our revenues dry up and some restructuring is essential. We need to be at the cutting edge of knowledge, so that Norway competes on quality and innovation rather than price. Every enterprise must concentrate on research and development. The answer lies in new competencies – for every worker and every leader. …And the delivery mechanism for these new competencies – for every worker and every leader – is e-learning. …NKN has the full engagement of the government. …because it delivers on the government’s programme of ‘competence reform’ for the whole population. …NKN serves as a training portal for an entire nation.”

Finn Bergesen (chief executive of the Confederation of Norwegian Business and Industry (NHO)):

“It is a unique offering and it re-establishes the workplace as a place of learning. For the 820,000 members of the Norwegian Federation of Trade Unions and for our 16,000 member companies the Competence Network opens for the right and relevant learning. … For the companies this means a much more cost effective and more and better learning per krone, and it will help enterprises keep their competitive edge.”

Svein Erik Skjønberg (managing director of NKN) announced that already at the opening of NKN, there were 200 course offerings supplied by 40 different content providers – with an early emphasis on subject areas such as IT, health and safety beside courses at university level – and that new courses were added daily, so that the number of courses was expected to reach 1,000 already at the end of the year (four months later). According to Skønberg NKN was “moving at a fast speed…” and he anticipated that after one year of operation more than 100,000 citizens could be using the NKN network, which already from the start would address more than 50 percent of Norway’s working population through different forms of business and industry, trade unions, the public sector and the bulk of the private sector. Saba, the supplier of the technology behind NKN had marketed their technology and services well. According to Bobby Yazdani (chief executive of Saba):


“… This project is going to live beyond this generation, and we are looking forward to it. Generations yet to be all born will benefit from what you are launching today, and I solute you, and I salute you for your commitment. It is an honor to be here today, as Norway teaches the world a very important lesson about speed, cooperation, integration and education. … Never before has an entire country, an entire country mothered the successful, business practices of many of the world's co-operations: Fords, GEs, GMs, Ciscos. … The NKN's strategy … will enable the country's entire work force to remain a highly relevant economic phase and enforce that it's prosperous. This is a precedent-setting event for Norway and us and the rest of the nations of the world.”

Technical issues NKN based its technology and learning infrastructure on the learning management system supplied by the American Saba learning platform. It was assumed to function as a seamless learning network, to function for a whole nation with a large number of course/content providers using different kinds of institution-specific-technologies. Saba should configure its system structure to be flexible enough to constitute a nationwide learning network to effectively address any training level, to be fast enough to deliver timely training solutions, and to be robust enough to integrate multidisciplinary learning applications for every industry in Norway (from www.saba.com here from www.kikm.org/portal/egov.htm). According to Saba the software was ideal for developing comprehensive Human Capital Management solutions. It included, in principle, solutions for knowledge management, learning management and content management. NKN offered services based on the system for planning, organising and documentation of training as an ASP solution for SMEs. Further, the system was, of course, intended to be used as a possible learning platform for courses delivered by the cooperating content or course providers. In addition, NKN also from the start offered support services concerning choice of technology for learning and also services on the adaptation of existing internal systems in companies and on development of internal training programmes and integration with the NKN technology. Although NKN emphasised its dedication to e-learning, many of the courses and training programmes marketed through the portal were face-to-face training – and also printed materials. It was also the total situation from the start that the majority of suppliers of Internet based training programmes through NKN were not able to distribute their courses through the Saba LMS. NKN was from the start attentive to problems and challenges concerning e-learning standards, but seems to have underestimated the challenges connected with different standards and system solutions and the problems concerning distribution of existing Internet based courses through NKN’s Saba platform. This is why the NKN Saba system for most course providers never worked as a learning management system. For many of the courses, both from the start and later on, NKN mainly functioned as a web based catalogue of courses from different institutions.


Courses and services The intention was that NKN should establish itself as the centre of a national network for life long and work related learning with all types of courses at all levels from all types of educational providers. Although the profile was on e-learning, a belief in the cost-effectiveness of e-learning and that the market was ready for Internet based learning, especially at the workplace, the NKN catalogue included all kinds of teaching-learning forms. The open course catalogue, which was presented at the time when NKN officially opened, included 10 (only private) institutions representing distance education institutions, IT course providers, study organisations, multi-media and e-learning companies, publishers and employers’ organisations. The courses were mainly IT courses (including IT tests), some general secondary school subjects, and some vocational training courses. Learning forms were distance education (including correspondence education and Internet based learning), CD-ROM based e-learning and books. The courses could only be ordered via NKN, but not studied on the NKN Internet platform. Later on NKN marketed its cooperation with a large number of partners including public colleges and universities, among others the Universities of Oslo and Bergen. The University of Oslo announced in its annual report for 2000, that it was the first of the Norwegian universities to have signed an agreement with NKN (UiO 2001). NKN also signed agreements of cooperation with publishing companies, e-learning developers and course providers abroad. In addition to agreements with educational institutions, NKN offered courses in cooperation with its owner organisations, e.g. such as an Internet based course in ‘inclusive working life’ developed by the Federation of Process Industries and Statoil, and basic training for the Logistics and Freight Association – both examples developed with support from the competence development program. The NKN courses were organised in an internal comprehensive total course catalogue, in an open access catalogue on the web pages, and as specific catalogues for paying subscribers of the competence network, e.g. specific company course catalogues. In addition to the courses, NKN offered solutions for knowledge management, such as constructing competence profiles for individuals and organisations/companies, storing and updating of individual CVs, analysis of competence needs etc. Thus, besides the training courses NKN marketed its products and services as:

• designing and operating internal training systems in companies, public enterprises and organisations

• outsourcing of internal training • registration of employees’ competence • training based on work processes (training in work) • all forms of traditional training • development of tailor made e-learning • CLMS systems • support and guidance on training technology


Management, strategies and attitudes NKN was governed by a board representing the owner organisations. The main owners were, as mentioned above, the Confederation of Norwegian Enterprise (NHO) and the workers’ association, the Norwegian Federation of Trade Unions (LO), and after about one year of operation also Telenor. In addition, many of the nationwide sectoral federations of NHO, national unions affiliated with LO, and also labour organizations not affiliated with LO participated as minor share owners. From the very beginning NKN built up a competent staff recruited partly from owner organisations and institutions in the field of distance education and e-learning. However, there is reason to believe that in total it was staffed by personnel with more organisational and theoretical competence than real hard business experience and practical e-learning experience to build up a commercial profit making e-learning enterprise in short time according to the vision of the company. NKN aimed at becoming the main hub for distance education and e-learning provision, including printed and electronic courseware and other types of educational provision, for work related learning in Norway based on its Saba technology, partnership with Norwegian and foreign course providers and its close relationship with the labour market, employers’ and employees’ organisations. In the first phase NKN courses and services were open for the labour market only for a certain access fee. However, in May 2001, it was announced that the NKN course catalogue was opened for individuals to access free of charge. A main challenge for NKN, as it was not an educational institution, was to sign partnership with course and content providers, in particular higher education colleges and universities, distance education providers, private schools, e-learning companies, study organisations and publishers. According to published information from NKN, agreements were signed with around 50 course and content providers. Backed by its owners, NKN was assumed to have the best contacts and relationship with the labour market, i.e. the main market for its services. In this connection it was assumed that NKN should be the contact point for the users concerning course enrolments, registration of personal information and invoicing. There is no doubt that the NKN services as an intermediate between the course providers and customers did result in some bureaucratic and complicated extra work for the course providers, that necessarily led to less cost-effectiveness for the providers. In addition, NKN charged a broker commission on sales that was not unsubstantial. It should be kept in mind that course prices for most providers in Norway do not give large earnings, if profit at all. Another problem, as seen from the course provider’s perspective, was that direct contact between the provider and the customer, i.e. the user of learning products, in many cases is necessary for adapting all aspects of teaching and learning to the needs of participants. Perhaps, specifically in education, an intermediary broker makes administration and teaching processes more complicated, more expensive and most probably of less quality. From the course providers’ side it can also be noted that for course providers with a history of reasonable success in course delivery to enterprises and public services, the organisation,


including sales and marketing activities, would have been built up for handling direct communication with enterprises. In such cases NKN could represent an obstacle rather than a supporting mechanism for contact with potential customers. For course providers with less experience in delivering training to the work force, the establishment of NKN was not enough to change priorities from their traditional main activities to attention towards workplace training needs. It should neither be underestimated that in many respects NKN’s cooperating course providers looked at NKN as a possible threat to their business. The interest for participating was for some providers probably seen more as an insurance against being left outside, than as a belief in its value as a tool for their own marketing and teaching activities. Seen from the potential customers’ side there is no doubt that both employer and employee organisations looked at competence development as an important area for cooperation, and that competence development was necessary for development and competitive power of Norwegian business and industry as stated in the goals of the competence reform (KUF 1998). However, in real life there is a long way from the goals of the social parties to the practical decisions taken by an individual employer or business, large or small, and not least the learner, when deciding to buy or enrol in a course. There is also a long distance between the assumed objective competence needs in the workforce and an employer’s willingness to pay for courses (course fees, work hours and possible leave of absence with pay). As did the competence reform, the NKN probably overestimated the market for its possible services and willingness among workers to engage in learning. Specifically, successful e-learning requires that the participant is willing to spend time and effort on active engagement in the learning process. NKN was established during the time of IT and e-learning hype, and both the possibilities in e-learning and the readiness for e-learning in business and industry were probably highly overestimated.

Economy NKN was established as a limited company first owned by the Confederation of Norwegian Enterprise (NHO) and the workers’ association, the Norwegian Federation of Trade Unions (LO). Also a number of the member organisations of NHO and LO contributed with share capital. The investments from the owner organisations made it possible to build up a comprehensive staff from the establishment. It was the intention that NKN should offer courses and services based on commercial principles of selling its services with profit. As NKN was not an educational institution with its own courses, it was dependent on signing agreements with course and content providers. NKN viewed itself as a broker between the course providers and the customers (individuals and organisations/companies). For this service NKN should receive a certain percentage of the course fees. As mentioned, NKN did not manage to sell services and courses to cover its costs, and the share capital was spent in a short time frame.


Conclusions In the following some characteristics of the Norwegian Competence Network (NKN) are related to the success factors for large scale Internet based e-learning to possibly detect some of the main reasons for its discontinuation.

Historical context 1. Long history or tradition in dealing with e-learning, online learning or distance education: NKN was a completely new enterprise with no history, tradition or experience in the field. The establishment was based on future prospects resulting from the Competence Reform and was a direct part of wage agreements between the social partners and the government. 2. High competence or tradition in e-learning, online learning or distance education: NKN, its owners and staff had a rather limited experience in online education. The initiative came from organisations with main functions far from administering, selling and organising e-learning services. NKN engaged competent staff to perform the necessary functions. However, most of the staff did not have direct practical experience in running an e-learning business. 3. Evolutionary (step-by-step) development (scalability): NKN was not a result of an existing organisation ready for transferring into an e-learning provider. Although, there had been some positive trials of applying e-learning for competence development – the testing of e-learning programs in some companies – building up a large scale operation from specific funded projects seems to be a lot more complicated and vulnerable process. 4. Continuing research and evaluation related to e-learning and online education: In spite of the foregoing trials, NKN as an organisation had not any activities related to research on e-learning.

Technical issues 5. High competence in information and communication technology (ICT): It can hardly be said that NKN was an institution characterised by specifically high competence in ICT. The technology was based on Saba software developed and supported from an American firm. 6. Based on standard and widely-used technologies; widely-used technologies enables students to apply the software and hardware they have at their disposal with little need to buy and install additional equipment: As NKN offers were based on courses and contents delivered from a large number of providers with different types of technology, forms of education (both organisation and pedagogy) it is probable that standardisation of specifications on the receiving end must at least have been difficult – if not impossible. 7. Well integrated ICT systems that support online education: Most probably the Saba software represented well integrated and state of the art technology for e-learning at the time. However, there is no doubt that standardisation issues concerning


integration and the possibility of achieve satisfactory, or at best seamless, interfaces with systems used by course providers were not solved and led to more difficulties than expected. 8. Effective administrative systems: There is all reason to believe that the Saba systems were effective for its purpose. On the other hand the success of NKN would also be dependent on student and course administrative systems of course providers. The efficiency of these systems could hardly be followed up by NKN, and lack of integration would reduce efficiency.

Course issues 9. Wide range of subjects and levels: Partnerships with a large number of course and content providers able to deliver ‘all’ types of courses and training programmes, was a basic strategy in the establishment of NKN. The course catalogue contained a large number of courses. These represented very different kinds from books and CD-ROMs to correspondence education and Internet based distance education as well as ordinary classroom education and blended learning. 10. Wise choice of topics, courses, and programmes that are ‘onlineable’: Although NKN was profiled as “the world’s largest Internet school … with the aim of giving everybody in the whole country opportunity for further- and continuing education at the workplace or at home via the Internet” (NKN 2000a), the courses included many offers that in practice were not offered on the Internet. 11. Flexible student start-up and progression: The flexibility of the courses offered varied a lot. Some were based on individual learning, flexibility and free progression, others were not. 12. Students' time flexibility leads to asynchronous communication and little focus on synchronous communication technologies: NKN did not seem to have any clear policy on methodological or organisational issues related to synchronous or asynchronous communication or media and communication technologies. The courses NKN offered differed a lot also in this respect.

Management, strategies and attitudes 13. Support from top management: NKN had full support from the top management of owner organisations, the board and the top management of NKN itself – as the development of e-learning provision was the basis for establishment and the goal of the company. However, concerning the main owners there is reason to believe that the focus of employers’ and employees’ organisations is on other questions and challenges than running a commercial e-learning operation. 14. Enthusiastic employees who believe in online education (little resistance): There is also all reason to believe that the staff of the whole organisation was enthusiastic in the endeavour to build up a highly profiled e-learning operation. They had all been engaged just for this purpose. 15. Strategies that support online education and employees that are loyal to the strategy: The strategy was built on marketing and organising education based on Internet and e-learning software. However, it can be discussed whether the strategy of offering the large


variety and types of courses, not all e-learning according to accepted definitions, was the best strategy for developing “the world’s largest Internet school”. 16. Focus (strategy, control, and management) on quality: All available information indicates that the NKN had great attention towards quality management, quality assurance and quality control. It can be claimed that quality control of e-learning provision to the labour market and the public was one main function of acting as an intermediate between providers and customers. One focus of NKN was “… to offer updated and quality assured training and education accessible on the Internet through the brand name The Competence Network” (NKN 2000b). 17. Effective administrative routines: Seen from the outside it can be claimed that the totality of routines were not efficient. Delivering courses through NKN involved extra work for course providers with their own technology and administrative routines for delivering e-learning. The cooperation established by the agreements between NKN and course providers involved very elaborate routines on who is doing what, communication between provider and NKN and communication and payment structures when training programmes involve provider, NKN, possibly employer and trade union and groups or individuals of learning. Also systems concerning payment, invoicing and reporting became bureaucratic and costly for the provider. 18. Some sort of industrialization (division of labour, systemization, automation, rationalization, work flow management): This issue does not apply directly to NKN as an intermediate between course provider and customer/e-learner. As the courses differed the degree of industrialization of teaching would differ. However, again seen from the provider side the NKN part did not increase cost-efficiency of course delivery. 19. Focus on predictable and manageable teacher workload: Not relevant for courses delivered by partners. 20. Collaboration with other educational institutions: Collaboration with other institutions was the basis and part of the main strategy of NKN. Already from the start, NKN established partnerships with 30 to 40 course and/or content providers. However, it is not certain how enthusiastic the different institutions actually were, and to which extent they really had a lot of training programmes that fitted into NKN’s strategy. 21. High credibility (formal and informal) with the government and public administration: There is all reason to believe that NKN had the full support of the government including ministries of education and trade and commerce. As NKN also was established by the social partners in connection with emphasis on including education, training and competence development as part of the tariff agreements, the support from leading forces of the Norwegian society should be unquestionable.

