Have you noticed them too? For the past months we have been bombarded with advertisements of the LOI and NCOI, Dutch commercial institutions that brought to attention their acknowledged MBO (Intermediate Professional Education), HBO (Higher Professional Education) and Master studies (WO). These advertisements are hinting towards something that might be highly disrupting the traditional land of education.
In the recent past we have experienced major digital disruptions in many industries due to the rise of big companies, for example Booking.com (travel), Uber (passenger transportation), Spotify and iTunes (music), and Amazon and Alibaba (retail). We have witnessed many disastrous strategic decisions of traditional companies in various industries such as the photography industry (Kodak, Fuji), the telecom industry (Nokia, Blackberry), and in the retail industry (V&D, Free Record Shop, Blokker). New companies beat traditional companies when it comes to delivering products and services in a quicker, better, and easier way.
Anyhow, when looking at the impact of technology in multiple industries, it is not the question if, but when and how traditional higher education in the Netherlands will too fall prey to the technological revolution. It will be interesting to witness which institutions will take the right precautions in time to secure or improve their position.
Assuming that developments in the distant and recent past in many industries with regard to the impact of digitization are a guarantee for the future of any organization, it seems inevitable that a number of the funded institutions in the Netherlands as we know them, might not survive. Maybe none of them will!
Competition in higher education
In the education sector, one can observe an increase in competition. Not just between traditional institutions but in a greater extent between so called public (funded) institutions and private (non-funded) institutions. Additionally, the current model of financing is experiencing a lot of pressure. This might result in private institutions also being able to make a claim to government funding (OCW). In other words, when the available funds will have to be divided between a bigger group of institutions, the amount of available funds per institution will decrease substantially. By way of illustration, the average contribution from government funding (most recent available figures) as income in the budget in 2016 was about 71% for HBO and about 56% for university level, source: cijfers.duo.nl.
However, we have not gone that far yet. The WHW (law on higher education) does not allow this particular distribution of funding. The current WHW contains for example a clause that makes sure the institution handing out the diploma, must also take care of the curriculum. Although this might be the case in the Netherlands, other countries are currently experimenting with commercial institutions of education within the traditional system. In the United Kingdom for example, people are thinking of opening up the traditional system for commercial institutions (see Rubens, trendrapport 2016).
More competition between innovative higher educational institutions will lead to better quality and a reduction of costs, The British Department of Education thinks. When commercial institutions are able to deliver high quality, acknowledged higher education to extensive groups of people, one can appropriately speak of disruptive innovations within the education sector (source: Surf Trendrapport 2016).
In conclusion, when observing the market: predictions reveal that the number of new traditional students will decrease after the year 2020. The online offering increases, partly stimulated by an increase in developments aimed at in individual, time, and location independent studies. This is also expected to lead to an increase in competition, especially from institutions abroad.
In short: the chances of future students not having to study at regular, traditional higher education institutions, but at private institutions, while still being entitled to receive government funds, are very likely. Just as the chance of this private institution being abroad.
Digitization is a necessity
An important driver and enabler within the education sector is digitization. Both primary as well as supporting activities are assisted by digitization. Through technology, personalization according to the principles ‘any time, any place, any path, any space’ (Surf trendrapport 2016) is possible. Similar to other industries, new parties will arise that will purely operate on digital platforms, resulting in a shorter time-to-market. Traditional institutions will have to adapt and anticipate on the growing need for personalized, lifelong learning.
This not only means developing new educational material and learning concepts such as Flipping The Classroom  and blended learning; mixing offline with online education. These developments also entail the need for a state-of-the-art ICT infrastructure that will be able to facilitate these new materials and concepts. Moreover, this new infrastructure will make demands in terms of supporting activities regarding logistics and operational management.
Think of students subscribing for certain modules, applying for both regular and digital exams. Besides students, employees will need this infrastructure not only to facilitate a student helpdesk and the educational logistics, such as digital support of student acquisition, scheduling and planning, and tracking student progress, but also to utilize student data and learning analytics at executive management level. For the scientific departments of higher education institutions, it means digital access of research (Open Access) and digital support of the research process (Virtual Research Environment)
Finally, the rise of digital channels will also result in easy access for foreign students, leading to the physical campus becoming less prominent and gaining an equivalent in terms of a digital campus, which will become a more significant meeting place. Virtual Reality, as well as Artificial Intelligence and Gamification are technologies that will contribute to this development, while at the same time improving education didactyly and allowing adaptive learning.
In addition to setting up and making available the technological platforms and tools, setting up a suitable digital organization requires the necessary attention. What has to be organized internally and how do I manage this? Certain skills are expected from lecturers, and the developing of digital learning resources requires additional skillsets which are typically not readily available.
Will traditional higher education institutions survive digitization?
It seems evident that the education sector might be the next big sector in which traditional institutions see their market share vanish and where new both domestic and foreign players take the lead. Besides, disruption is also waiting around the corner for suppliers in this sector, for example Lix Technologies (Spotify for books), who offer a platform for students in higher education and claim to be 60% cheaper than competitors. For the time being, the current method of financing by the government offers a safety net. However, available funds are more likely to shrink than grow, as they might be divided among more parties in the near future.
The big question for Executive Boards of Universities should not be “Are we going to take steps in digitization and if so, when?” but should be “What do I have to do today to transform my organization into a fully-grown Digital University within the next 3 to 5 years?”. Just no ‘delayed political decision-making’ and ‘everyone can talk about it for a while and then we’ll think about it.’
In this sector, the relatively unwieldy and large institutions will have to act professionally and become more agile as the critical student asks for this. Waiting for politics or some sort of higher body will not help. See for example this report of the Education Council ‘Doordacht digitaal’. Fancy and justified observations and promises, but what exactly is going to be delivered? Performing such a transformation will promise to be a long journey, so use the time that is left wisely by acting, and not waste it by talking about the ifs and hows.
 Flipping The Classroom is an instructional strategy that is a form of blended learning and switches the traditional learning environment with instructional content, mostly online, outside of the classroom. Homework is made in the classroom whereas lectures are offered online.
Onno Wasser, advisor Anderson MacGyver
Funding Higher Education
In 2018, €30,4 billion was divided among:
- €4,5 billion to academic, higher education;
- €3,0 billion to regular higher education (HBO).
Apart from this, €4,3 billion was directed at Intermediate Professional Education (MBO) and adult education.
Academic and regular higher education institutions received this funding for:
- Higher education (HBO);
- Practice-based research (HBO);
- Academic higher education (WO);
- Academic research (WO);
- Collaborations with academic hospitals (WO).
The received amounts consist of a fixed and variable component, which is dependent on:
- The amount of applications at acknowledged Bachelor and Master studies within the regular study duration;
- The of successfully completed Bachelor and Master studies in which a diploma was received.
Every year, the government sets the budget. Often, higher education institutions receive funding from non-profit institutions for research (2nd source of income) or from companies (3rd source of income). Besides that, higher education institutions receive money from tuition fees.
Funding from the government is exclusively for acknowledged higher education institutions that are mentioned in the WHW.