2.1 – Costs & Funding

E-learning is not cheap. No matter what model is used to support it, in the short term, extra funding or reallocated funding will be needed if e-learning is implemented on a wide scale. The good news is that if e-learning is implemented properly, there can be cost savings or cost efficiencies in the longer term. However, in order to implement e-learning successfully, organizations need to decide how it will be funded and how that funding will be sustained. Many organizations launch e-learning initiatives with one-time start up funding without considering how the programs created will be sustained. Funding is a key readiness issue that organizations need to examine carefully. In order to make sound decisions about funding e-learning, we need to have a good understanding of what it actually costs and what the benefits are. As you will read in chapter 7 of Bates & Sangrà, our higher education institutions have very little understanding of the cost issues.

Based on their analysis of 11 post secondary institutions, Bates & Sangrà make five recommendations related to costs and funding of e-learning:

1. Know What is Being Done

They argue that institutions do not know enough about how instructors use their time in teaching and how this affects costs. E-learning has a great potential to increase productivity but in order to do that institutions need to change their approaches to course development and delivery and how financial data is organized and reported.

2. Change How Costs are Tracked

They recommend a shift to an activity-based accounting model where costs and revenues are tied directly to programs.

3. Develop a Clear Funding Strategy

Investment in e-learning should be explicitly linked to the replacement of existing practices. Where the savings will be made to cover the additional costs of e-learning needs to be clearly identified.

4. Link Costs to Benefits

Current practice at most post secondary institutions is to use e-learning in an “add-on” approach. That means existing teaching approaches, funding models, hiring practices, workload allocations etc. remain unchanged but e-learning is added to the mix. There is rarely any serious attempt to measure the benefits of the use of technology. The goals for e-learning need to be clearly identified, measured and related to costs.

5. Make Business Plans Part of Program Planning

Business plans allow us to identify the costs of developing and delivering a program and to identify the risks. More importantly they allows us to track and compare the costs of different modes of delivery and they provide us with important data for doing cost-benefit analyses.

These ideas are explained in more detail in chapter 7 of Bates & Sangrà.

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Bates, A.W. & Sangrà, A. (2011). Managing Technology in Higher Education: Strategies for Transforming Teaching and Learning. San Francisco: Jossey Bass, chapter 7.

Bates, A.W. (2001). National strategies for e-learning in post-secondary education and training. Chapter 5. Paris: UNESCO/International Institute for Educational Planning.

Additional Reading

In this presentation, Anya Kamenetz discusses the issues facing higher education. The presentation focuses on the US context but the issues she raises and solutions she offers are quite relevant to other contexts.

Guiding Questions

Use the following questions to guide your thinking about the funding issues:

  1. You are the Vice-President, Academic, of your institution. You need $500,000 to set up an educational technology centre to meet the growing demand from faculty for support. Could you find an area within your budget responsibility where you could justify reducing costs to pay for the new centre? Even if you think closing a department would not seriously damage the mission of the institution as a whole, would you be able to close it, given your union agreements? Could you achieve the same results by re-organizing existing departments? Is there somewhere else in the university’s budget from where you might be able to persuade others to release that kind of money?
  2. Bates & Sangrà argue strongly in favour of activity-based accounting in which revenues flow directly to the programs that generate them rather to a central institutional institutional account. While I understand the logic of this, I have serious concerns about what it might do to the institiution’s identity and financial flexibility. Do you think this might reduce a college or university to a loosely organized group of independent business units without any overriding institutional purpose? What about the impact on its ability to support activities that don’t fit neatly into one school or faculty?
  3. As you can see from the business model example in chapter 7 of Bates & Sangrà, the MET is self-funded through tuition fees. Should institutions focus on markets where e-learning can pay for itself, or should senior administrators ensure that all students, including government-subsidized undergraduates, have access to e-learning, even if this means closing some face-to-face programs to find the money? Are there other choices?