Economy issues 22. Cost-effective courses (much learning for the money): It was the ambition of the owners that NKN should provide cost-effective competence development for the Norwegian workforce – as illustrated by the speech of Finn Bergesen,


chief executive of NHO at the opening ceremony,”… NKN is cost effective, as people learn more per krone, and it will help all enterprises keep their competitive edge”. The fact is that it was not cost-effective and spent much more money than it earned. The question is whether it had potential to become cost-effective with the strategy that was chosen. From the viewpoint of providers of Internet based courses, it is questionable if it could become cost-effective. 23. Stable and predictable sources of income from operation of online education: NKN never in its life time managed to get predictable or stable income. Course sale is a long process. Support from government policies and the organisations of working life has probably little influence on decisions on training taken by individual enterprises and very little influence on the individual learner’s decision to enrol for a training course. It is probably a fact that in establishing NKN the owners largely overestimated readiness for applying e-learning in the market, Norwegian business and industry. 24. Pressure on the necessity to change to stay in business and flexibility to adapt to the changing market: This factor relates to an educational institution’s motivation to change dependent on whether income is based on fixed budgets or income from course fees. NKN was established to supply learning over the Internet and not as a response within an organisation to needs for change. 25. Flexible employment and use of part time teaching staff to adapt to changes in markets: This factor does not directly relate to NKN, as NKN based its course provision on cooperation with other parties to provide content and courses. But it seems clear that NKN from the start had a staff that was too expensive to be covered by income from courses and services.

References Brækken, G. (1997): Tiden er inne for et åpent universitet. Kronikk i Aftenposten 12.6.1997. Døving, E., Ure, O. B., Tobiassen, A. & Hertzberg, D. (2006): Kompetanseutviklingsprogrammet 2000-2006. Sluttevaluering. SFN rapport 32/2006. Fafo-rapport 551. www.snf.no/intranettarkiv/internettfiler/Rapport/06/R32_06/R32_06.pdf Retrieved 16.5.2007. Fossen, E. (2000): Kompetansereformen får en norsk portal å lære gjennom. www.digi.no/php/art.php?id=56160 Digi.no. Retrieved 16.5.2007. KUF (1997): NOU:1997:25. Ny kompetanse. Grunnlaget for en helhetlig etter- og videreutdanningspolitikk. Oslo. Statens forvaltningstjeneste. KUF (1998): St. meld. 42 (1997-98) Kompetansereformen. Oslo. Statens forvaltningstjeneste. Larsen, R. (2004): Utdannings- og forskningsdepartementets (UFD) forventninger til det nye Norgesuniversitetet. Avdelingsdirektør Rolf Larsens innlegg på første styremøte i det nye Norgesuniversitetet, Losby gods, 24.02.04


Norgesuniversitetet (2002): The Norwegian University Network for Life Long Learning. Werb site in English. http://web.archive.org/web/20011205122413/norgesuniversitetet.no/n.nsf/alt/54CDHM Retrieved 23.5.2007. NOU (2002): Næringslivets Kompetansenett gis bort. News from the Norwegian Opening Universities, 21.12.2002. http://norgesuniversitetet.no/nyheter/5H32QL Retrieved 16.5.2007. NOU (2007): Kompetanseutviklingsprogrammet avsluttet. http://norgesuniversitetet.no/artikler/2007/kup-avslutning Retrieved 16.5.2007. NKN (2000a): LO og NHO med verdens største nettskole. NKN web pages. 2000. NKN (2000b): Standard agreement between NKN and course providers. Onarheim, L. F. (2000): Speech at the Opening Ceremony of NKN. Originally published at NKN’s web pages. Paulsen, M. F. (2003): Online Education. Learning Management Systems. Global E-Learning in a Scandinavian Perspective. Bekkestua. NKI-Forlaget. Rock, S. (2000): The Great Norwegian Experiment. Learning & Performance. Cover Story, pp. 4-7. www.noc.uth.gr/edu-sw/Paroysiaseis/Syllogiki_ekdilwsi_SEPE- yndesmoy_Epixeirisewn_Plirophorikis_kai_Epikoinwniwn_Elladas/23-ATC-Athens_Technology_Center/p04-7_Cover_story.pdf Retrieved 16.5.2007. UiO (2001): Årsberetning UiO 2000. Oslo. Universitetet i Oslo. www.uio.no/om_uio/arsberetning/2000/studieadministrasjon.html Retrieved 16.5.2007. VOX (2005): Kompetanseutviklingsprogrammet (KUP). www.vox.no/templates/CommonPage.aspx?id=387 Retrieved 16.5.2007.


The Scottish Interactive University The Interactive University is a strange name for a new e-University. It lacks both historical and educational strengths. It lacks educational strengths because every contemporary foundation would surely claim that it was ‘interactive’. It lacks historical value because every university in the past, no matter how conventional, would still claim that it was interactive. Figure 6. The Interactive University homepage

Retrieved 08.09.07 from http://web.archive.org/web/20061111195257/http://www.interactiveuniversity.net/ The Interactive University was started in Scotland on 15 October 2002 and was closed four years later on 17 April 2007. The following documentation has been used in this account of the failure of the Scottish interactive University:


• The Scotsman (2007) Report that the Interactive University is to shut at the end of

May 2007. http://fm.schmoler.net/2007/04/the_scotsman_re.html.

• PR Newswire Europe (2002) New Scottish ‘university’ to promote global learning. News Release 15 October 2002. www.prnewswire.co.uk/cgi/news/release?id=92446.

• Bristow, S. F. (2004) Competitor Analysis: Interactive University (edited by Bacsich,

P) The UKeU Reports. York: The Higher Education Academy.

• Microsoft Window Server System (2004) Interactive University. Online Educator Expands Teaching Solutions. Customer Solution Case Study. Seattle: Microsoft.

Historical context On 15 October 2002 PR Newswire carried this press release on behalf of Heriot-Watt University:

A new 'university', based on the latest technology, teaching and learning methods, is set to grow Scotland's global reputation as a centre of academic excellence. The Interactive University (IU) is an independent organisation set up with key contributions from Scottish Enterprise and Heriot Watt University. It will be a resource open to all Scottish universities and higher educational institutions to help market and deliver degrees around the world. Courses in a range of subjects will be delivered through supported e-learning, a new approach to teaching and learning off-campus. It involves a mix of e-learning and locally-based tutoring with partner universities abroad. Heriot Watt has worked with SE (the Scottish Enterprise development agency of the Government of Scotland) to establish the Interactive University, and brings its existing expertise in exporting its knowledge abroad. The University is currently running supported e-learning courses in a number of subject areas in 10 countries, is a leading academic institution in exploiting 'e' technology using this new format. The Scottish government Enterprise Network is investing more than £2.3 million to get the IU up and running as a key part of its e-business strategy for Scotland. ‘This new resource will play a major part in using e-learning expertise to build Scotland's standing as a world class seat of learning. We are constantly being told that we are living in a global market and this applies equally to knowledge. E-learning technology is the key to exporting our knowledge building an unrivalled educational brand for Scotland around the globe, reaching more students than was ever possible in the past’ was given as the justification by Scottish Enterprise.

Bacsich (2004) comments: ‘It is important to note that the Interactive University was born as Scottish Knowledge (a previous Scottish e-University) collapsed – at the time, some described this (politely) as a merger between the two, while others reported that Heriot-Watt had absorbed Scottish Knowledge and rebranded it as the IU. At the time, Scottish Knowledge sources blamed the company’s closure on rivalry from the very Scottish universities with which it had partnered, whose independent efforts (they claimed) had driven them out of the market.’


Like the United Kingdom eUniversity, the IU set out to be ‘an interactive bridge between universities and students across the globe who wish to study for an internationally-recognised qualification, without leaving their home country’. Its main target market was post-compulsory education in the developing world. There were, however, a number of differences between the projects:

• the IU was confined to Scottish institutions rather than attempting to cover the whole of the UK

• the IU adopted a distributed model of learning rather than relying exclusively on e-learning.

• the funding available to the IU was approximately 4% of that available to the UKeU • the IU in 2003 had many more students enrolled on its programmes than the UKeU.

IU courses were delivered both online and through local learning partners. The use of local learning partners was a major element in the pedagogic approach followed by the IU, which was said to focus on the 3Cs: content, context and community. ‘This is a student-centred approach that allows individuals to study at a time and a place that suits them. The learning is a mix of online, interactive study and traditional classroom teaching’. In 2003 one of the first contracts signed by the IU was with Nanyang Institute of Management, a leading provider of private education in Singapore . Over 1,500 new students were expected to enrol through the IU for the Stirling and Heriot-Watt programmes, generating an estimated £6 million over three years. In January 2004 the IU announced its first agreement with an African local partner, ZICAB (the Zambian Institute for Capacity Building ) designed to provide access to the Heriot-Watt Management programme and the Stirling MBA. Like Nanyang Institiute of Management, ZICAB is a privately owned company, specialising in professional training. The Interactive University’s emphasis on the face-to-face component of education was a primary differentiator between its efforts and those of Scottish Knowledge. This was stated explicitly upon the launch of IU, via the release of statements confirming that IU would “improve on Scottish Knowledge by working with local institutions so that students can use nearby facilities”; and that “people need teachers for a rich educational experience”. This difference and many others make it clear that the Interactive University has very little in common with what was once Scottish Knowledge. In 2004 IU had 50 employees, with offices in Edinburgh, Singapore and Dubai. Its headquarters at Edinburgh Park, Scotland’s largest business park, were sublet from Fujitsu; its Singapore office was within a recently-opened Scottish Development International (SDI) “incubator” for Scottish business in Asia. IU sought to establish a leading international education business; to be a Centre of Excellence for the Scottish Sector; and to offer development opportunities and services for Scottish universities. The Interactive University closed its doors at the end of April 2007. The joint venture among Scottish Enterprise, Heriot Watt University, and Robert Gordon University was intended to be a "one-stop-shop" for foreign students accessing courses from Scottish universities. However, the expected number of student registrations was not achieved.


The move to shut down came after the majority of Scottish universities failed to participate and a £1.5 million bid for emergency funds was turned down by Scottish Enterprise. It had been hoped the IU would bring in millions in revenue for Scottish universities, with the institutions using it as a means to offer supported learning to students at partner institutions in up to forty other countries. However, less than a quarter of the anticipated number of students was attracted to the venture.

Technical issues Microsoft Windows presents its cooperation with the IU thus: The Interactive University (IU), based in Edinburgh, Scotland, provides the first national education system that is conducted purely online, and is the world’s largest single online education program. The IU has experienced a 10,000 percent increase in enrollment in four years and anticipates continued growth to 500,000 students in two years. Its Java-based infrastructure can’t keep up. The IU is implementing a solution based on the Microsoft .NET Framework and Microsoft Windows Server System. An IU representative stated: We used whatever the best technologies were, at the time, for learning and virtual environments, contact management, and publishing. However, we decided we had to make that mix of technologies scalable, which is why we looked at J2EE and the Microsoft .NET Framework, and ultimately decided to go with the .NET Framework for a variety of new administrative developments.” Besides content management, the MLE included a student records system and a Virtual Learning Environment (VLE) through which students accessed online course material. In order to provide a complete and rich learning experience, the MLE also integrated with a range of e-commerce and customer relationship management applications and courseware, financial solutions, and general messaging and office support applications.

Courses The Interactive University offered two distinct online products, with different target markets. The first was SCHOLAR, which was launched by Heriot-Watt in 2000, 2 years before the formation of IU. Scottish Knowledge initially marketed SCHOLAR internationally; the Interactive University then managed all SCHOLAR publication and distribution on behalf of Heriot-Watt University. SCHOLAR was purportedly the largest online learning programme in the world, with over 45,000 registered students, 3,900 tutors and more than 10,000 hours of online content (across 23 courses). SCHOLAR was based on a concept of “supported e-learning, designed to strengthen links between the pupil and teacher”. SCHOLAR provides online support for students taking Scottish Advanced Higher, Higher, Higher National Certificate and Heriot-Watt first level courses. All local Scottish authorities were members, and 95% of Scottish schools used SCHOLAR materials. Learning materials were developed in Mathematics, Physics, Chemistry, Biology, Computing and French, with


more courses (and foreign languages in particular) in development. SCHOLAR interactive online materials were meant to complement printed texts. Secondly, the Interactive University offered several other courses, from foundation to MBA level. Most were developed by Heriot-Watt University, which acted as IU’s “parent company” in most respects; IU absorbed staff from around the university who were developing and managing the courses prior to IU’s involvement. Courses available were from Heriot-Watt and Stirling Universities, and comprised one Foundation course, six Bachelors, one Masters, and one MBA as follows: The Heriot-Watt Business Foundation course, which provided an entry route to the Heriot-Watt Management Programme. The Heriot-Watt Management Programme, which had roughly 1,000 students in more than 35 countries. Students selected from 5 degree pathways: • Bachelor of Business Administration; • Bachelor of Arts in Business and Accounting; • Bachelor of Arts in Business and Finance; • Bachelor of Arts in Financial Management and Accounting; and • Bachelor of Arts in Management. The Heriot-Watt BSc in Information Technology. The Heriot-Watt MSc in Information Technology. The University of Stirling MBA in Entrepreneurship. The official division of labour between the Interactive University and its overseas partners was described in various places thus:

IU provides course materials while the overseas university provides tutoring, IT facilities and face-to-face recruitment. IU’s web site advertised that IU would convert Scottish university courses into online and print formats, then deliver them globally. In fact, it seems that most, if not all, courses available were completed prior to the birth of the Interactive University. Further development of course materials would presumably be undertaken by the same Heriot-Watt teams who had worked on the SCHOLAR materials (some of whom were then part of the IU).

Management, strategy and attitudes Although all Scottish universities were said to be members of the Interactive University, there was no evidence of new course development with the majority of the partners. There was no evidence that IU participated in any commercial partnerships, nor that it had maintained any of the early relationships established by Scottish Knowledge (e.g. with News International or Shell). IU did not award degrees directly, but rather relied on its Scottish partner institutions.


IU’s success relied primarily on its SCHOLAR courses, offered by every secondary school in Scotland. SCHOLAR figures aside, it is quite difficult to pinpoint the precise number of HE-level students studying with the Interactive University. IU’s only explicit acknowledgement of non-SCHOLAR programme student numbers was in its Heriot-Watt Management Programme brochure, which referred to “around 1,000 students in more than 35 countries”. Thus it seems clear that most IU students were in fact SCHOLAR students (Bacsish 2004). Other IU partnerships were reported by The Scotsman in July 2003 as follows: Scotland’s Interactive University (IU), one of the largest e-learning facilities in the world, has continued its expansion by signing a major deal in China. The contract to supply business courses to the Long Way College in Harbin and three similar deals, agreed in principle, with universities in Beijing, Nanjing and Shanghai, were to be worth more than £5 million a year to the Edinburgh-based company. Interactive University (IU), the Edinburgh-based e-learning firm, has expanded into Iran after signing a contract with an education centre in Tehran to supply business courses. It is expected the programme, written by Heriot-Watt University and developed by IU, will generate revenues of up to £400,000 within three years. The press has also made reference to partnerships with the Syrian Virtual University and Hong Kong Polytechnic University. The IU made it known that it had partners in 40 countries, but the partner list was not readily available.

Economy Heriot Watt described Interactive University as an independent, not-for-profit company. UK£2.3 million of new funding was made available from Scottish Enterprise, the country's economic development agency, and a dozen local companies. Heriot Watt predicted an operating income from Interactive University of UK£5m in student fees by 2004/2005, coming from an estimated 3000 students. The new company employed about 50 staff. Heriot Watt itself had an established distance learning operation, claiming some 10,000 students in 25 countries worldwide. The Interactive University model “involves a mix of e-learning and locally-based tutoring with partner universities abroad”. This is something of a departure from Heriot Watt's more minimal approach to support for its distance learning students. The Interactive University’s immediate success after only a year in existence seemed heavily reliant on Heriot-Watt’s earlier prowess in the distance learning market. IU moved its headquarters to a prestigious Edinburgh business park, but it was initially housed at Heriot-Watt itself. The SCHOLAR programme was well underway before IU’s creation. Launched in 2000, it received £700,000 from the Scottish Executive in 2001


Support from Scottish Enterprise, the Scottish government funding agency, was critical to IU’s entrance into the e-learning market. Scottish Enterprise contributed £2.3 million to the IU’s creation, and considered IU to be its “first Global Companies Development Programme higher education pilot”. The only non-Heriot-Watt degree offered by IU, the MBA from Stirling University, was inherited directly from Scottish Knowledge. This demonstrates, says Bacsish (2004) one way in which IU has been able to own Scottish Knowledge’s successes while disowning its failures. IU sought out partners willing to provide face-to-face tutorial support from the start. In a typical IU arrangement, IU provided course materials while the overseas university provided tutoring, IT facilities and face-to-face recruitment. The IU business model enabled up to 50% of the revenue generated by student fees to remain with the local learning partner.

