Open Universities Australia - 2016 Year in Review

Open Universities Australia
2 0 1 6 YEAR IN REVIEW

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Our Shareholders

Chairman's message

As with 2015, this year has been a year of change for Open Universities Australia as we continue to reposition the organisation for sustainable success around a focus on higher education. During 2016, we undertook some major steps to transform the business to better align with shareholders' desires for the company, and a year about which I and my fellow Board members feel extremely proud, whilst recognising the enormous effort that is still required to set OUA up for its next phase of growth.

Any sense of déjà vu arises from the constancy of change in today's world, a new paradigm of modernity that is with us all for the long term. It seems unlikely, with all that is happening in the higher education in Australia - massive shifts in policy and funding settings, intensity of competition between universities and private higher education providers to attract what is a steady but low growth market here in Australia in which just about every potential student has the ability to choose between options for higher education programs; and greater scrutiny by students, the government and media about the return on investment that students receive for their investment in higher education – that OUA has any "easy" or "simple" years ahead on the horizon. Nonetheless, the shareholders, Board and management team accept this reality with relish and have doubled down during 2016, through sharp focus and hard work. We need to be constantly evolving, quickly iterating as changes in the market occur.

2016 was clearly one of those years. Following a series of discussions between the Board and management, and between management and the Vice Chancellors of our seven university shareholders that have taken place over the past couple of years, we undertook to recommit OUA to the higher education sector only, with a very different business model to the one that has characterised the bulk of OUA's history. That meant undertaking a thorough examination of the non-higher education lines of business: our vocational education and training provider (Open Training Institute), our corporate training company (e3 Learning), our "white label" online education services business (Education Solutions), our free online course platform (Open2Study), and our internet domains registry for our owned top level domains (.courses and .study), to determine their long term futures, and the making of the difficult decisions to exit a number of those businesses.

At the heart of those discussions was a deep commitment by our Board, shareholders and management to build their level of alignment. Not every company can say that it has the degree of alignment that those three stakeholder groups have at OUA, and I'm very proud that we work hard on that and that it has resulted in clear outcomes for which everyone has signed up.

I would like to pay tribute to and to thank my fellow Board members for a year of hard work, dedication and commitment, and sorting through some challenging issues. We farewelled Professor Gill Palmer and Stephen Beall from the Board during 2016 and welcomed their replacement nominees from RMIT University and Swinburne University of Technology, respectively, Professor Belinda Tynan and David McCall. Gill and Stephen were diligent, thoughtful, wise and talented board members and we wish them well as they transition out of full time work at universities and hope and trust that they enjoyed, grew from and found value in their time as directors of OUA.

Finally, I would like to commend our management team, led strongly and bravely by CEO Paul Wappett and his Executive Team. We ask and demand a lot from our management and that is all the more so when an organization is in a time of transition. I am always so proud of how they respond to the challenges that we as a Board and a set of shareholders set for them. In particular, I want to commend Paul for the way in which he has set about ensuring that the shareholders of OUA have a consistent view of what OUA should be and what it should do. That process revealed a range of very different underpinning assumptions and beliefs about OUA amongst our shareholders and it has taken a deft touch to bring about a very clear convergence around a model for OUA's future.

I have enormous confidence in and optimism for OUA's future and look forward to being able to report progress in 2017's Annual Report.

CEO's message

When I first started in this job at the beginning of 2012, I painted a picture of what type of organisation OUA could be in 2017. I recently revisited that blueprint to determine how much of it we've been able to achieve, and what we know now that we didn't know then and how that has shaped our emergent strategy in the meantime. I've come to see that that plan - as is often the case for CEOs starting in a new company - was boldly ambitious (and I don't say that in a euphemistic, 'Yes Minister' way), a little naïve in some places and quite prescient in some areas.

We have pursued most of the things set out in that plan: some have worked well; some – I must put up my hand and say - have been abject failures. And, ultimately, the numbers don't lie: our enrolment numbers, our revenue and our earnings are all less than they were at the time I started with OUA. I'm acutely aware of and sensitive to those numbers; after all, I am ultimately accountable for OUA's performance.

