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JUNE 20, 2000 B-SCHOOL NEWS If You Put It Online, Will They Come? Some universities and education companies are betting on big demand for a Web-based MBA
The schools are catching Web religion just in time to confront new competition from private, for-profit companies that also are offering business education online. The business models of these new arrivals -- which focus on reacting quickly to demands from both students and corporations -- hint at ways in which traditional B-schools may have to change their approach in order to remain current. The list of for-profit companies that offer business programs grows weekly. Kaplancollege.com, a sister company to test-preparation company Kaplan Inc., tells Business Week Online that it will launch its own part-time MBA program early next year. Both Kaplans are owned by The Washington Post. Colorado-based Jones International University, a five-year-old virtual school, launched a regionally accredited MBA program in March. Capella University, a seven-year-old e-learning company run by Capella Education Co. in Minneapolis, offers an accredited online MBA for total tuition of about $16,000. And Unexus University, a Canadian company, announced on June 13 that it will launch an online MBA in the fall, and that it already has 24 students enrolled in its year-old eMBA program for executives. Most of the new online programs rely on a smattering of material from business leaders, plus instruction from professors from different disciplines or schools -- even established B-schools, in some cases. CHANGING NEEDS. Such companies have entered the playing field just as business education faces new demands from its customers. At many schools, "business education is no longer consonant with the new business arena," says Jaime Alonso Gomez, dean of the Mexican B-School ITESM. His school has offered distance education for 11 years, yet he still sees room for improvement. He argues that traditional business education is "out of tune" with international business and a more mobile community of scholars. The solution, he and others say, is virtual, online education that's available anywhere, anytime, and is directly applicable to an existing work project. One task facing for-profit companies is to establish credibility that competes with that of traditional B-schools with big brand names. The other is to find good instructors. Indeed, with only nine months or so to go before its launch in 2001, Kaplancollege's MBA program lacks both a director of MBA programs and instructors to monitor its lessons. Moreover, Kaplan's B-School dean, Babson College recruit Connie Bosse, says that the school has yet to decide on the MBA core curriculum, or even elective courses -- not surprising since the company began to design its online program only in the fall of 1999. The B-school will build each course with existing Kaplan material or purchased content, but "none [of the curriculums] are done yet," she says. Jones International University has used extensive market research to determine what its students want. Among other things, it learned that multinational companies are struggling to get managers up to par on new business trends, says president Pamela Pease. The research showed that students want e-commerce and e-finance courses, she adds. Pease expects Jones' part-time MBA program, with a tuition of $10,000, to earn a profit by early 2002. THE BOTTOM LINE. Indeed, most of the new e-learning companies see online MBA programs as a way to make money relatively soon. Kaplan COO Andrew Rosen expects profits by 2004, assuming that by then he'll have several thousand students. Kaplan's MBA may not burst onto top-50 lists, such as Business Week's. "To try to play into that market is impossible," says Bosse. But since Kaplan's part-time MBA program will cost between $13,000 and $20,000, vs. an average $48,375 for a full-blown program at a top-25 school — it has the potential to become one of several bargain MBAs. Kaplan is well enough known that its B-school probably also has a chance to pique the interest of professionals who want to stay on the job and learn on the side, its ideal market. "We have a trusted name in education," Rosen boasts. In 1999, Kaplan's admissions test preparation revenues jumped 27%, to $156 million. In part, that reflected rising interest in a U.S. education overseas -- where traditional B-schools are starting to offer their own distance-MBAs. Of course, persuading B-school hopefuls that getting an MBA online from an unknown, for-profit company is worth their sweat will require lots of cajoling. Will the newcomers ultimately succeed? They'll make inroads intitially, says ITESM's Gomez, but he argues that eventually the online programs of name schools will rule the market. It's an argument that the dean of any traditional school would make. Next will come the test of whether he's right.  By Mica Schneider in New York  | | Learn about your online education options |
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