Conclusion. Why did it fail? The official reasons for the failure of the Interactive University are given as:

• the expected number of student registrations was not achieved. • the majority of Scottish universities failed to get on board • a £1.5 million bid for emergency funds was turned down by Scottish Enterprise. • It had been hoped the IU would bring in millions in revenue for Scottish universities,

with the institutions using it as a means to offer supported learning to students at partner institutions in up to forty other countries, but this did not eventuate.

To these reasons may be added:

• the Interactive University was a strange name for a new e-University • there was an arrogant assumption that Scottish degrees would prove attractive to

students overseas and that students in China, Iran, Syria and Hong Kong would enrol in them in large numbers

• the claim that ‘500.000 students would enrol in the next 2 years’ was inane. It shows a total lack of hard-nosed market research, which is essential for any new e-university, and that the university lacked analysis of the real world. The IU did not have the structure nor the technology to process half a million students.

• the IU claimed to be a university. Yet, its only successful programme was a high-school programme called SCHOLAR. This was inherited from Heriot-Watt University and developed with a grant from the Scottish Executive. Bacsish (2004) seems to suggest that the enrolment of the IU was 46.000, comprising 45.000 from the SCHOLAR programme and 1.000 from other programmes.

• Heriot-Watt University, the main promoter of the IU, was well known for having a successful overseas distance education programme, especially its overseas MBA, which was considered one of the best available. Yet the IU did not follow the Heriot-Watt model.


References Scottish Funding Council Draft Strategic Plan (2002) Reply on behalf of Interactive University (SFC/02/2006C) The Scotsman (2007) Report that the Interactive University is to shut at the end of May 2007. http://fm.schmoler.net/2007/04/the_scotsman_re.html. PR Newswire Europe (2002) New Scottish ‘university’ to promote global learning. News Release 15 October 2002. www.prnewswire.co.uk/cgi/news/release?id=92446. Bristow, S. F. (2004) Competitor Analysis: Interactive University (edited by Bacsich, P) The UKeU Reports. York: The Higher Education Academy. Microsoft Window Server System (2004) Interactive University. Online Educator Expands Teaching Solutions. Customer Solution Case Study. Seattle: Microsoft. Checkpoint-elearning (2007) Scotland’s Interactive University closed. www.checkpoint-elearning.com/article/4026.html


Scottish Knowledge Scottish Knowledge was, in many ways, a predecessor of the United Kingdom e-University (founded in the year 2000). Scottish Knowledge was founded on 1 August 1997 and closed in the year 2002. It was succeeded by the Scottish Interactive University, which was founded by Heriot-Watt University and Scottish Enterprise – the Scottish economic development agency funded by the Government of Scotland – and started in March 2003 which was, in its turn, closed on 17 April 2007 after four years in existence. Figure 7. The Scottish Knowledge homepage

Retrieved 08.09.07 from http://web.archive.org/web/20020607111116/www.scottishknowledge.com/home.cfm


Historical context Scottish Knowledge was a short-lived partnership between Scotland’s 21 higher education colleges and universities which offered online courses and distance education courses to students around the world. It had offices in the United Arab Emirates, Malaysia, the USA and in Edinburgh, Scotland. The company, Scottish Knowledge PLC, began operating on 1 August 1997, following a successful capital raising programme, which resulted in all the Scottish universities and their associated colleges contributing almost £300.000 to the venture. An additional £1.950.000 was raised from industry, government and private investors. In September 1997 the Minister for Higher Education and Research in the United Arab Emirates, awarded Scottish Knowledge the contract to plan and develop the first phase of the Abu Dhabi International Petroleum Institute. In February 1998 it launched its Distance Learning Investment Program and committed over £3 million to the development of over 30 postgraduate, undergraduate and vocational courses as online, web based programmes. In June 2000 it was awarded a further contract to manage the $50 million Abu Dhabi Petroleum Institute, which involved the delivery of oil and gas courses from 8 Scottish universities and colleges. In 2000 it received a contract to deliver training to 100.000 Shell employees worldwide, through the Shell Global University. By 2000 it had opened 3 International Offices, in Malaysia, North America and the Middle East, to support its increasing business activities in these regions to promote Scottish education and training into sectors such as medical and healthcare, engineering and IT. In 2000 it entered a joint venture with Malaysia's 11 public universities to provide online course to 150,000 graduates. In 2001 it achieved accreditation of the world’s first foreign nursing course, approved for delivery into the USA to 2.5 million nurses. In 2002, in its fifth year of operation, the Scottish Knowledge University was closed and absorbed into a new e-learning venture launched by Heriot-Watt University and the Scottish government development agency Scottish Enterprise, called the Interactive University.

Online courses Scottish Knowledge focused its courseware in programmes which met the markets it had identified in its key sectors:

• Information Technology • Business Management • Oil and Gas


• Telecommunications • Medical and Health • Law.

Its target markets were primarily in North America, Asia and the Middle East. It sought to articulate programmes from the further education to the higher education sector that could be delivered using a flexible delivery format (modular, on the job etc). The programmes ranged from medical and health services, to petroleum engineering, business and finance and information technology.

Technical issues In Scottish Knowledge particular emphasis was placed upon the delivery of online programs using the latest web technologies and the Internet. Students without access to this technology needed to be provided with alternative access opportunities. E-learning was used widely in the major projects, which were won: a contract to provide academic courses for the SHELL Global University to deliver training to 100,000 employees worldwide, a joint venture with Malaysia's 11 public universities to provide online courses to 150,000 graduates and accreditation of the worlds first foreign nursing course, approved for delivery into the USA to 2.5 million nurses. The challenge for Scottish Knowledge and its partner institutions in the FE and HE sector was to find a way to continue to develop and deliver education and training in an increasingly competitive global environment. A high priority was also to develop programmes which articulated between the vocational and higher education sectors to provide students with a flexible study framework (modular, on the job, at home) as well as access to international accreditation from UK universities and colleges and membership to institutes and bodies.

Management, strategy and attitudes The goals of Scottish Knowledge were:

• Investment in high quality Higher Education courses to transform them into online (Distance Learning) materials.

• The global marketing and distribution of these Scottish higher education courses. The priorities of Scottish Knowledge were to:

• Identify niche market opportunities for distance education and training in the target markets of North America, Asia and the Middle East.

• Within the universities and further education colleges in Scotland to identify areas of academic excellence to meet these demands, and market these into the regional sectors.


Scottish Knowledge had development partnership agreements in all of its major markets to invest in a number of long term strategic programs to strongly position the company and the Scottish universities as global players in distance learning delivery. The management structure involved three International Offices, in Malaysia, North America and the Middle East, to support the increasing business activities in these regions and to promote Scottish education and training. The challenge for Scottish Knowledge and its partner institutions in the FE and HE sector was to find a way to continue to develop and deliver education and training in an increasingly competitive global environment. Particular emphasis was placed upon the delivery of online programs using the latest web technologies and the Internet. The project involved all 21 Scottish universities and was based on pride in Scottish higher education courses.

Economic aspects At the beginning 13 Scottish universities and their associated colleges contributed almost £ 300,000 in share capital. An additional £ 1.95 million was raised from industry, government and private investors providing the company with an initial capital base of £2.25 million. A second round of funding of £3.5 million was raised in March 2000. This increased the market capitalisation of Scottish Knowledge from £2.25 million to £14.5 million pounds in a period of just over 2 years. Company turnover increased from zero in late 1997 to just under £500,000 in June 2000. Over £3 million was committed to the development of over 30 postgraduate, undergraduate and vocational courses as online, web based programmes.

Conclusion. Why did it fail? In the United Kingdom e-University Reports (No 6 Competitor Analysis: Interactive University) Bacsish (2005) writes:

In 2000 the Scots already had an e-University, Scottish Knowledge, which was, in fact, set up in August 1997. In late 2001 the UKeU was considering the purchase of Scottish Knowledge for £12 million but in the end decided not to go ahead. Scottish Knowledge continued to operate in some form until late 2002, when it closed. Yet in October 2002, before Scottish Knowledge closed, Heriot-Watt University with help from Scottish Enterprise had jointly set up the Scottish Interactive University.

The following reasons can be given for the failure of Scottish Knowledge:


• 21 universities and colleges was a clumsy management system for an e-learning university

• there was a certain arrogance in assuming that Scottish degrees would be acceptable and receive accreditation in the United States, Asia and the Middle East

• the student enrolment that Scottish Knowledge dreamed of was not available on the ground in the United States, Asia and the Middle East

• Scottish Knowledge used up its government funding and no more was made available • Before it closed the Scottish Government had already decided to found its own e-

University through Heriot-Watt University and its own funding agency, Scottish Enterprise.

Reference Bristow, S.F. (2005) United Kingdom e-University Reports (No 6 Competitor Analysis: Interactive University) edited by Bacsish, P. York: The Higher Education Academy.


SWI freeweb Date: 5 January 2007. Company: SWI Ltd. Place: Budapest, SWI offices Interviewee: Gábor Agárdi managing director E-learning activity: okta.to learning portal (translate: educator) Period of activity: 1999-2005 Figure 8. The Freeweb homepage

Retrieved 08.09.07 from www.freeweb.hu In the first decade of the second millennium a Hungarian educational site called okta.to (EDUCATOR) made visible progress towards online learning with many courses offered at a reasonable price. The site was owned by a free-web-service provider SWI and after a very


promising start-up, it closed down in 2005. At the time of operation it was Hungary’s largest publicly accessible online learning opportunity.

Contextual factors The managing director, a Teacher of Information Technology, had already written a book in 1996 for GDF and decided to teach it via internet by distance education. A German Investor (Knorr Capital) decided to invest in SWI and they made a common company. They needed a business plan only from SWI. (The investor has actually never invested the agreed money). This investment helped the company to work hard to develop an online learning business based upon the existing infrastructure they had. This infrastructure was quite substantial with UPS protected servers with practically endless storage capacity and thousand of clients who used free web. Free advertisement through free web banners was also given. The development and learning model was simple: The designer (managing director) wrote 2-3 pages long lessons, and he designed tutor marked assignments as well. The whole course was based upon simple, but transparent web pages and e-mail correspondence for feedback.

History SWI launched a free-web service in the early nineties. The offer was not very attractive to clients, and the company needed new service ideas. The company experienced dramatic undercapitalisation, so income needed to be generated in one way or another. SWI launched the e-learning service in 1999. In the first two months the number of subscribers went up to 60. It worked very well. The managing director decided to introduce other courses than his own. SWI used its own free web banner advertising potential to recruit course writers-tutors. They established a filtering system to find the appropriate course writers either in business terms or in terms of quality. There was no special training for writers, only the course content management system, the already available courses, and templates. SWI asked the applicant (designer) to write the course with the help of the SWI model (templates), upload it to the server, and later, when subscribers appeared to tutor it. SWI offered publicity, web hosting, IT and course management. Income was split. The model worked and the number of courses and subscribers increased rapidly. The service started to suffer from quality problems in the case of the most popular courses, users complained about their tutors not responding. It was a well known fact that tutors became overloaded with students, but they could not estimate the workload needed to tutor online students. The original model was based on the designer-tutor model, so every designer tutored his or her own course. The company was thinking of changing the model to give the tutoring to teachers who were not writing the material, but this idea did not reach the level of action. The company did not want to invest more energy in the business, so discontinuing seemed to be the easiest way to escape from the “trap”.


SWI decided to close down in 2004, but they finished all the courses and postponed the close-down to 2005.

Technical issues Preparing for the start-up, SWI designed and produced its own LMS in 2 months enabling multiuser-multitutor activity. (Users could subscribe to many courses). As it was ready, this system had to be filled up with courses and users. The programmers did not have any special training in e-learning. They programmed the specification of the managing director. The product had basic functions, but it functioned well for the purpose. The courses had linear design: learners could follow the tutorials lesson by lesson. There was no extra function of the LMS. It was a big challenge to keep the services alive. The director now thinks that courses (materials) should have been more interactive, instead of linear design. The technology should have been upgraded with test designer and test management tools as well.

Courses At the peak period they had 40-50 courses ranging from 0-12 000 Florints, the number of users reached 5000. They had users even from Canada and African countries. Most of the courses were IT courses from basic knowledge to programming languages. There were also arts, like philosophy and so on. As the course provider offered the e-learning hosting as a business, all teachers who had the feeling that their course could be of interest could design their own courses. Design and development time and energy was their own investment to later success.

Management, strategy and attitudes The strategy and attitude of this business was simple and avoided any academic theoretical requirement. The company wanted courses to be published and learners who pay for the courses. The company wanted income, and was ready to invest in IT infrastructure, time and energy. E-learning never became the main profile of the company. The company management however believed that learning is an activity worth supporting, so the low price was decided to offer easy access. It is visible now, when the managing director is still thinking of offering the archived content for free to customers in order to enrich the service portfolio of the company.


Economy The service was launched in 1999 with practically no previous investment (other than IT infrastructure, time and energy). The course price was 4000 Ft (16 Euros), which at that time was cheap. Face-to face courses ranged from 40 000-80 000 Ft for a 20-100 hours classic course (excluding trainings). SWI used its own free web banner advertising potential to recruit course writers-tutors. So marketing did not cost anything. It was clear that the amount of advertising was in linear relation with the learner numbers. SWI and the course designer contracted to split the income 50 %-50 %. This business activity still did not require hard investment other than time and programming. The company administrators could handle course management, payments, contracts, and all administration needed as extra duties. All went very well at that time. This activity financed basically the free-web profile which was down this period. Although from a business point of view, the education service of the company faced challenges. The company still regards this e-learning activity as good and a profitable business idea, which fulfilled the company’s requirements.

Other factors SWI is still guarding the materials, they have the record and contact with tutors, and still have the database of former users. SWI is not regarding the discontinuity as a failure, but a big success, since it was the only “mega” activity in Hungary during this period, and it generated substantial income which helped the company to still be in operation. SWI is still thinking of re-offering the distance learning service on a free access basis for their Free-web clients. SWI believes that a mature internet market will need quality web-storage/web-hosting, with extra services among which free learning opportunity could play an important role.

Conclusions Payment techniques were unresolved at that time, manual bank transfer with pre-payment had to be applied. This online activity was offered too early in terms of technology:

• No Hungarian standard LMS at that time • No internet payment attitude at that time • Educational market was immature.


The company could not perform better with the known difficulties:

• lack of investment • lack of energy (product management)

MD’s brief conclusion on the failure of American companies investment in Hungary in the nineties

1. Technology in Hungary was lagging behind.

2. The Hungarian attitude in Hungary did not favour this activity

3. The American business attitude did not work in Hungary

4. Payment was technically problematic in Hungary till recent years.


The United Kingdom e–University ‘We learn by our mistakes’ is an old adage in the English language. Unfortunately, there is little learning from mistakes in education. There is little scientific research on educational mistakes. Research in the area of educational mistakes is notoriously difficult. Documentation is hard to access. Key figures disappear or refuse to be interviewed. Access to vital sources is denied. Where government use of taxpayers’ money is involved the secrecy is even more pronounced. Figure 9. The UKeU homepage

Retrieved 02.09.07 from http://web.archive.org/web/20031230170822/http://www.ukeu.com/ Happily, the closure of the United Kingdom e-University (UKeU) is well documented. These sources will be used in this analysis:


• Bacsish, P. (2005) Lessons to be learned from the failure of the UK e-University.