What the bald numbers don't necessarily reveal, however, is how vulnerable to changes in the external environment OUA was in at the time, how restrictive some of our ageing and creaking infrastructure made life for us, and how uncertain life for OUA was going to be under a demand driven system with an inflexible business model.

I'm extraordinarily proud that we have had the courage to try some of the things that we have tried and of the persistence that we have shown to transform our business from being a reseller of online units and programs to being a true digital platform business. That has taken an enormous amount of energy and commitment and has at times eaten into shareholders' equity as we have looked to make investments that will benefit OUA for many years to come. Those sorts of transformational decisions require courage and they require us to hold our nerve and I am deeply appreciative that our Board has been so supportive of our efforts to change.

During 2016, a number of those changes came to the fore. We sold e3 Learning, our online corporate training company to City & Guilds in November and in the process said goodbye to many colleagues that we have valued having as part of the OUA family. We made the difficult decisions to exit the vocational education and training sector and the online education services sector. Unlike the experience of many others in the VET sector, the news that we were ceasing enrolments in Open Training Institute (our VET subsidiary) was greeted with respect and understanding (albeit amongst a great deal of disappointment) by our students, our staff, the regulator, the government, the media and the general public, largely because we made the very conscious choice to treat our students with dignity, with transparency and openness, with fairness and with humanity. Those changes set up OUA to be more successful in the future.

And, finally, we emerged from a series of discussions with shareholders (to which the Chairman has referred in his message) with a very clear, coherent and unified view of the business model that we need to employ in our core higher education business to be successful. That requires big changes to the way we go about bringing new units and programs into the OUA Platform and the way we market ourselves to students. Already we are seeing great benefits from our efforts in those areas.

None of this would have been possible without the talent, the drive, the passion and the pursuit of excellence by our staff. It is very humbling to lead an organisation in which its employees care so much about the purpose of the organisation, the way in which we go about our business, and how we treat each other and the people who interact with OUA. Our people are, simply, an enormous source of joy, pride and satisfaction to me and I am indebted to them for being willing to follow me into an exciting but not-assured-until-we-get-there future.

On their behalf, I would like to thank the Board and shareholders of OUA for continuing to put their faith in us, to back us as we set about doing something that hasn't been done before, and to be patient with us as the complexity of our world plays out. Those things are not givens, and we are deeply conscious that they would not be afforded to all management teams and deeply appreciative that they are afforded to us. In particular, I would like to thank the Chairman for his deep, demonstrable and unwavering support to OUA.

And on all their behalves, I would like to thank our students for putting their trust in us, for allowing us to guide them to make what are really significant life decisions, and for honouring the commitment that comes with signing up to study towards a higher education degree. We only exist because of you, and I want to assure you that you are the centre of every decision we make.

Board of Directors

Professor S. Bruce Dowton More info

Professor S. Bruce Dowton
Nominee Director – Macquarie University Chairman of the Board

Professor S. Bruce Dowton is the Vice-Chancellor of Macquarie University. He is a paediatrician, clinical geneticist, molecular biologist, researcher and academic who has served as a senior medical executive at universities, healthcare institutions and consulting organisations in Australia and the United States. He has also held visiting Professorial and External Examiner appointments at several overseas universities.
Mr David McCall More info

Mr David McCall
Nominee Director - Swinburne University of Technology

David McCall is the Head of Strategy and Commercial Management at Swinburne University. He leads the strategy, delivery, commercial and product management functions of the university. David joined Swinburne in 2015, having previously held senior positions in financial services and online businesses, and has also been involved in several digital start-ups both in Australia and SE Asia.
Mr David Pitt More info

Mr David Pitt
Nominee Director – Monash University Member of Finance, Audit & Risk Management Committee

David Pitt is the Senior Vice-President and Chief Financial Officer of Monash University. Prior to joining Monash University David held senior positions at Telstra in the areas of research, engineering, human resources, finance, television, superannuation and offshore entities.
Professor Ian O’Connor More info

Professor Ian O’Connor
Nominee Director – Griffith University

Professor Ian O’Connor is the Vice-Chancellor of Griffith University. Professor O’Connor is widely published in the field of juvenile justice, child welfare and the future directions of social work and human services.
Mr David Menarry More info

