OPM Sourcing – Having an Evaluation Strategy Pays

In the OPM marketplace today there are multiple suppliers and multiple offerings to choose from. A recent article and webinar from Phil Hill Phil Hill Article does an excellent job of describing offerings available and trending. In his piece, Phil discusses the historically successful full service offerings (2U, Pearson, Academic Partners) driven by revenue share and then also talks about newer Fee for Service offerings (Noodle Partners) where the supplier acts as an integrator to bundle service components to deliver an ultimate complete service. A telling part for me of his presentation was the statement that these quite different offerings should ‘not be considered as binary choices’.  

As a services sourcing expert with recent experience in the OPM space I can readily tell you that process and strategy are vital in a sourcing approach. Running a competitive souring process, and having a mix of suppliers and delivery models involved, is the only way to

  1. Have the information needed to make an informed choice by knowing what the best deal is, based on alignment with your overall OPM strategy
  2. Compounding this by using competition to get the best deal in terms of contract terms, financials, etc.

Do not rush to pick a winner in Revenue Share v’s Fee for Service models, at least until you have all   the information.

In a recent OPM engagement Stuart Harris Consulting helped a School develop and implement such a process. Both traditional Revenue Share and new Fee for Service suppliers were involved. As the process moved forward it drove both competition and more and more knowledge about the details behind each suppliers’ offerings. We were able to build financial models, risk assessment models, contract comparisons, and more.  Stakeholders who had potentially favored one solution at the outset changed their minds as details (positive and negative), risks, and concerns emerged.  Based on all of this The School was eventually able to make a choice of supplier and delivery model that aligned with their strategy, they got a solid modern services contract to support the deal, and they got business and risk management deal terms that would never have been on offer based on ‘standard paper’. Most importantly they signed up for a deal that in their view optimized the financial returns from OPM balancing against other factors.

For this School, having an OPM evaluation strategy certainly paid, the first step to building the strategy was not thinking that Fee for Service/Revenue Share was a binary choice, they let the process lead them to an informed strategic decision.

Leave a Reply

Your email address will not be published. Required fields are marked *