Open and Distance Learning Association of Australia conference, Adelaide. Available at www.unisa.edu.au/odlaaconference/PDFs/32%20odlaa2005%20-%20bacsich.pdf

• Garrett, R. (2004) The real story behind the failure of the UK e-University. Educause

Quarterly, 27, 4. Available at www.educause.edu/apps/eq/eqm04/eqm0440.asp?bhcp=1

• Higher Education Funding Council for England (HEFEC) (2004) Business model for

the e-University. London: Higher Education Funding Council for England. Available at www.hefce.ac.uk/pubs/hefce/2000/00_44.htm

• United Kingdom Government, Select Committee for Education and Skills (2005)

United Kingdom e-University. London: House of Commons. Available at www.publications.parliament.uk/pa/cm200405/cmselect/cmeduski/205/20502.htm.

Bacsish writes as a former staff member of the UKeU. He also writes as a university academic who has carried out both research and publication on the successes and failures of e-learning at university level. His viewpoint throughout is the lessons that can be learned from the failure of the UKeU by the field of university level e-learning. He comments: ‘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’ Garrett writes as Deputy Director of the Observatory on Borderless Higher Education in London, England. His is a well balanced presentation of the causes of the failure of the UKeU which are clearly laid out in his article:

In February 2000, with much fanfare, the British government announced funding of £62 million ($113 million) for a national, commercial e-university called United Kingdom e-University (UKeU). The initiative was touted as an innovative response to the perceived opportunities and threats of online higher education—in the form of U.S. institutions such as the University of Phoenix Online and the University of Maryland University College, not to mention the many—at the time—dot-com start-ups such as NYU Online and Cardean University. Despite considerable resources and a lengthy development period given to UKeU, the government announced in February 2004 that the project had failed to meet recruiting targets, and it quickly became clear that the initiative would not survive. Recruitment and marketing have ceased, and negotiations are under way to transfer certain activities and assets to the U.K. higher education sector. In the wake of the announcement, much press coverage has accused the venture of wasting public funds and pursuing an unrealistic business model. Such criticism raises important questions: To what extent was UKeU fundamentally misconceived? Or was it simply saddled with impossible expectations?

The Business model for the eUniversity is published in the name of the United Kingdom Government’s Higher Education Funding Council for England (HEFCE). It is available today, unpassworded, on the World Wide Web.


This is a weak, surprisingly bland, document. It abounds in generalised statements, put forward without proof, like:

Recent reports have put the size of the global market for e-learning at several billion dollars, in part due to general economic growth in countries experiencing rapid development and modernisation, and in part due to changes in demographic patterns. But perhaps most significantly, it is due to the ever growing individual and corporate interest in continuous professional development (CPD) and in lifelong learning, the requirements for which are now quite different from those of a decade or so ago. (paragraph 4). The main aim given for the concept of the e-U is to provide the opportunity for the flagship provision of UK higher education excellence using digital channels, primarily abroad but also at home. The result should be an expansion of the UK’s overall share of the global overseas markets for higher education; an expansion which builds on, rather than substitutes for, current UK provision as far as possible. (paragraph 15). As the e-U concept is not an electronic version of a conventional university, the committee for academic quality would need to develop a quality assurance process for the learning modules based on a new paradigm. We would expect the main approach to be to quality assure the process used by suppliers themselves when developing the modules – for which the committee might define a quality management process. For example, the committee might require evidence of active contributions from subject, pedagogical and learning technology specialists. (paragraph 65).

The document is quite lacking in statistical precision. Vague references, seemingly not based on scientific research, are given about the University of Phoenix and Western Governors Union in paragraph 94. There is nothing that resembles the hard-nosed statistical analysis of Schulmeister’s (2006) study of e-learning in the United States:

82% of enrollments are for online courses at undergraduate level and only 18% for courses at graduate level, whereby the 2-year public colleges carry the main burden of the undergraduate courses:

Undergraduate Graduatepublic 2-year 1.435.000 - public 4-year 566.000 322.000 private 4-year 278.000 202.000

Table 1 - Courses taken according college type; NCES 2004

The differentiation between courses for undergraduates and courses for graduates still does not suffice to tell us what this distribution signifies. Therefore another argument has to be presented. It can be determined that most of these online courses are offered by 2-year colleges or community colleges where a course generally lasts two years and not by institutions that offer 4-year bachelor courses. This suggests that the bulk of the courses offered for undergraduates are mainly courses for Associate Degrees which is in fact the task of these colleges namely to award Associate Degrees and to act as a bridge to bachelor programs:

Number of Enrollments

Number of Institutions

Level of Participation

public 2-year 1.472.000 1.070 90 % public 4-year 945.000 620 89 % private 4-year [4] 589.000 1.800 40 %

Table 2 - Institutes with online enrollments; NCES 2004


Thus, more than half of all online students are attending 2-year colleges where they hope to get an Associate Degree. What importance can be really placed on this information and who makes up the rest of the students is interesting and requires further differentiation. Comparison shows that those studying for an Associates Degree make up the lions share in online education (50%) whereas those participating in Masters (21%) or PhD programs (16%) represent a smaller share. Bachelor programs, which spring to mind as the best candidates for online courses, represent only a very small share (8%).

Paragraph 52 of the UKeU Business Plan gives a vague concept of the teaching structure which seems to lack precise pedagogical research into either the pedagogy of distance education or the pedagogy of e-learning. The document is titled The Business Model for the eUniversity but it is surprisingly unbusinesslike. It does not contain precise financial figures or costs. This is a 50 page document presented in 243 paragraphs. The Select Committee on Education and Skills (2005) document is the official United Kingdom government evaluation of the venture and of the spending of the £50m (€75 million) that the government had allocated to the project. It is presented thus:

In February 2000, the then Secretary of State, David Blunkett, announced the ambitious project to establish the e-University as a single vehicle for the delivery of UK universities' HE programmes over the internet. The Government allocated £62 million to the HEFCE for the project over the period 2001-2004. UK e-Universities Worldwide Ltd (UKeU) and e-Learning Holding Company Ltd were established in 2001. In September 2003 UKeU launched its first programmes, attracting just 900 students against a target of 5,600. On 25 February 2004, the HEFCE Board decided that in future HEFCE funding should support the development of e-learning in universities and colleges—in effect the HEFCE terminated UKeU. £50 million out of the Government's allocation of £62 million has been spent on the project. The Committee announced its inquiry into the e-University project on 16 June. Our purpose was to account for the expenditure to date (£50 million), to clarify why the UKeU venture failed, what lessons could be learnt from the failure of the project, and to consider the future for e-learning and e-Universities in the UK.

Historical context The historical context of the UKeU was that it was first mooted in the year 1999 and was founded in the year 2000 just before the dot.com bubble burst and it collapsed and was closed in 2004 at the time of many other collapses of internet technologies. It was launched at the height of the dot.com boom and closed when the dot.com bubble burst. The UKeU was launched in February 2000 by the UK Secretary of State for Education, Mr David Blunkett, who appointed the United Kingdom Government’s Higher Education Funding Council for England (HEFCE) to take charge of the project.


By August 2000 studies on the business model, tools and markets had been completed. By July 2001, 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 place 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. 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. UKeU was 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. The UKeU failed to meet its targets, aims, and objectives. The launch of the first UKeU courses was delayed until September 2003. When launched, they attracted just 900 students against a target of 5,600. Furthermore, despite it being a condition of grant, UKeU failed to attract significant private investment. The following summary of UKeU progress against its targets is taken from the Business Review of the UKeU, conducted from September to December 2003 by PA Consulting:

From initial incorporation in 2001, the e-University didn't move from its initial start-up into its business launch phase until September 2003, when the first tranche of 16 courses were made available online and the first wave of 900 students signed up. However, this position was still significantly behind that originally targeted for this stage of the business plan agreed with UKeU in April 2002. The original business plan forecast rapid growth to 110,000 students within the UKeU's first six years, reaching over 250,000 by Year 10. Revenues were forecast to grow commensurately, breaking even by Year 5 (2006-07) and generating gross profits of more than £110m by Year 10. Even by Year 2 (2003-04), the original plan forecast student enrolments of more than 5,600 (downgraded from 12,600 in the first PwC plan) and revenues of £2.7 million. In practice, the UKeU has underperformed against the results forecast by the original plan in respect of courses available, students enrolled, platform delivery and external investment secured. A new and substantially revised business plan was approved by the UKeU Board in November 2003, containing updated forecasts for enrolments, product launches and operating costs. The revised plan was based on significantly lower business volumes than the original plan, targeting growth towards 45,000 students and revenues of £40 million by 2009-10. Expected break-even was forecast for 2007-08. The revised plan was predicated on the availability of a further £30m of capital from HEFCE in addition to the £27m already invested. Unlike the original plan, the revised business plan contained no provisions for private sector investment within the next six years, although this option was still being explored.


Technical issues Most of the technical issues centre around the UKeU’s decision to develop its own LMS (Learning Management System) or VLE (Virtual Learning Environment) rather than use one of the many on the market. This proved to be hugely costly and extremely lengthy and delayed the operational launch of the project considerably. In the event the UKeU was closed before the LMS was finished so it is unknown how satisfactory the product might have been. All the commentators roundly criticise the UKeU for this. Bacsish comments:

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, 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.

Garrett adds:

A major problem arose from platform investment. Early on the company decided that existing commercial and other platforms were inadequate and that competitive advantage lay in developing a world-class platform in-house. The central argument was that the platforms then available (course management systems such as Blackboard and WebCT) were

• too narrowly conceived (concerned with course management only, rather than integrating portal, content, and other functionality);

• positioned e-learning as supplementary to the campus (whereas for UKeU, at least in the original thinking, provision was to be entirely online);

• overly content-driven (rather than student-driven); and • did not permit much of what the developers regarded as good pedagogy (team

teaching, problem-based learning, blind marking). Between 2002 and 2004, UKeU spent millions developing a new platform. Following a competitive tender, the company brought in core technology and expertise from Sun


Microsystems. Bold claims were made about the emerging system. To quote a UKeU brochure from 2003, “We have created a new eLearning platform and architecture that dramatically exceeds the capabilities of any previous system.” On one level, in-house platform development was sensible. If the UKeU courses could run on a platform widely acknowledged to be superior, it would go some way to reducing the aforementioned brand confusion—there would be a better alignment of the traditional U.K. higher education brand and high-quality online programs. Given that the UKeU platform remains incomplete, it is difficult to assess its full capabilities. It is an open question whether the vision or reality of the UKeU platform is in fact significantly and qualitatively different from the latest version of commercial and open source rivals. Recent years have witnessed significant platform convergence, with vendors focusing as much on third-party interoperability and support services as on core functionality. Key trends have been the integration of the course management function into broader administrative capabilities and attempts to enhance the pedagogic respectability of leading platforms. Whether or not the UKeU platform is (or would have been) among the best in the world would be very difficult to demonstrate to potential students. There is generally a significant gap between the pedagogic conception of instructional designers and those of the average faculty member, to say nothing of the average student (even at the graduate level). This suggests a tension between the amount of investment in the new platform (said to be around £20/$35 million) and the rather limited marketing pay-off in terms of student recruitment. In retrospect, the company might have saved significant funds by using an existing platform, getting programs up and running more quickly, and leaving more funds for marketing. This would also have permitted the venture to grow more slowly (that is, with reduced upfront investment and ready-to-go third-party technology, UKeU could both have recruited faster and had more modest growth targets). Platform innovation might better have come once drawbacks of third-party systems had been demonstrated in practice and healthy recruitment had prompted private investment. Indeed, this approach would have allowed the in-house platform to develop at an appropriate pace, thus avoiding the embarrassment of missed deadlines and media scrutiny.

The House of Commons Select Committee treated this aspect under the heading ‘A technology-driven approach’ as follows:

Considerable focus and finance was given to the learning platform. £14.5 million—almost one third of all money received by UKeU—was spent on developing a new platform in partnership with Sun Microsystems Ltd. In describing UKeU's key priorities in order to succeed, Sir Anthony Cleaver spoke first of the technology platform and said that 'John Beaumont immediately focused on the platform'. It was clearly their number one priority. Sun Microsystems Ltd were signed as a strategic partner in October 2001, but the technology development proved more complex than anticipated. Difficulties in developing this new platform caused delays in the launch of UKeU's courses until September 2003 and problems still existed even then. Furthermore, only a small proportion (around 200) of the 900 students were using the UKeU platform—the majority of students chose to work with individual HEIs' own platforms. It has been suggested that the existing web-based learning platforms could have been used or adapted for use at a fraction of the cost of the new platform. UKeU's decision to develop its own learning environment was not based on any market research or other research findings. The basis for this decision is uncertain, but it was UKeU's opinion that the Government's objectives could not be fully met without developing a new platform. This was linked to the highly ambitious nature of the project. Because of the scale of the project that was envisaged from the start, the idea of gradually developing the scope of an existing platform was not considered.


There are examples of successful platforms that have worked, however, and could have been utilised by UKeU if they had been slightly less ambitious about the scale of the operation. The UKeU were evidently aware of such examples. John Beaumont told this Committee: 'The two examples that are often highlighted in the US are the University of Phoenix and e-College. The University of Phoenix has probably got the largest number of students of a private university. It is increasingly online but across the States, Canada and Puerto Rico there are over 100 campuses so it is a blended approach. The other one which is probably nearer to wholly online higher education is something called e-College which is Nasdaq listed, set up in 1996. Last year their online courses grew by 40%; they have now got about 1.4 million students, of which a good third are wholly online, the rest are hybrid. Those are the two best examples.' When we asked why these successful platforms could not have been used rather than UKeU developing its own complex platform, John Beaumont replied that this had been examined before he and Sir Anthony joined UKeU. UKeU allowed the development of the technology platform to drive its strategy and the development of programmes. It had a skewed focus on the platform, based on an assumption that once this was right, the original projections of very high student numbers would be easy to realise. Unfortunately this assumption was not based on research evidence, but on an over-confident presumption about the scale of the demand for wholly internet based e-learning.

It is clear that the technical platform was a major issue in the demise of the UKeU. There were other possibilities. Most conventional UK universities had by this time purchased either WebCT or Blackboard and either of these LMSs or VLEs should have been adequate for the project which was not even a university (as it did not offer its own degrees). By this time Dublin City University had already made the decision to become the first university in the world to use the open source LMS Moodle. It is still using it in 2007 and many hundreds of universities throughout the world have followed its example. If it was good enough for Dublin City University it should have been good enough for the UKeU. In spite of the unanimous criticism of the House of Commons Committee, Garrett and Bacsish, the position is not totally clear. In submissions to the Megatrends in e-learning project learndirect, the United Kingdom’s and Europe’s leading provider of e-learning with 500.000 students a year, states that it developed its own LMS or VLE, that this was a kernel of the success of their system, and that it was the basis for their ability to handle half a million e-learning students per year.

Online courses The House of Commons committee underlines:

The launch of the first UKeU courses was delayed until September 2003. When launched, they attracted just 900 students against a target of 5,600.

5.600 seems a meagre target for a £50 million project. Bacsish has more detail:

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.

Garrett adds:


The venture was a private company (with around fifty staff), majority owned by the U.K. higher education sector. It did not award its own degrees, instead contracting with U.K. universities to offer theirs. The company focused on infrastructure development, course development support, quality assurance, and marketing. The target audiences were primarily

1) international graduate students who wished to study online rather than come to the U.K. and

2) the private sector (businesses wanting customized degree-level training for staff, for example).

The first programs were available in early 2003. By early 2004, more than 20 U.K. universities and other organizations were listed on the UKeU Web site offering around 40 programs, but most with a start date of mid to late 2004. The only recruitment figures ever released were 900 students by November 2003 (against a target of 5,600).