Mr David Menarry
Nominee Director – Curtin University

David is Curtin University's Chief Financial Officer. Curtin is Western Australia’s largest university, with over 60,000 students locally and internationally, assets of $1.5 billion and annual revenues of approximately $900 million. David’s strategic financial leadership supports Curtin’s achievement of research and teaching outcomes.
Mr Paul Beard More info

Mr Paul Beard
Nominee Director – University of South Australia Chair – Finance, Audit & Risk Management Committee

Paul Beard is the Chief Operating Officer at the University of South Australia, with responsibility for finance, facilities, IT, planning and institutional analytics. Prior to joining the University of South Australia, Paul held senior roles in both the private and public sectors in Australia and the United Kingdom. Paul is a Chartered Accountant.
Professor Belinda Tynan More info

Professor Belinda Tynan
Nominee Director – RMIT University

In May 2016 Professor Tynan assumed the role of Deputy Vice Chancellor (Education) and Vice President of RMIT University. Prior to joining RMIT, Professor Tynan was the Pro Vice Chancellor of Learning and Teaching Innovation at The Open University, UK. She provided executive leadership in the areas of learning and teaching innovation. Her previous roles have included Pro Vice-Chancellor Learning, Teaching and Quality at the University of Southern Queensland, and Director DEHub, the research centre at the University of New England.
Retired in 2016:

Professor Gill Palmer Nominee Director - RMIT University

Mr Stephen Beall Nominee Director - Swinburne University of Technology

Executive team

Stuart Elmslie Executive General Manager - Corporate Services (CFO)

Stuart Elmslie
Executive General Manager - Corporate Services (CFO)

In 2016 we adopted a balance scorecard approach to budgeting and long-term planning. This enabled us to align the activities of transitioning toward OUA as a multi-sided platform for the efficient and effective matching of students with universities in Australia. Investment into OUA’s core capabilities and applications, as well as a rebuild of the website in 2017, will materially change OUA’s market offering, and position the business for its next phase of growth as a disruptor to the Australian Higher Education landscape.
Janine Harper Executive General Manager - Education Delivery

Janine Harper
Executive General Manager - Education Delivery

2016 was a year punctuated by BIG decisions for OUA; decisions that were complex, stimulating and/or difficult; decisions that impacted everyone in our organisation in some way. How people chose to hear and respond to our business decisions while continuing to produce great outcomes for clients was genuinely nothing short of inspirational.

Hitting the RESET button on OUA’s future, and having the opportunity to help create such an exciting vision to strive for - from within a brand-new premise – the scene is set for an exciting 2017.
Paul Wappett Chief Executive Officer

Paul Wappett
Chief Executive Officer

This year we sold our subsidiary, e3 Learning, and realised a great return on investment in only a few short years. We also made the decision to exit Open Training Institute and Education Solutions, which allowed us to obtain a laser-like focus on the business that we will be taking into the future, and to concentrate on the unique positioning that OUA occupies in the higher education landscape. The alignment between shareholders, Board and management is at an all-time high.
Andy Sheats Executive General Manager - Student Experience

Andy Sheats
Executive General Manager - Student Experience

I was very excited to join OUA in the closing days of 2016. My focus is to grow our base of students, channel students to the programs that best fit their academic aspirations, and improve their experience through OUA. In the short time that I have been here, we have focused on lifting the professionalism of our Student Advisors in preparation to bring expanded universities and programs onto the platform in 2017. We also have kicked off a significant revamp and uplift of our core sales and service systems, including a greatly improved web platform. I expect to see continued and focused improvement to customer service levels based on improvements to our team, processes and systems.
Carlos Schäfer Executive General Manager - Industry and Training

Carlos Schäfer
Executive General Manager - Industry and Training

During 2016 we sold e3 Learning and in the process said goodbye to many valued OUA colleagues.

We also made the decision to exit Open Training Institute and worked closely with our students to help them complete study during the 18 month notice period. Putting our students needs first, we worked closely with the regulator, government and media to ensure a respectful exit.

As we work towards a formal closure of Education Solutions in June 2017, we have continued to service our clients to the same high standard and decided to give back to the Moodle community by providing all developed assets, learnings and improvements on the technology.