UKeU: the sorry tale of elearning scheme

POOR decisions over marketing and technology contributed to the failure of UKeU, says the Education and Skills Committee inquiry into the ill-fated £50m elearning project.

The inquiry was set up in June, after a 12-month investigation by Computing had revealed the scale of the problems at what was once the government's flagship online learning scheme for higher education.

The high-spending initiative was wound up last year having attracted just 900 students.

The committee says UKeU failed largely because it took a supply-driven rather than a demand-led approach, concluding there were three areas where such an approach led to failings:

• UKeU pursued a narrow concept of elearning
• There was a distinct lack of marketing and market research
• There was too much emphasis placed on the development of the technology platform.

The committee also highlights UKeU's failure to attract private sector funding, and the highly ambitious nature of the project.

The concept of elearning

The Higher Education Funding Council for England's (Hefce's) original business model suggested that UKeU must be 'learner-centred'.

But the project pursued a narrowly-focused concept of elearning, concentrating on the use of distance learning through technology.

Chief executive John Beaumont had no previous experience of elearning, and UKeU undertook no research into the needs of the learner.

The organisation failed to pick up on evidence that a blended approach, incorporating face-to-face teaching, was required.

And no advice was sought from existing distance learning providers, such as the Open University.

'We have found that UKeU inherited a narrowly-focused definition of elearning and chose to pursue that approach without questioning it at any stage,' says the report.

Market research and marketing

Both the Department for Education and Skills (DfES) and Hefce identified marketing - and inadequate market research in particular - as a key cause for the failure of UKeU.

Wrapped up in the prevailing dot com atmosphere, those in charge of the project wrongly assumed there was a huge demand for internet-based learning.

Marketing was given a low priority, despite spending £4.2m on sales and marketing.

Beaumont and chairman Sir Anthony Cleaver put a stop to proposals to spend £12m on a marketing company to meet the needs of UKeU - but spent £14m on platform development and £11m on course development.

The committee also found it 'inexplicable' that UKeU did not seek to forge a closer relationship with the British Council.

UKeU's approach to marketing was to 'draw on contacts' such as those made by Cleaver, who was also chairman of the Asia Pacific Advisers for Trade Partners UK.

The committee questioned whether it was appropriate that the only market research consisted of executives making visits to the Far East. 'Evidence to this inquiry suggests that UKeU's understanding of their markets came from anecdotal evidence from individual discussions, rather than from systematic analysis,' says the report.

A technology-driven approach

Almost a third (£14.5m) of the money received by UKeU was spent on a technology platform.

Existing web-based learning platforms could have been adapted at a fraction of the cost, but it was UKeU's opinion that objectives could not be met without developing a new platform.

The system, developed in conjunction with Sun Microsystems, was clearly Beaumont and Cleaver's number one priority.

But it proved more complex than anticipated. Sun signed a contract as UKeU's strategic partner in October 2001, but difficulties in platform development delayed the launch of UKeU's courses until September 2003.

Just 200 of UKeU's 900 students used the platform, the majority of students choosing to work with the individually-contracted universities.

'UKeU had a skewed focus on the platform, based on an assumption that once this was right, the original projections of very high numbers would be easy to realise,' says the report.

A failure of partnership

UKeU's business plan envisaged a partnership with private sector companies, with private/public funding split 50/50 to put commercial drive and accountability into the venture.

Instead, the committee found that UKeU became another example of how the public sector struggles to form partnerships with the private sector.

Sun entered as a strategic partner in October, but decided not to hold shares in UKeU, and removed itself from any influence over operating decisions.

In the early stages of its set-up, UKeU also failed to reach an agreement with publishing specialist Pearson.

And the committee found no indication that the higher education institutions were helping to drive the project forward.

'It appears to us that the wave of enthusiasm which caused all but a handful of higher education institutions to sign up to the UKeU project receded very rapidly, leaving it without private sector investment or active higher education sector engagement,' says the report.

A highly ambitious project

Rather than concentrate on selected UK postgraduate and continuing professional courses, UKeU decided to start with the global market, aiming to reproduce the full student experience of a conventional university.

This necessitated work on the organisation's entire product chain from the outset, including the sourcing of products, channel management, online delivery and cash collections.

UKeU set itself an 'impossibly ambitious business model' - and should have focused on specific elements of the product chain, say MPs.

'We have found that, although there were ambitious aims for the project before UKeU was established, it added to the pressure by taking very ambitious business decisions,' says the report.

Salary and bonuses

In March 2003, it was reported that Beaumont's basic salary was £180,000, with a 'performance-related bonus' of £44,914.

At the time, the learning platform was running a year late and no courses had been launched, while initial pilots, due to be launched in spring 2003, were also delayed until autumn 2003.

With targets missed, why did Beaumont get such a big payout?

The committee found UKeU's bonus scheme was an example of the anomaly caused by the belief that private investment would be part of the project.

But when little investment was forthcoming, the systems were not changed to reflect the circumstances in which UKeU operated.

The committee says any company paying bonuses of this kind, having underperformed in the way UKeU had, would face severe criticism from shareholders.

'We consider that for either the private sector or the public sector the bonuses paid to senior staff were wholly unacceptable and morally indefensible,' says the committee's report.

Feedback from the committee

Paul Holmes, Liberal Democrat MP and member of the Education and Skills Select Committee investigating UKeU, says the online university was yet another example of the government trying to be dynamic and adventurous in partnership with the private sector.

'A lot of this stems from the government's idea that public is bad and private is good,' he said.

Holmes says taxpayers have had to cover the costs of UKeU, and that the government should have realised something was wrong much earlier.

'The condition of the grant was that UKeU attracted private sector cash - and it effectively got none. Someone should have realised that if the private sector aren't touching this, something must have gone wrong,' he said.

'The management got massive bonuses even though they got everything wrong and missed every target.'

What happens now? The future of online learning

WHILE the Education and Skills Committee reports on the failings of UKeU, the Higher Education Funding Council for England (Hefce) releases its elearning strategy this week.

The document sets out Hefce's plan for supporting online learning over the next 10 years, and reflects responses to a consultation process begun in August 2003.

Hefce delayed finalising its strategy so it could take account of the committee's conclusions on UKeU.

The committee's final report says the government must clarify how it intends to support online learning and it expects Hefce's plan to embed 'elearning in higher education in a full and sustainable way'.

Hefce's strategy suggests higher education institutions (HEIs) are struggling to 'normalise' elearning as part of the education process, and that HEIs undertaking elearning projects should not focus solely on the use of IT.

Instead, the organisation proposes a definition of elearning that encompasses the many uses of technology that HEIs can adopt within teaching.

Hefce aims 'to support the higher education sector as it moves towards embedding elearning appropriately, using technology to transform higher education into a more student-focused and flexible system, as part of lifelong learning for all who can benefit'.

The strategy aims to help HEIs by addressing seven strands of activity, including learning resources and student support. About £33m will be available for project capital funding.

Hefce intends to make available any residual funding from the UKeU project to support higher education elearning, and has agreed with the Higher Education Academy and the Joint Information Systems Committee to provide funds to help embed elearning in HEIs.

The programme will be aided by a 'virtual' national elearning advisory and support centre to co-ordinate activities, offer leadership and nominate elearning 'champions' from HEIs.