There are two major issues here: Garrett’s statement that the UKeU did not award its own degrees and the condemnation from all the commentators that it offered e-learning and not blended learning. Not awarding one’s own degrees takes the ground from under the project’s claim to be the UK e-University. The ability to award one’s own degrees may be taken as important for the status of being a university. The planning documents and the HECEA Business Plan are unclear on the exact relationship of the UKeU and the other more than 100 UK universities many of whom, like Staffordshire University and the Open University of the United Kingdom, had extensive overseas distance education programmes. They could only regard the new government creation as a rival, as a competitor for overseas markets developed with much effort over many years and as a competitor for what they would have regarded as much-needed finance. All the commentators criticise the UKeU for offering e-learning and not blended learning. The House of Commons Committee speaks of ‘an over-confident presumption about the scale of the demand for wholly internet based e-learning’. Blended learning is a different field of educational provision from e-learning and this criticism needs to be evaluated against these criteria:

• The American e-learning authority, T.H.Davenport, stated in a recent article that 'The use of e-learning is generally unsupervised by any instructor or training professional; this is one way it achieves economic efficiencies’.

• Many e-learning authorities accept that technological advances have made it possible for not only course content but also student support to be provided electronically

• The leading United Kingdom e-learning provider, learndirect with 500.000 students, made it clear to the Megatrends in e-learning provision project that it was a specialist e-learning provider, with total focus on e-learning. Blended learning was not considered in its analysis, in spite of the fact that it has more local bases in the UK than any other enterprise, except MacDonalds.


Management, strategy, attitudes It is frequently stated that the UKeU did not have any acknowledged e-learning experts amongst its senior management and that, therefore, policy discussions had to begin at a lower level than an experienced team would accept. The House of Commons Committee was clearly irked that the senior management, who could be held responsible for the collapse of the project, voted themselves performance-related bonuses. They write:

One issue which provoked public comment was the awarding of bonuses to senior executives of UK e-U. The bonus scheme and potential share packages are examples of the anomalies that were caused by the fact that the structure and systems were set up under the assumption that private investment would be part of the project. When little investment was forthcoming, the structure and systems were not changed to reflect the circumstances in which UKeU was operating. Systems and structures that may have been considered appropriate when set against the original plan became inappropriate for a venture that was almost entirely publicly funded. We consider that for either the private sector or the public sector the bonuses paid to senior staff were wholly unacceptable and morally indefensible. The argument that they reflect private sector practice does not stand up to scrutiny. Any company which paid bonuses of this kind having underperformed in the way that UK e-U did would face severe criticism from its shareholders.

Economic aspects The House of Commons Committee presents UKeU expenditure thus: Table 1 Public expenditure on the e-University project to date Public Good Activities e-China project £3 M e-Learning research centre £1 million Research studies and other disseminations £2 million Advisors: legal and business £1 million Commercial Activities Technology platform development £14.5 million Learning programmes development £10.9 million Sales and marketing (including overseas) £4.2 million UKeU operating costs £12.9 million Total expenditure £49.5 M Source: HEFCE Clearly the expenditure on the technology platform development was large, but some of the expenditure (e-China project, e-Learning research centre) could be regarded as for the public good outside the UKeU project. The Committee adds from the consultants’ report:

The original business plan forecast rapid growth to 110,000 students within the UKeU's first six years, reaching over 250,000 by Year 10. Revenues were forecast to grow commensurately, breaking even by Year 5 (2006-07) and generating gross profits of more than £110m by Year 10. Even by Year 2 (2003-04), the original plan forecast student enrolments of more than 5,600 (downgraded from 12,600 in the first PwC plan) and revenues of £2.7 million. In practice, the


UKeU has underperformed against the results forecast by the original plan in respect of courses available, students enrolled, platform delivery and external investment secured.

Conclusion. What were the causes of the failure of the UKeU? The House of Commons gives authoritative and detailed causes of the failure of the UKeU. Its presentation deserves to be cited in full:

The UK e-University project was effectively wound up last year by HEFCE, having spent £50 million of public money but having succeeded only in attracting 900 students. We inquired into the issue to find out why this had happened, what lessons could be learnt from the failure of the project, and to consider the future for e-learning and e-Universities in the UK. Our findings are that the UKeU failed largely because it took a supply-driven rather than demand led approach. This supply-driven approach, combined with the very ambitious nature of the venture in an emerging market that did not sustain the high expectations of demand, and an inability to work in effective partnership with the private sector, led to the failure of UKeU to meet its targets, aims, and objectives. The launch of the first UKeU courses was delayed until September 2003. When launched, they attracted just 900 students against a target of 5,600. Furthermore, despite it being a condition of grant, UKeU failed to attract significant private investment. We have also concluded that there was insufficient market research. There was no formal market research undertaken to assess either the level of demand or the nature of the demand and the type of e-learning required. There was no systematic evaluation of the markets, no thorough and robust market research, and no understanding of consumer demand. UKeU also focused too much on providing an integrated e-learning platform. UKeU allowed the development of the technology platform to drive its strategy and the development of programmes. It had a skewed focus on the platform, based on an assumption that once this was right, the original projections of very high student numbers would be easy to realise. Unfortunately this assumption was not based on research evidence, but on an over-confident presumption about the scale of the demand for wholly internet based e-learning. The project failed to form effective partnerships with, or gain significant investment from, the private sector. UKeU's attempt to form genuine partnerships with the private sector was a commendable aim and could have helped it to stay competitive and market-orientated. Instead, UKeU became another example of how difficult the public sector finds it to form successful partnerships with the private sector. The failure to find private sector partners or investors should, however, have caused the holding company, HEFCE and the DfES to have concerns sooner rather than later about the viability of the project. One issue which provoked public comment was the awarding of bonuses to senior executives of UK e-U. The bonus scheme and potential share packages are examples of the anomalies that were caused by the fact that the structure and systems were set up under the assumption that private investment would be part of the project. When little investment was forthcoming, the structure and systems were not changed to reflect the circumstances in which UKeU was operating. Systems and structures that may have been considered appropriate when set against the original plan became inappropriate for a venture that was almost entirely publicly funded. We consider that for either the private sector or the public sector the bonuses paid to senior staff were wholly unacceptable and morally indefensible. The argument that they reflect private sector practice does not stand up


to scrutiny. Any company which paid bonuses of this kind having underperformed in the way that UK e-U did would face severe criticism from its shareholders. We do not want the Government to become increasingly risk-averse as a result of what happened with UKeU experience. Instead it should learn from this experience and, in the future, take a more experimental approach to such high risk ventures. This would involve focussing more on testing various models and prototypes; taking an evidence-based approach; involving the private sector as partners in a more organic process; undertaking effective risk-assessment procedures; and setting open and transparent success criteria for such projects. We recognise the important role the Government has to play in providing support, information and guidance for e-learning to develop within HEIs. The Government's role in providing an overarching national strategy for e-learning is vital to ensure consistency, coherence, and clarity of purpose in developments across the sector. The Government must clarify its national strategy for developing e-learning in the UK and how it intends to invest in and support e-learning across the HE sector in a way that provides coherent progress.

Garrett provides five other reasons which he labels ‘problems’: The first problem for UKeU was timing. UKeU debuted in February 2000, just a few weeks before the dot-com crash. During the Internet boom, the potential for new technology to transform many aspects of society in the short term, including higher education, was dramatically overstated. The second problem was focus. The dot-com boom presented online delivery as an alternative to the conventional campus rather than as a supplement, as has more often turned out to be the case. UKeU’s business model centered on wholly online provision, with very little evidence of a secure market. This led to a third problem—branding. Confusion existed between the mainstream U.K. education brand emphasizing the three elements of tradition, place, and quality and marketing by UKeU that promised “the best of U.K. higher education with online convenience” without being able to utilize these elements. A fourth problem arose from platform investment. Early on the company decided that existing commercial and other platforms were inadequate and that competitive advantage lay in developing a world-class platform in-house. All this leads to a fifth problem—impatience. An April 2004 press release from the Higher Education Funding Council for England (which administers public funding for higher education in England, including for UKeU) stated that one reason for “restructuring” UKeU 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 to the handful of programs then available would have been judged quite respectable. Bacsish summarises his views on the causes of the failure in a series of recommendations for the success of university e-learning projects:

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’.

In this report attention has been drawn to the findings of the Megatrends in e-learning provision project that is not recorded by any of the commentators nor by the House of Commons Committee. This is that, at the time that the UKeU was being developed, one of the world’s most successful e-learning institutions, learndirect of the University for Industry, was being developed. The achievements of this institution in enrolling half a million students per year and administering them in successful systems, causes one to query some of the central reasons accepted by the commentators for the failure of the UKeU. Learndirect was developed in the same country, in the same educational system, at the same time as the UKeU failed. It clearly went out to recruit staff who were experts in e-learning and who were dedicated to e-learning. But it did not embrace blended learning, which the commentators establish as a major criticism of the UKeU. It set out to develop its own LMS/VLE, as the UKeU did, and attributes much of its success in handling half a million students a year to the robustness and sustainability of this platform.

References Bacsish, P. (2005). Lessons to be learned from the failure of the UK e-University. Open and Distance Learning Association of Australia conference, Adelaide. Bacsich, P. (2005). UKeU overview. In The UKeU Reports Round One, Higher Education Academy, 2005. Bacsich, P. & Davies, D. (2004). Presentation 4. In Learning materials & environments seminar, appendix to chapter nineteen. In The e-University Compendium Volume One, Higher Education Academy, 2004. Davenport, T H (2001). elearning and the Attention Economy. LineZine. Available at www.linezine.com/5.2/articles/tdeatae.htm Garrett, R. (2004). The real story behind the failure of the UK e-University. Educause Quarterly, 27, 4. Higher Education Funding Council for England (HEFEC) (2004). Business model for the e-University. London: Higher Education Funding Council for England. Schulmeister, R (2006). elearning in the USA: the standard? The benchmark? Eleed: elearning and education. Available at http://eleedcamussource.de/archive/3/688 Thompson, Q. (2004). Overview of the e-university concept. In The e-University Compendium Volume One, Higher Education Academy, 2004.


United Kingdom Government, Select Committee for Education and Skills (2005). United Kingdom e-University. London: House of Commons.


The Open University of the United States The Open University of the United Kingdom is generally accepted to be the world’s leading open university and the world’s foremost provider of distance education. In the late 1990s the Open University, under the leadership of its Vice-Chancellor, Sir John Daniel, began planning for the Open University of the United States. This institution was started in 1998 and closed in 2002, four years later. Figure 10. The USOU homepage

Retrieved 02.09.07 from http://web.archive.org/web/20010206214239/http://open.edu/


Historical context In the late 1990s planning began at the Open University of the United Kingdom for an Open University of the United States. The United States Open University started in 1998. The first American staff for the new university were hired in late 1999. The first courses were offered in spring 2000. In the year 2000 five courses were offered to 90 students. In January 2001 Sir John Daniel retired as Vice-Chancellor of the Open University and as President of the United States Open University and moved to UNESCO in Paris. In 2001 the United States Open University offered 30 courses to 660 students. On 30 January 2002 the Open University decided to cease funding the American initiative. In June 2002 the Open University of the United States was closed.

Technical issues The Megatrends in e-learning project charts the migration of the Open University of the United Kingdom from being a world leading institution for multimedia distance education to being a megaprovider of electronic distance education, generally known as e-learning. In 1998 when the United States Open University was founded and the design of the system was being worked out, the OUUK did not have this expertise in electronic distance education. Therefore the design of a completely online institution was premature. As Davies (1999) states the design of the United States Open University was based on the United Kingdom offerings on which the OUUK had built its reputation:

The Open University in the United Kingdom (OUUK) is well known for having pioneered the use of distance learning as a way to offer high quality higher education to many people. The Open University now offers its courses in many countries and so it was natural that, in 1998, it was decided to create a separate institution in the United States, the United States Open University (USOU). USOU is a sister organization to OUUK and will offer essentially the same type of education to residents of the United States that is currently offered in the UK. The long-term aim of the USOU is to establish a university based on teaching, research and scholarship, with both permanent US based Faculty and Associate Faculty.

Meyer (2006) presents the foundation of the United States Open University (USOU) thus, emphasising the explosive growth of online education in the United States:

In spring 1999, the Open University (OU) of the United Kingdom created the U.S. Open University (USOU) to coincide with the explosive growth of online education in the United States. The institution’s first chancellor, Richard S. Jarvis (previously chancellor of the University and


Community College System of Nevada), began hiring U.S. staff and opened an office near Denver, Colorado. News stories about the fledgling enterprise soon appeared in the Chronicle of Higher Education, Change magazine, and the Business Wire. It seemed an auspicious beginning to a new enterprise that targeted a growing field and brought with it the expertise and imprimatur of the U.K. Open University, which had enrolled three million distance students worldwide since 1971.

Online courses Commentators on the demise of the United States OU have been critical of the university’s choice of online courses. Arnone (2002) states that at the time of its closure most of the students were in two joint courses:

About two-thirds of students are in two joint programs: a master's-degree program in information systems with the University of Maryland-Baltimore County, and a bachelor's-degree program in business administration with Indiana State University.

Meyer (2006) adds:

The USOU depended entirely upon its parent for credibility with other institutions. “One advantage of the OU [reputation] was … we never had a question about content quality when dealing with other universities,” noted Jarvis, the former chief executive of the United States OU. On the other hand, the OU was a mature bureaucracy, with practices appropriate for operation in Britain. These practices did not always work well for a fledgling branch working in the different cultural and educational environment of the United States. Because of its quality curriculum, the OU enrolled 200,000 students worldwide in 2003. As it happened, though, several aspects of the OU curriculum did not fit the U.S. market. Americans aren’t as interested in the “Greeks and Romans … and some of the courses had a distinctly European slant on things,” explained Jarvis, or what he called the “queen and cricket problem.” “Course adaptation was expensive but a real need for adult students in the U.S.,” Jarvis said. The costs of redesigning courses added to the pressure on the USOU to raise revenues, however. The problems with adapting the OU curriculum were only one example of how the USOU may have misunderstood the U.S. marketplace, however. Student expectations were another, along with confidence in the dot-com boom that encouraged optimism about potential enrolments.

The present writer carried out research on distance education in the United States of America, many years ago in the late 1970s. A major visit was made to the University of Maryland at College Park, near Washington. The reasons for visiting this institution were that it was a major provider of distance education in the US and because it was known to be the largest user of Open University of the UK materials at the time. I was informed that the materials were causing great difficulties and the University of Maryland was spending much time and money adapting them. ‘The materials are too conceptually dense for American sophomores’ I was told. ‘The language used is too complex to be understood by American sophomores’. It appears that similar problems faced the Open University of the United States twenty years later. Meyer (2006) concludes:

Like many companies established during the dot-com boom, the USOU expected many more enrollments than it got. As Jarvis put it, “The market was softer than we thought,” with a worsening economy prompting the dot-com bust. Furthermore, the OU curriculum is largely for


undergraduates. By focusing on baccalaureate degree-seeking students as its primary market, the fledgling USOU had to compete with 3,885 U.S. institutions of higher education. These U.S. institutions had greater visibility and more experience in the U.S. marketplace and greater familiarity with American students. “The biggest mistake we made was getting started with undergraduate education,” noted Jarvis. “The OU MBA is one of the largest and most highly regarded in Europe…. We should have done an MBA or Americanized the OU MBA first.” As it turned out, the challenge of making inroads in the U.S. undergraduate market was one that USOU would not have enough time to solve.

The comments on starting with the Open University MBA are well made. The Open University of the United States also ran into difficulty with the accreditation of its courses. It sought accreditation from two sources: the Distance Education and Training Council (DETC) in Washington DC and from the Middle States Association. It won accreditation from the Distance Education and Training Council but this is only the organisation that provides accreditation for correspondence schools and colleges in the US and was of no use for the accreditation of the OUUS courses at university level. Accreditation at university level in the USA is granted by regional boards and the OUUS applied, therefore, to its local board the Middle States Association of Colleges and Schools for accreditation as a provider of university courses. At the time of its closure it still had not won this accreditation and therefore was not an attractive institution for students who wished to enrol for a university degree programme. Arnone (2002) sums up:

The university suffered because it lacked both accreditation and name recognition among American students. Also, the university couldn't offer federal financial aid or employer reimbursement to its students, two important considerations to the part-time, working-adult population the university sought to serve. Nor could the university attract transfer students from other institutions.

Thus the Open University’s courseware, of which it was so proud, proved to be a stumbling block for the enrolment of American students in part-time university degree programmes.

