Understanding Disaggregation and Service PartnershipsPaul LeBlanc | President, Southern New Hampshire University
1. What is disaggregation in the higher education context?
There’s been a long history of disaggregation unbundling in higher education. What’s different is that it’s never really touched the core academic functions, the delivery of the academic program. When you think about how academic programs function they’ve always been vertically integrated. Faculty think about programs and courses, they develop them, they sort out course descriptions and develop learning outcomes, they choose textbooks and thinking about the learning materials, they pull all that together, they write their proposals for governance, then they teach the courses and the programs. They intervene when students struggle, administer the assessments and assign grades and review those programs and courses and advise them. All of that’s been very much vertically integrated in the body of the faculty.
For the first time in higher education, there’s a willingness to disaggregate that core academic function, and that’s a pretty dramatic and, for some, traumatic, new development.
2. Why is the disaggregation or unbundling of services beneficial for higher education institutions?
When you start to disaggregate any process or vertically-integrated process or service, theoretically, what happens is there are people who are better at parts of that process, so you improve the overall. It also sometimes allows you — when the parts are not so tightly connected — to start playing with how they come together. That brings you into the realm of business model reengineering.
If you take a look at some of the more innovative new programs that are out there, what you’ll find is they disaggregate functions and reassemble them in different ways. Western Governors University, as an example, delivers learning content, but there isn’t an instructional faculty member. They pull apart content delivery and instruction. The student engages with the materials on their own but when they need access to an expert, they have faculty members to whom students can turn. But that faculty member never gets to assess the student. Western Governors University pulls that out and it is handled by a different person or another faculty member. What that’s allowed them to do is play with how the model comes together, lower costs, think about delivery differently and, in their case, move to a competency-based model that carries a high level of integrity.
The real power of unbundling is in allowing people to reimagine how they do their business.
3. What are the biggest pitfalls postsecondary leaders must be aware of when it comes to disaggregating?
Disaggregation oftentimes can [lead to] displacement of highly-skilled people and incumbent jobs, so you want to be really careful about that. There’s a lot of traditional faculty and traditional institutions who look at some of this and think, “Wait a minute, we’re at risk here.” This is a threat to a model that they hold dear. In the discussions around higher education reform, we’re not as forthright as we probably should be in saying to the faculty, “Roles will change and some functions and some kinds of institutions and some sectors may change along the way. And then other new roles may emerge.”
Unbundling oftentimes comes with outsourcing to third parties. That raises a question of choosing your partners wisely. If you’re not going to be in control of a thing and you’re going to pay someone else to have that control you need to have a really strong service level agreement in place. You need to be really clear about your expectations, because when you’re doing a key function yourself, you can measure your performance, and if you drop the ball, then you drop the ball, but you’re also in place to fix it. If someone else is dropping the ball, you need to be able to have recourse on that, you need to be able to hold them accountable and ensure that the service is fixed.
As we wrestle with trying to solve the problem of affordability and sustainability, what people are increasingly saying is, whether you love the traditional model or you’re a critic of it, what we all have to agree on is that it’s not very financially sustainable in the long run. It almost doesn’t matter how you feel about the existing models because the underlying business models, financial models, sustainability models, have changed.
4. How should an institution determine which services they should outsource?
Sometimes it depends, I think, with understanding of what you’re really good at and what you’re not. I’ll give you an example. When we wanted to grow our online programs, we tried to do our own admissions call center. This was going to be our attempt to get leads and then use our own call center to call people and then help them move through the admissions process.
We weren’t very good at it.
Our own people weren’t very comfortable with it, we didn’t understand the processes very well, we didn’t have in place the right technology. We determined at that point that we would outsource that to a third party. They were much, much better than we were. We were able to learn a lot and now we still work with some external partners for this function, but we have a huge internal call center and we’re really good at managing it.
5. Are there any administrative and academic services in particular that institutions should be looking to outsource, regardless of size and organizational model?
I think that every institution is different on this question and you have to really be hardnosed in your own internal analysis. The problem is sometimes people don’t know what they don’t know. They don’t know what are the right questions to ask, or they don’t know how to benchmark the performance of the area in question against best practices. Sometimes outside help is called for. You get somebody who really understands [industry best practices and can say,] “Here is where you are and here is the gap.”
Some people feel like you shouldn’t ever outsource key and critical functions, mission-critical functions.
6. Is there anything you’d like to add about the importance of looking to disaggregation as a strategy to both decrease operations costs and increase competitiveness in a highly commoditized marketplace?
It’s not clear to me that higher education is yet commoditized; I think that disaggregation becomes more and more powerful — but never in isolation and never for its own sake. When one looks at this question, you have to look at it also in terms of what problems you find. Disaggregation may be helpful for solving some problems and not others, depending on the institution.
You have to look at capabilities. You have to look at the extent to which you can use technology to have a multiplier effect on work you do well and want to expand. It’s far more complicated, I think, than simply a, “Let’s decide what we want someone else to do so that we don’t have to do it.”
In higher education, disaggregation includes revenue sharing (bundled services companies almost always take a share of tuition). Remember that our margins are going to get tighter and tighter in higher education. Giving up a portion of the revenue stream might become more and more painful for an institution, even as disaggregation and paying others to do certain functions becomes more interesting.
This interview has been edited for length.
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- Disaggregation of services allows institutions to better understand and modify their business practices to become more efficient.
- In cases where unbundling results in outsourcing of certain functions, institutions should have strong service agreements in place to ensure their interests are protected and third-party vendors are held accountable.
Author Perspective: Administrator