Management, strategy and attitudes Meyer (2006) places a lot of the management failure on the departure of Sir John Daniel at the time when the American foundation was running into trouble:

John Daniel, vice chancellor of OU and President of USOU, “had a vision—a deep personal vision—of an American version of the OU.” Daniel had “great passion for his vision … [that] OU access in the U.S. would be a good thing even if it didn’t turn a large profit.” But in January 2001, this powerful advocate for the USOU left to serve as assistant director-general for education at UNESCO.

She comments: ‘an influential advocate is important to an enterprise, but advocates sometimes leave. It is better to ensure wide support for the enterprise across the organization’s leadership and sponsoring organizations’.


The financial implications of the American foundation were also considerable for the parent university in England:

Although the OU tempered its support of the USOU after Daniel departed, it spent $27 to $28 million on the venture while experiencing a downturn of its own. The worldwide economy was slowing, competition was increasing from other providers of distance education in the U.K., and funding had been cut by the British government. These factors increased financial pressure on the USOU, which was considered an experiment that had yet to meet its potential as a revenue generator.

The management structure of the American venture was also criticised by Meyer:

The USOU was owned, funded, and operated entirely by the OU, which did not seek independent capital investment. Whether foregoing outside investment was wise is hard to know, since demands imposed by the investment capital market might have changed the nature of the educational enterprise. Evaluating the decision in hindsight is complicated by the poor economic performance of so many dot-com businesses having ample capital investment. Students felt the “price was too high” in the softening economy, indicating that the USOU needed to price services based on market research on what U.S. students were willing to pay. Clearly, USOU needed a different profit center than undergraduate tuition. Perhaps the mission was too broad and should have focused on fewer programs with a greater likelihood of short-term profitability, such as the OU MBA program.

Conclusion. Why did it fail? Jarvis (2002) the President and Chief Executive Officer of the US Open University gives a series of reasons for the failure of the USOU: Lesson #1: Community. Distance/distributed/online institutions need to build a community to grow the market (before competing for it), better understand the legalities, and help self-police each other. Lesson #2: Quality Matters and Accreditation Works. DETC gave USOU sound business practices and a focus on the student experience. Regional accreditation emphasizes faculty and governance. A developing institution will benefit from both. Lesson #3: It Takes More than Money. Having to continuously raise or defend funding drains time-on-task and loses focus. Start-up staff must be creative, flexible, and cut their ties to old ways. Lesson #4: Partnerships. Most partnerships are high-maintenance, the rest are extremely high. If you can’t explain to the partner what win-win is, you won’t win. Both partners must understand what each means by “scale.” Lesson #5: Going Global. World-class is high cost and most global markets are low-cash and low-tech. Adaptation of content is the least of the challenges in getting to and winning market share.


Meyer (2006) describes the story of the USOU as ‘a cautionary tale with five important lessons’:

First, an influential advocate is important to an enterprise, but advocates sometimes leave. It is better to ensure wide support for the enterprise across the organization’s leadership and sponsoring organizations. Second, new educational enterprises need a thorough understanding of their potential customers’ needs, wants, and expectations. These factors should guide the development of appropriate curricula and services. Third, an educational enterprise, like any other, needs a careful business plan that is continuously updated and revised as the organization learns more about its customers and market. An appropriate business plan should guide development and the choice of new projects. Sufficient funding is needed to help the organization survive bad economic times. Fourth, accreditation must be in place early. Accreditation boosts an educational enterprise’s reputation and ability to attract students and can mean the difference between success and failure. Fifth, sometimes things happen that no institution can easily foresee: a softening economy, a sudden change in leadership, a budget cut for the institution and/or its partners. Any of these factors can cripple a new and vulnerable enterprise.

Tilson (2002) the former Director of Learning at the USOU concludes by asking a series of questions in a presentation titled United States Open University: Great Expectations and Cold Realities: USOU: What Happened? Was it:

• How we operated? • Our pricing structure? • The lack of name recognition? • Our accreditation status? • Student expectations? • OU expectations?

This study shows that all of these factors contributed to the demise of the United States Open University.

References Arnone, M (2002) United States Open University announces it will close in June. The Chronicle of Higher Education, 5,2,2002 available at Davies, G (1999) Creating a new university – the United States Open University. Frontiers in Education Conference 1999. Jarvis, R (2002) Lessons learned in launching the USOU. Distance Education and Training Council 76th Annual conference, 14-16 April 2002.


Meyer, K (2006) The closing of the US Open University. Educause Quarterly, Vol 29. No 2. Tilson, S. (2002) United States Open University: Great Expectations and Cold Realities. Western Cooperative for Educational Telecommuications Annual conference, 2002. Available at http://conference.wcet.info/2002/presentations/files/Tilson.ppt


Analysis of trends and characteristics This is a study of the e-learning initiatives presented in this book. The ten initiatives, which failed to reach targeted goals, are listed below:

• The Alliance for Lifelong Learning (USA/United Kingdom) • California Virtual University (USA) • IT Fornebu Knowation (Norway) • Bedriftsuniversitetet (Norway) • Næringslivets Kompetansnett (NKN) (Norway) • Scottish Knowledge (United Kingdom) • The Scottish Interactive University (United Kingdom) • SWI freeweb (Hungary) • The United Kingdom e-University (United Kingdom) • The Open University of the United States (USA/United Kingdom).

The trends and characteristics of these institutions are clearly of the greatest importance for the development of the field of e-learning. Prestigious institutions have been involved. The Alliance for Lifelong Learning brought together four of the world’s most famous universities: Stanford University, Princeton University, Yale University and Oxford University. The United Kingdom e-University carried all the prestige of the government of the United Kingdom which invested €93.000.000 in the venture. The Open University of the United States carried all the prestige of the Open University of the United Kingdom, the world’s leading multimedia distance education university, which, as the Megatrends project shows, is fast developing into one of the world’s leading electronic distance education (e-learning) universities as well. The Open University of the United Kingdom also made a considerable financial investment in the Open University of the United States. In what follows, the trends and characteristics of the initiatives which failed to reach their targeted goals are delineated. In the first place this is done individually, institution by institution, and case study by case study. Then overall conclusions, recommendations, trends and characteristics of the ten failures are identified. This study has its risks. Learning from mistakes and failures is not a characteristic of educational research. Educational research rarely focuses on failure or on the lessons that can be learnt from failure.


This type of educational research is notoriously difficult to undertake. Data is difficult to collect. Key individuals refuse to be interviewed. Important documentation is not made available. Websites are quietly closed down. Our researchers have been rebuffed. Nevertheless, the identification of the characteristics and trends of e-learning initiatives that failed to reach targeted goals is vital for the progress and development of the field of e-learning.

Reasons for failure Alliance for Lifelong Leaning The reasons given for the failure of the Alliance for Lifelong Leaning are:

• The cost of offering top-quality enrichment courses at affordable prices was not sustainable over time.

• The project’s founders appear to have underestimated the costs of designing online courses.

• The project’s founders overestimated the numbers of students willing to pay tuition costs.

• Alllearn was backed by the prestige of the partner institutions but had difficulties selling the value of non-credit courses, instead of the elite degrees of the elite universities.

• The Alliance for Lifelong Leaning did not attract enough students. • There was no interest in general interest subjects like archaeology or the poetry of the

First World War. • The budget of $12.000.000 was too small. • The ‘general interest’ market for online provision is unproven. • Lack of interest was the primary reason. • Institutions offering non-credit courses must generally charge lower tuition fees than

providers of credit courses leading to a qualification. The shorter duration of the non-credit courses when compared to degree programmes led to less tuition revenue.

It is clear that the Alliance for Lifelong Leaning, also known as Alllearn, failed as an e-learning initiative sponsored by Stanford, Princeton, Yale and Oxford. Princeton withdrew almost at once when initial enrolments only reached 600. The universities were said to be focusing on their 500.000 alumni, but only 600 enrolled. The embarrassment and the damage to the prestige of the famous universities involved was demonstrated by the almost complete silence of the universities’ websites when the project was disbanded. The project proved that there is a limited market for online, non-credit, edutainment courses and the absence of the official degrees of the elite universities was clearly a contributor to failure.

California Virtual University (CVU) The reasons given for the failure of the California Virtual University (CVU) were:


• There was a lack of strategy and it was never clear what the CVU was intended to be. Was it just a database or something more?

• The broker model was ‘a hodgepodge of previously existing courses with great differences in format and quality’ (Berg 1998).

• There was inadequate prevision and planning of the financial and business aspects. • The CVU was without any means of financial support. • The University of California, California State University and the California

Community Colleges refused to contribute financially. • Each institution offered courses from its own site so that the students did not need to

return to the CVU portal. The California Virtual University was a loose e-learning consortium running on a broker model. Its functions were to advertise and administer the 1600 courses on its website, but every consortium member kept full independence and dealt with the whole range of academic services and accreditation. The CVU started in September 1997 and was practically closed in March 1999 and the CVU’s homepage on the WWW was quietly taken down.

IT Fornebu Knowation (ITFK) The reasons given for the failure of IT Fornebu Knowation (ITFK) are:

• ITFK never managed to achieve a good working relationship with the education system.

• ITFK was regarded as a redundant organisation established by businessmen with little competence in education and by equally incompetent politicians.

• The Norwegian competence reform in continuing education and lifelong learning was not successful and therefore there was a decreased, not an increased, market for continuing education.

• The ICT market in Norway reduced by 30%-40% and so there was a great reduction in the ICT continuing education market.

• ITFK greatly underestimated the cost of setting up electronic classrooms and study centres.

• ITFK was based on a grand vision of a world class research and development centre at Fornebu which was not realised.

• There was no market research to show that such a centre at Fornebu was needed and would be successful.

• ITFK was not the result of an evolutionary and incremental development process. ITFK was established on the basis of a vision by a small number of investors and entrepreneurs with little or no experience in the field of e-learning.

The setting up of a world class ICT research and development centre at the former Oslo airport at Fornebu, including the IT Fornebu Knowation (ITFK) e-learning system, was unsuccessful. The market for online continuing education was inadequate and the videoconferencing-based model was too costly. The Norwegian Parliament closed its contribution in December 2004 after investing €50.000.000 in the project.

Bedriftsuniversitetet (The Business University) The Bedriftsuniversitetet failed for the following reasons:


• There was a decreasing market for tailor-made continuing education. • The courses being offered by the Bedriftsuniversitetet company were in direct

competition with courses being offered by the four constituent institutions of the Bedriftsuniversitetet.

• The Bedriftsuniversitetet competed with existing institutions for a decreasing market for online and continuing education.

• Some critics of Bedriftsuniversitetet asked questions such as: “What is the point of establishing a company for continuing education that would actually compete with the educational activities of the very institutions that own it?” As the market failed to grow and even decreased, it became impossible to find an adequate answer to this question.

It was set up by four of the largest institutions of higher education in Norway: the University of Oslo, the Norwegian University of Science and Technology, the BI Norwegian School of Management (one of the Norwegian mega providers) and SINTEF research institute. Founded in 2002, it was closed in the spring of 2003.

The Competence Network of Norwegian Business and Industry (NKN) The reasons for the failure of NKN are given as:

• NKN was a completely new enterprise with no history, tradition or experience in the field. The establishment was based on future prospects resulting from the Competence Reform and was a direct part of wage agreements between the social partners and the government.

• NKN, its owners and staff had a rather limited experience in online education. The initiative came from organisations with main functions far from administering, selling and organising e-learning services. NKN engaged competent staff to perform the necessary functions. However, most of the staff had no direct practical experience in running an e-learning business.

• NKN was not a result of an existing organisation ready for transferring into an e-learning provider. Although there had been some positive trials of applying e-learning for competence development – the testing of e-learning programs in some companies – building up a large scale operation from specific funded projects seems to be a lot more complicated and vulnerable process.

• In spite of the foregoing trials, NKN as an organisation did not have any activities related to research on e-learning.

• It can hardly be said that NKN was an institution characterised by specifically high competence in ICT. The technology was based on Saba software developed and supported by an American firm.

• As NKN offers were based on courses and contents delivered from a large number of providers with different types of technology, forms of education (both organisation and pedagogy) it is probable that standardisation of specifications on the receiving end must at least have been difficult – if not impossible.

• Most probably the Saba software represented well integrated and state of the art technology for e-learning at the time. However, there is no doubt that standardisation issues concerning integration and the possibility of achieve satisfactory, or at best seamless, interfaces with systems used by course providers were not solved and led to more difficulties than expected.


• There is every reason to believe that the Saba systems were effective for its purpose. On the other hand the success of NKN was also dependent on student and course administrative systems of course providers. The efficiency of these systems could hardly be followed up by NKN, and lack of integration reduced efficiency.

• Partnerships with a large number of course and content providers able to deliver ‘all’ types of courses and training programmes, was a basic strategy in the establishment of NKN. The course catalogue contained a large number of courses. These represented very different kinds, from books and CD-ROMs to correspondence education and Internet based distance education, as well as ordinary classroom education and blended learning.

• Although NKN was profiled as “the world’s largest Internet school … with the aim of giving everybody in the whole country opportunity for further- and continuing education at the workplace or at home via the Internet”, the courses included many offers that in practice were not offered on the Internet.

• The flexibility of the courses offered varied a lot. Some were based on individual learning, flexibility and free progression, others were not.

• NKN did not seem to have any clear policy on methodological or organisational issues related to synchronous or asynchronous communication or media and communication technologies. Courses on offer differed a lot also in this respect.

• NKN had full support from the top management of owner organisations, the board and the top management of NKN itself – as the development of e-learning provision was the basis for establishment and the goal of the company. However, concerning the main owners there is reason to believe that the focus of employers’ and employees’ organisations is on other questions and challenges than running a commercial e-learning operation.

• There is also all reason to believe that the staff of the whole organisation were enthusiastic in the endeavour to build up a highly profiled e-learning operation. They had all been engaged just for this purpose.

• The strategy was built on marketing and organising education based on Internet and e-learning software. However, it can be queried whether the strategy of offering the large variety and types of courses, not all e-learning according to accepted definitions, was the best strategy for developing “the world’s largest Internet school”.

• All available information indicates that the NKN had great attention towards quality management, quality assurance and quality control. It can be claimed that quality control of e-learning provision to the labour market and the public was one main function of acting as an intermediate between providers and customers. One focus of NKN was “… to offer updated and quality assured training and education accessible on the Internet through the brand name The Competence Network”.

• Seen from the outside it can be claimed that the totality of routines were not efficient. Delivering courses through NKN involved extra work for course providers with their own technology and administrative routines for delivering e-learning. The cooperation established by the agreements between NKN and course providers involved very elaborate routines on who is doing what, communication between provider and NKN and communication and payment structures when training programmes involve provider, NKN, possibly employer and trade union and groups or individuals of learning. Also systems concerning payment, invoicing and reporting became bureaucratic and costly for the provider.

• As the courses differed the degree of industrialization of teaching would differ. However, again seen from the provider side the NKN part did not increase cost-efficiency of course delivery.


• Collaboration with other institutions was the basis and part of the main strategy of NKN. Already from the start, NKN established partnerships with 30 to 40 course and/or content providers. However, it is not certain how enthusiastic the different institutions actually were, and to what extent they really had a lot of training programmes that fitted into NKN’s strategy.

• There is every reason to believe that NKN had the full support of the government including ministries of education and trade and commerce. As NKN was established by the social partners in connection with emphasis on including education, training and competence development as part of the tariff agreements, the support from leading forces of the Norwegian society should be unquestionable.

• It was the ambition of the owners that NKN should provide cost-effective competence development for the Norwegian workforce – as illustrated by the speech of Finn Bergesen, chief executive of NHO at the opening ceremony,”… NKN is cost effective, as people learn more per krone, and it will help all enterprises keep their competitive edge”. The fact is that it was not cost-effective and spent much more money than it earned. The question is whether it had potential to become cost-effective with the strategy that was chosen. From the viewpoint of providers of Internet based courses, it is questionable if it could become cost-effective.

• NKN never in its life time managed to get predictable or stable income. Course sale is a long process. Support from government policies and the organisations of working life has probably little influence on decisions on training taken by individual enterprises, and very little influence on the individual learner’s decision to enrol in a training course. It is probably a fact that in establishing NKN the owners largely overestimated readiness for applying e-learning in the market, Norwegian business and industry.

• NKN was established to supply learning over the Internet and not as a response within an organisation to needs for change.

• It seems clear that NKN from the start had a staff that was too expensive to be covered by income from courses and services.

NKN, The Competence Network of Norwegian Business and Industry (Næringslivets Kompetansenett) was established in August 2000, sold out to pay its creditors in 2002, and quietly closed down thereafter. It was set up to support the Norwegian goals of competence reform and competence development. It overestimated the willingness of workers to engage in learning.

Scottish Knowledge The reasons given for the failure of Scottish Knowledge are:

• In 2000 the Scots already had an e-University, Scottish Knowledge, which was, in fact, set up in August 1997. In late 2001 the UKeU was considering the purchase of Scottish Knowledge for £12 million but in the end decided not to go ahead. Scottish Knowledge continued to operate in some form until late 2002, when it closed. Yet in October 2002, before Scottish Knowledge closed, Heriot-Watt University with help from Scottish Enterprise had jointly set up the Scottish Interactive University (Bacsish 2005).

• 21 universities and colleges was a clumsy management system for an e-learning university.


• There was a certain arrogance in assuming that Scottish degrees would be acceptable and receive accreditation in the United States, Asia and the Middle East.

• The student enrolment that Scottish Knowledge dreamed of was not available on the ground in the United States, Asia and the Middle East.

• Scottish Knowledge used up its government funding and no more was made available. • Before it closed, the Scottish Government had already decided to found its own e-

University through Heriot-Watt University and its own funding agency, Scottish Enterprise.

Scottish Knowledge was a short-lived partnership between Scotland’s 21 higher education colleges and universities which offered online courses and distance education courses to students around the world. Scottish Knowledge was founded on 1 August 1997 and closed in the year 2002. It was succeeded by the Scottish Interactive University, which was founded by Heriot-Watt University and Scottish Enterprise – the Scottish economic development agency funded by the Government of Scotland – and was strangely opened before Scottish Knowledge closed.

Scottish Interactive University The reasons given for the failure of the Scottish Interactive University were:

• The expected number of student registrations was not achieved. • The majority of Scottish universities failed to join. • A £1.5 million bid for emergency funds was turned down by Scottish Enterprise. • It had been hoped the IU would bring in millions in revenue for Scottish universities,

with the institutions using it as a means to offer supported learning to students at partner institutions in up to forty other countries, but this did not eventuate.

• The Interactive University was a strange name for a new e-University. • There was an arrogant assumption that Scottish degrees would prove attractive to

students overseas and that students in China, Iran, Syria and Hong Kong would enrol in them in large numbers.

• The claim that ‘500.000 students would enrol in the next 2 years’ was inane. It shows a total lack of hard-nosed market research, which is essential for any new e-university, and that the university lacked analysis of the real world. The IU did not have the structure nor the technology to process half a million students.

• The IU claimed to be a university. Yet, its only successful programme was a high-school programme called SCHOLAR. This was inherited from Heriot-Watt University and developed with a grant from the Scottish Executive. Bacsish (2004) seems to suggest that the enrolment of the IU was 46.000, comprising 45.000 from the SCHOLAR programme and 1.000 from other programmes.

• Heriot-Watt University, the main promoter of the IU, was well known for having a successful overseas distance education programme, especially its overseas MBA, which was considered one of the best available. Yet the IU did not follow the Heriot-Watt model.

The Scottish Interactive University was set up by Heriot-Watt University and the funding agency of the Scottish government, Scottish Enterprise, in October 2002 and closed in 2007. Much of its courseware was inherited from Heriot-Watt University, which had a well known distance education programme, or from Scottish Knowledge, the Scottish e-university which it replaced.


SWI freeweb The following is an evaluation of SWI freeweb:

• SWI still has the learning materials, the records, contacts with tutors, and the database of former users.

• SWI does not regard the discontinuity as a failure, but as a big success, as at this period it was the only “mega” activity in Hungary, and generated substantial income which helped the company to be operational.

• SWI is still thinking of re-offering the distance learning service on a free access basis for their Free-web clients. SWI believes that a mature internet market will need quality web-storage/web-hosting, with extra services among which a free e-learning opportunity could play an important role.

• Payment was technically problematic in Hungary until recent years. There was no internet payment facility at the time. Payment techniques were unresolved; manual bank transfer with pre-payment had to be applied.

• This online activity was offered too early in terms of technique. • There was no Hungarian standard LMS at that time. • The educational market was immature. • The company could not have performed better because of the lack of investment and

the lack of energy (product management). • Technology in Hungary was lagging behind other parts of the world. • The attitude of Hungarians to e-learning did not favour this activity in Hungary. • American business attitudes did not work in Hungary.

From 1999 a Hungarian educational site called okta.to (EDUCATOR) made visible progress towards online learning with many courses offered at a reasonable price. The site was owned by a free-web-service provider SWI and after a very promising start-up, it closed down in 2005. At the time of operation this was Hungary’s largest publicly accessible online learning opportunity.

United Kingdom e-University What were the causes of the failure of the United Kingdom e-University?

• The UK e-University project was effectively wound up by HEFCE, having spent €75.000.000 million of public money out of an allocation of €93.000.000 but having succeeded only in attracting 900 students.

• The UKeU failed largely because it took a supply-driven rather than demand-led approach. This supply-driven approach, combined with the very ambitious nature of the venture in an emerging market that did not sustain the high expectations of demand, and an inability to work in effective partnership with the private sector, led to the failure of UKeU to meet its targets, aims, and objectives.

• The launch of the first UKeU courses was delayed until September 2003. When launched, they attracted just 900 students against a target of 5,600.

• There was insufficient market research. There was no formal market research undertaken to assess either the level of demand or the nature of the demand and the type of e-learning required. There was no systematic evaluation of the markets, no thorough and robust market research, and no understanding of consumer demand.


• UKeU focused too much on providing an integrated e-learning platform. UKeU allowed the development of the technology platform to drive its strategy and the development of programmes. It had a skewed focus on the platform, based on an assumption that once this was right, the original projections of very high student numbers would be easy to realise.

• The project failed to form effective partnerships with, or gain significant investment from, the private sector.

• One issue which provoked public comment was the awarding of bonuses to senior executives of UKeU.

• The government should learn from this experience and, in the future, take a more experimental approach to such high risk ventures. This would involve focusing more on testing various models and prototypes; taking an evidence-based approach; involving the private sector as partners in a more organic process; undertaking effective risk-assessment procedures; and setting open and transparent success criteria for such projects.

• The Government must clarify its national strategy for developing e-learning in the UK and how it intends to invest in and support e-learning across the HE sector in a way that provides coherent progress.

• UKeU debuted in February 2000, just a few weeks before the dot-com crash. During the Internet boom, the potential for new technology to transform many aspects of society in the short term, including higher education, was dramatically overstated.

• The dot-com boom presented online delivery as an alternative to the conventional campus rather than as a supplement, as has more often turned out to be the case. UKeU’s business model centered on wholly online provision, with very little evidence of a secure market.

• Confusion existed between the mainstream U.K. education brand emphasizing the three elements of tradition, place, and quality and marketing by UKeU that promised "the best of U.K. higher education with online convenience" without being able to utilize these elements.

• Early on the company decided that existing commercial and other platforms were inadequate and that competitive advantage lay in developing a world-class platform in-house.

• An April 2004 press release from the Higher Education Funding Council for England (which administers public funding for higher education in England, including for UKeU) stated that one reason for "restructuring" UKeU was that "student recruitment had not met planned targets in the first year." This served as a reminder that in terms of recruitment, the company had only been operational for a single year. In other circumstances, the 900 students recruited by November 2003 to the handful of programs then available could have been judged quite respectable.

• Understanding and leveraging the brand is crucial and the UKeU failed to do this. • The right market research, and the willingness to act on it, is crucial. • ‘Time to market’ must be kept short, and the UKeU did not achieve this • Cost of marketing must be kept low. • Realism about differentiators is necessary: ‘quality’ is not a differentiator; price is;

platform functionality is not. • An e-university must be a university and a company – doing that well is hard; it

affects every aspect of the activity. • Good management and staff are essential – ensuring them is hard.


The historical context of the UKeU was that it was founded in the year 2000 just before the dot.com bubble burst and collapsed and was closed in 2004 at the time of many other collapses of internet technologies. It was launched by the UK Secretary of State for Education, Mr David Blunkett, who appointed the United Kingdom Government’s Higher Education Funding Council for England (HEFCE) to take charge of the project. A budget of €93.000.000 was provided and the venture carried with it the prestige of the Blair UK government.

The Open University of the United States The reasons given for the failure of the Open University of the United States are:

• Community. Distance/distributed/online institutions need to build a community to grow the market (before competing for it), better understand the legalities, and help self-police each other.

• Quality Matters and Accreditation Works. DETC gave USOU sound business practices and a focus on the student experience. Regional accreditation emphasizes faculty and governance. A developing institution will benefit from both.

• It Takes More than Money. Having to continuously raise or defend funding drains time-on-task and loses focus. Start-up staff must be creative, flexible, and cut their ties to old ways.

• Partnerships. Most partnerships are high-maintenance, the rest are extremely high. If you can’t explain to the partner what win-win is, you won’t win. Both partners must understand what each means by “scale.”

• Going Global. World-class is high cost and most global markets are low-cash and low-tech. Adaptation of content is the least of the challenges in getting to and winning market share.

• An influential advocate (Sir J Daniel) is important to an enterprise, but advocates sometimes leave. It is better to ensure wide support for the enterprise across the organization’s leadership and sponsoring organizations.

• New educational enterprises need a thorough understanding of their potential customers’ needs, wants, and expectations. These factors should guide the development of appropriate curricula and services.

• An educational enterprise, like any other, needs a careful business plan that is continuously updated and revised as the organization learns more about its customers and market. An appropriate business plan should guide development and the choice of new projects. Sufficient funding is needed to help the organization survive periods of economic difficulties.

• Accreditation must be in place early. Accreditation boosts an educational enterprise’s reputation and ability to attract students and can mean the difference between success and failure.

• Sometimes things happen that no institution can easily foresee: a softening economy, a sudden change in leadership, a budget cut for the institution and/or its partners. Any of these factors can cripple a new and vulnerable enterprise.

The Open University of the United States was started in late 1998 and closed in June 2002. It carried with it much of the prestige of the Open University of the United Kingdom and its failure to win university accreditation by the appropriate American Regional Board in its lifetime was a major factor in its lack of success.


Conclusions and recommendations This study of e-learning initiatives which failed to reach targeted goals has far reaching implications for the field of e-learning. The ten case studies that have been presented come from different education systems, mainly the United Kingdom, the United States, Norway and Hungary, and they share the cultural backgrounds and educational traditions of the countries in which they were developed. From this point of view they are very different. It is possible, however, to identify conclusions for the field as a whole from the common trends and characteristics of some or all of the e-learning initiatives that failed to reach targeted goals. In what follows five major conclusions and recommendations that are characteristic of all or nearly all of the initiatives, that were closed because they failed to reach targeted goals, are identified.

1. Hard-nosed market research is essential for the success of any e-learning initiative. Failure to meet this criterion can be found in the Alliance for Lifelong Learning, the California Virtual University, IT Fornebu Knowation, Bedriftsuniversitetet, Scottish Knowledge, the Scottish Interactive University, the United Kingdom e-University and the Open University of the United States. New e-learning initiatives need to keep their feet on the ground. They need to commission scientific market research. This is especially true if their desired market is outside their home economy, for example in Africa or Asia. Plans like ‘the institution anticipates continued growth to 500.000 students in two years’ (Scottish Interactive University) for a system that apparently enrolled only 1000 adult students or ‘to provide online courses in the arts and sciences to their combined 500.000 alumni’ (Alliance for Lifelong Learning) for a system that initially enrolled 600 students are so ridiculously far from the mark that one wonders how the authorities concerned approved the foundations. It should be noted that the Megatrends project has shown that e-learning systems can in fact enrol very large numbers of students. The case study of the learndirect agency in the United Kingdom, developed at the same time as the failed UKeU, shows that it claims an enrolment of half-a-million students. The case study of the CrossKnowledge agency in France shows that it claims a quarter-of-a-million students. It should be noted that neither of these e-learning institutions operates at university level. It is recommended that those contemplating the foundation of a new e-learning initiative should study carefully the case studies provided here of both learndirect and CrossKnowledge and contrast them with the case studies of initiatives which failed to reach targeted goals.


2. e-learning initiatives should plan carefully for and control carefully their revenue and expenses. Seeding funding dries up quickly. There is every evidence that initiatives studied in this report overestimated their revenue and failed to show an operating profit of revenue over expenses. There is every evidence that the initiatives studied in the report underestimated the cost of developing quality e-learning materials and underestimated the cost of providing tuition services. In distance education theory the development of learning materials is usually regarded as a capital cost because once developed the materials become an asset that can be offered to students over a number of years. In e-learning the considerable cost of updating materials, perhaps annually, to meet the constantly changing requirements that students have to meet, is a further expense that has to be budgeted for. In distance education theory tuition costs are usually regarded as annually recurring costs because they change with the size of the student body and have to be budgeted for separately for each cohort of students enrolled. The case studies presented here show that the Alliance for Lifelong Learning, the California Virtual University, IT Fornebu Knowation, Scottish Knowledge, the Scottish Interactive University, the United Kingdom e-University and the Open University of the United States all failed to estimate accurately the costs of developing quality e-learning materials, the costs of providing tuition services and how they would guarantee that revenue was greater than expenditure. Another problem is that most of the initiatives have received seeding funding from government or from sponsors. The Alliance for Lifelong Learning received $12.000.000 from its four university sponsors, the IT Fornebu foundation received €9.000.000 from the Norwegian government. Scottish Knowledge received £14.500.000 from its sponsoring universities, from the government and from industry. The Scottish Interactive University received £2.300.000 from Scottish Enterprise. The UKeU was launched with a budget of €93.000.000. The USOU is said to have cost the UKOU £20.000.000. The CVU received $6.100.000 from the State of California. In all cases the seeding funding was used up, a further tranche of funding was applied for, this was refused and the institutions closed. It is recommended that all those planning future e-learning initiatives realise that seeding funding, whether from government, from sponsoring institutions or from industry will dry up and may dry up quickly. They need to get their activities quickly to a state where revenue exceeds expenditure and yields a profit.

3. Choice of courses and its accreditation is crucial. For an e-learning initiative to be successful the courses to be offered need to be chosen with care. This is even more important when the courses are to be offered overseas. As a general rule accreditation either at university level or at industry level is essential. Many of the initiatives studied show an arrogant assumption that courses from one country can be successfully offered in another, even in Africa or Asia.


The Alliance for Lifelong Learning showed that there is a limited market for unaccredited general interest courses, like ‘The Poetry of world War 1’. ITFK and the Bedriftsunversitetet’s courses were launched with an ICT focus in a declining ICT market. NKN showed that workers are not students. The Scottish Interactive University was based on courseware for second level students. The UKeU failed to make its courseware available quickly enough. The OUUK was very proud of the international reputation of its courseware, but failed because it could not get its courses accredited at university level in the United States. It is recommended that those contemplating an e-learning initiative should reflect on the consideration that workers are not students. Workers will only enrol in e-learning courses if they carry an accreditation that is necessary for the worker, or if they provide skills that are needed for the worker to secure promotion in his or her job, or provide skills that are necessary for the worker to hold on to his or her job.

4. It is important that those planning e-learning initiatives should define precisely the relationships of their initiative to existing providers and define precisely the institutional model they will adopt. The case studies present many instances of failed e-learning initiatives competing with other established institutions for the market, or even competing with their own sponsoring institutions for students. The UKeU competed with the international market of the Open University of the United Kingdom and the other British universities, which had worked for years to set up an international operation, usually because they felt that the British government funding was inadequate for their core activities. The OUUS competed in the American market with many hundreds of American universities, American State universities, American two-year colleges, American four-year colleges and many others. The relationship between the CVU and the other sections of the California education system was not clear. The Bedriftsunversitetet in Norway was in competition with the powerful institutions that founded it. Scottish Knowledge and the Scottish Interactive University were in competition for the same students. It is recommended that the founders of future e-learning initiatives plan carefully for the relationships with other existing providers, especially their relationships with their sponsoring institutions, and adopt a model that is not in conflict with existing provision.

5. E-learning initiatives should plan carefully to manage both their educational and business activities. Bacsish (2005) the leading analyst of unsuccessful e-learning institutions has written: ‘An e-university must be a university and a company – doing both well is hard because it affects every aspect of the activity. New e-learning initiatives should plan carefully for both their educational and business activities and adopt a management structure which allows both to be managed successfully. The CVU had a management structure which did not allow business activities to be managed successfully and which provided no financial revenue for the institution. ITFK was regarded as a redundant organisation established by businessmen with little competence in education.


Scottish Knowledge was managed by 21 universities and colleges. The UKeU was criticised by the UK Government Parliamentary Committee for allowing corporate business procedures to override educational management norms. The USOU was managed by American educationalists overseen from the UK. It is recommended that those considering future e-learning foundations plan carefully for the interaction of educational and business activities in the new institution.

Rating of success factors The Megatrends project has developed a grid of 25 criteria for the evaluation of robust and sustainable e-learning activities. This grid is applied here to the 10 e-learning activities which failed to reach targeted goals. The analyses are imperfect and insufficient since some of the necessary information is lacking. However, the rating indicates that the 10 institutions score poorly on nearly every criterion. This demonstrates the value of the Megatrends grid in the measurement of e-learning success. It also demonstrates the areas in which the failed initiatives failed to score well on the grid. Table 2. Rating of the institutions

Inst

itutio

n

1. L

ong

hist

ory

in o

nlin

e /d

ista

nce/

flexi

ble

educ

atio

n

2. H

igh

com

pete

nce

in o

nlin

e ed

ucat

ion

3. E

volu

tiona

ry d

evel

opm

ent

4. C

ontin

uing

rese

arch

5. H

igh

com

pete

nce

in IC

T

6. B

ased

on

stan

dard

tech

nolo

gies

7. W

ell i

nteg

rate

d IC

T sy

stem

s

8. E

ffec

tive

adm

inis

trativ

e sy

stem

s

9 W

ide

rang

e of

subj

ects

and

leve

ls

10. W

ise

choi

ce o

f top

ics

11. F

lexi

ble

stud

ent s

tart-

up a

nd p

rogr

essi

on

12. F

ocus

on

asyn

chro

nous

com

mun

icat

ion

13. S

uppo

rt fr

om to

p m

anag

emen

t

14. E

nthu

sias

tic e

mpl

oyee

s

15. S

trate

gies

that

supp

ort o

nlin

e ed

ucat

ion

16. F

ocus

on

qual

ity

17. E

ffec

tive

adm

inis

trativ

e ro

utin

es

18. P

redi

ctab

le a

nd m

anag

eabl

e te

ache

r wor

kloa

d

19. C

olla

bora

tion

with

oth

er in

stitu

tions

20. H

igh

cred

ibili

ty w

ith th

e go

vern

men

t

21. S

ome

sort

of in

dust

rializ

atio

n

22. C

ost-e

ffec

tiven

ess

23. S

tabl

e an

d pr

edic

tabl

e so

urce

s of i

ncom

e fr

om o

pera

tion

24. P

ress

ure

on th

e ne

cess

ity to

cha

nge

25. C

ontra

cts w

ith p

art-t

ime

tuto

rs &

cou

rse

deve

lope

rs

SWI 1 2 1 nd 3 4 1 2 3 3 nd 1 4 nd nd 2 2 3 nd 2 nd 4 3 2 4

CVU 1 2 1 nd nd 4 na nd 4 3 nd 4 2 nd 1 1 nd na 4 4 2 na 3 2 nd

ALL 1 3 nd nd 3 4 nd 3 4 4 nd nd 4 nd nd nd 3 nd 4 4 nd 2 4 nd nd

ITF 1 2 1 2 2 3 2 nd 1 1 nd 2 5 4 2 3 nd na 1 3 na 2 2 3 na UKe

U 1 2 nd nd 2 2 nd nd 1 1 nd nd 4 nd nd nd nd nd nd 2 nd 1 2 na nd

NKN 1 2 2 1 2 2 4 3 4 3 3 3 4 5 4 5 2 na 4 5 na 2 2 2 na

USOU 2 nd nd nd 3 nd nd nd 1 2 nd nd 3 nd nd 4 nd nd 2 2 nd 2 3 nd nd

SIU 2 2 nd nd nd 4 4 nd 2 3 nd nd 4 nd nd nd nd nd 1 2 nd 3 2 nd 4

SK 1 nd nd nd 2 3 nd nd 2 4 4 nd 4 nd nd nd 2 nd 5 3 nd nd 2 1 na

Avr. 1,2 2,1 1,3 1,5 2,4 3,3 2,8 2,7 2,4 2,7 3,5 2,5 3,8 4,5 2,3 3 2,3 3 3 3 2 2,3 2,6 2 4

Very much true - 5,4,3,2,1 -very little true. NA=Not applicable, ND= No data


It is also interesting to compare the rating of the discontinued initiatives with the rating of megaproviders as shown in Table 3. The table shows that the average rating of the discontinued initiatives is substantially lower than the ratings of the megaproviders. However, the ratings of factor 11 (Flexible student start-up and progression), 14 (Enthusiastic employees) and 25 (Contracts with part-time tutors & course developers) are not especially different from the ratings of the megaproviders. Table 3. Rating of discontinued initiatives and megaproviders

Fact

or

Fact

or 2

Fact

or 3

Fact

or 4

Fact

or 5

Fact

or 6

Fact

or 7

Fact

or 8

Fact

or 9

Fact

or 1

0 Fa

ctor

11

Fact

or 1

2 Fa

ctor

13

Fact

or 1

4 Fa

ctor

15

Fact

or 1

6 Fa

ctor

17

Fact

or 1

8 Fa

ctor

19

Fact

or 2

0 Fa

ctor

21

Fact

or 2

2 Fa

ctor

23

Fact

or 2

4 Fa

ctor

25

Ave

rage

Disc 1,2 2,1 1,3 1,5 2,4 3,3 2,8 2,7 2,4 2,7 3,5 2,5 3,8 4,5 2,3 3 2,3 3 3 3 2 2,3 2,6 2 4 2,65

DEI 4,4 4,3 4,2 3,8 4,3 4,7 3,8 3,8 4,1 4,1 2,5 4,6 4,3 3,8 4,3 4,4 4,1 3,7 3,3 4,2 4,2 4,1 4,4 4,3 4,2 4,08

U 2,3 3,5 4,1 3,4 3,8 4,8 2,8 3,1 3,6 3,8 1,9 3,9 4,1 3,7 4,1 4,1 3,2 3,6 3,5 4,2 3,3 3,4 2,3 3,5 4,1 3,52

CTP 2,6 3,6 3,5 3,0 4,4 4,9 4,1 4,0 3,4 4,1 4,3 3,2 4,7 4,2 3,8 3,9 4,2 3,5 4,3 4,2 4,5 4,6 2,6 3,6 3,5 3,87

A different approach to the rating could be to look for the factors that were most important for the failure as shown in Table 4. In this table, a 5 is given if the factor was important for the discontinuation, and a 1 was given if it was not an important factor for discontinuation. This approach indicates that the five most important factors could be:

• Cost-effectiveness • Stable and predictable sources of income from operation • Contracts with part-time tutors & course developers • Effective administrative routines • High competence in online education


Table 4. The most important factures that contributed to discontinuation In

stitu

tion

1. L

ong

hist

ory

in o

nlin

e /d

ista

nce/

flexi

ble

educ

atio

n

2. H

igh

com

pete

nce

in o

nlin

e ed

ucat

ion

3. E

volu

tiona

ry d

evel

opm

ent

4. C

ontin

uing

rese

arch

5. H

igh

com

pete

nce

in IC

T

6. B

ased

on

stan

dard

tech

nolo

gies

7. W

ell i

nteg

rate

d IC

T sy

stem

s

8. E

ffec

tive

adm

inis

trativ

e sy

stem

s

9 W

ide

rang

e of

subj

ects

and

leve

ls

10. W

ise

choi

ce o

f top

ics

11. F

lexi

ble

stud

ent s

tart-

up a

nd p

rogr

essi

on

12. F

ocus

on

asyn

chro

nous

com

mun

icat

ion

13. S

uppo

rt fr

om to

p m

anag

emen

t

14. E

nthu

sias

tic e

mpl

oyee

s

15. S

trate

gies

that

supp

ort o

nlin

e ed

ucat

ion

16. F

ocus

on

qual

ity

17. E

ffec

tive

adm

inis

trativ

e ro

utin

es

18. P

redi

ctab

le a

nd m

anag

eabl

e te

ache

r wor

kloa

d

19. C

olla

bora

tion

with

oth

er in

stitu

tions

20. H

igh

cred

ibili

ty w

ith th

e go

vern

men

t

21. S

ome

sort

of in

dust

rializ

atio

n

22. C

ost-e

ffec

tiven

ess

23. S

tabl

e an

d pr

edic

tabl

e so

urce

s of i

ncom

e fr

om o

pera

tion

24. P

ress

ure

on th

e ne

cess

ity to

cha

nge

25. C

ontra

cts w

ith p

art-t

ime

tuto

rs &

cou

rse

deve

lope

rs

SWI 5 5 3 3 1 4 1 3 1 1 4 5 1 5 4 4 4 4 3 1 3 1 1 3 5

CVU 4 4 5 4 3 3 5 3 2 3 3 3 5 3 5 5 3 3 1 2 2 3 1 3 3

ALL 4 4 4 nd nd nd nd nd 2 4 1 2 1 1 nd 1 nd nd 1 nd nd 5 5 3 nd

ITF 4 5 3 3 4 1 2 nd 4 4 nd 5 1 1 3 2 nd nd 4 2 nd 5 4 2 3 UKe

U 4 5 4 3 2 5 2 2 5 nd nd nd 1 nd 2 1 nd nd 4 1 2 5 4 2 nd

NKN 4 4 4 nd 4 3 1 2 1 1 3 nd 1 1 3 1 4 nd 1 1 2 4 5 nd nd

OUUS 1 2 2 nd 2 nd nd nd 3 5 nd 2 1 3 2 5 nd nd 4 nd nd 5 5 2 nd

SIU 1 1 2 nd nd 1 1 1 4 4 nd 2 1 nd 1 1 nd 1 5 1 2 5 5 2 nd

SK 3 2 3 3 3 nd nd nd 1 1 nd nd 1 nd 3 2 nd nd 1 4 nd 4 4 nd nd

Avr. 3,3 3,6 3,3 3,2 2,7 2,8 2 2,2 2,6 2,9 2,8 3,2 1,4 2,3 2,9 2,4 3,7 2,7 2,7 1,7 2,2 4,1 3,8 2,4 3,7

Very important for discontinuation - 5,4,3,2,1 -very little important for discontinuation na=not applicable, nd= no data

References Bacsish, P. (2005) Lessons to be learned from the failure of the UK e-University. Open and Distance Learning Association of Australia conference, Adelaide. Bacsich, P. (2005). UKeU overview. In The UKeU Reports Round One, Higher Education Academy, 2005.


About the authors Desmond Keegan was the foundation Chief Executive Officer of the Italian open university system, the Consorzio per l’Uiversità a Distanza. Today he is managing director of Distance Education International in Dublin, Ireland. He has designed, administered and brought to a successful conclusion more than 20 European projects. He has contributed extensively to the literature of distance education, e-learning and mobile learning including:

• Sewart D, Keegan D and Holmberg B (eds) (1983) Distance education: international perspectives. London and New York: Croom Helm. 446 pp. 2nd printing: Routledge 1985.

• Keegan D e Lata F (eds) (1984) L'università a distanza. Riflessioni e proposte per un nuovo modello di università. Milano: Angeli. 173 pp.

• Keegan D (1986) Foundations of distance education. London and New York: Croom Helm. 282 pp. Second edition: Routledge, 1990, Third edition: Routledge 1996.

• Keegan D (ed) (1993) Theoretical principles of distance education. London and New York: Routledge. pp 272. Harry K, John M and Keegan D (1993) Distance education: new perspectives. London and New York: Routledge. pp 348.

• Keegan D (ed) (1994) The industrialization of teaching and learning. Otto Peters on distance education. New York and London: Routledge. pp 260.

• Keegan D (1997) Distance training in the European Union. Brussels: The European Commission, 100pp. Weidenfeld G and Keegan D (eds) (1999) L'enseignement à distance à l'aube du troisième millénaire. Poitiers: CNED. 360 pp.

• Keegan D (2000) Distance training: taking stock at a time of change. London: Routledge, 152 pp. Keegan D (2002) The future of learning. From eLearning to mLearning. Hagen:FernUniversität (ZIFF) 176 pp.

Jüri Lõssenko is a project manager of the Estonian e-Learning Development Centre where he is involved in developing, supporting and implementing e-learning initiatives in Estonian higher and vocational education. His responsibilities include coordinating national e-learning projects financed by the European Social Funds and several Community programme projects as well as participating in numerous national and international working groups and organisations. Ms. Ildikó Mázár graduated from the Budapest University of Technology and Economics in 2002 as a bio-engineer, and in 2002 she completed a distance education course entitled “Course development, learning management”. Since September 2002 she has been working at the European Distance and E-Learning Network (EDEN) as Project Manager (earlier Project Co-ordinator). Pedro Fernández Michels is researcher in the Open University of Catalonia (UOC) and teacher for German as a foreign language. He has been working in the field of education and language acquisition since 1990 and started implementing virtual learning environments for language courses in 2004. He holds a B.A. in German and Spanish Philology, a Postgraduate


Degree in Didactics for German as a Foreign Language and a Máster in E-Learning, specialized in instructional design. Morten Flate Paulsen is Professor of Online Education and Director of Development at NKI Distance Education in Norway. He has worked with online education since 1986 and published many books, reports and articles about the topic. Many of his publications and presentations are available at his personal homepage at http://home.nettskolen.com/~morten/. His book Online Education and Learning Management Systems is available via www.studymentor.com. Torstein Rekkedal is Professor of Distance Education and Director of R & D at NKI Distance Education, Norway. He has worked in distance education research since 1970. He has produced a stream of research publications in the field of distance education and online learning. He has chaired the research committees of the European Association for Distance Learning (EADL) and the International Council for Open and Distance Education (ICDE). In 2003 he was conferred honorary doctor of the British Open University for his research work in the field. He is presently chair of the standing committee for quality of the Norwegian Association for Distance and Flexible Education. Home page: http://home.nettskolen.com/~torstein/ Jan Atle Toska holds a Cand. Phil. degree from the University of Bergen and a Master of Public Administration degree from Copenhagen Business School. He has published papers as well as several books on organizational and strategic issues in e-learning and higher education, see www.nuv.no. From 1995 to 2004 Toska was the managing director of SOFF, the Norwegian Agency for Flexible Learning in Higher Education and from 2004 to 2007 he has been the managing director Norway Opening Universities, the national agency for flexible and lifelong learning in higher education. Dénes Zarka has been working as head of development and adult education expert at the Centre for Learning Innovation and Adult Learning of the Budapest University of Technology and Economics since 1997. He worked as Project Manager at the Budapest Training Technology Centre in 1992-1997. His current work includes managing ODL projects, planning and developing of distance education and e-learning courses and service systems related to the developed, adapted learning materials (network of tutors, specification of courses, staff, tutor training, sale). He often gives methodological lectures and workshops on content development. Furthermore he is experienced with ODL and ICT research, corporate relations and market research. He is member of the Board of Experts in the National Council for Distance Education, in the Foundation For Open Learning in Vocational Education and at the Public Foundation of Apertus on the field of ODL, adult education and quality assurance.

Documents

E-learning initiatives that did not reach targeted goals