Standards to Support National Cooperation in Applying Technology to VET

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The Business Model

The first step in the interactions between the major participants in the learning process is research by the learner to determine a course suitable to his/her needs and the needs of the employer.

VET sector delivery of educational material to learners is an example of a process which can be represented by a customer focused Value Chain.

The value chain showing the main players in the flexible delivery process is shown in the figure below.

We define value as

Value = Perceived benefits - cost.

The objectives of using online technology are to maximise value throughout the chain.

Because the VET sector is becoming increasingly client focused, value for the learner will be of primary importance. But other players will also benefit from increases in value. Their perceived benefits and costs will be different, but increases in value will tend to diffuse throughout the value chain. That is, additional value created in one part will tend to flow on to other players.

Where excess value is not taken out of the process by eg. monopoly rents, value would ultimately be expected to flow through to the end user, ie. the learner. This should be the case in the VET sector, because it comprises two components which are unlikely to extract excessive returns, viz:

• non-profit government providers; and
• an increasingly competitive private provider market, where as competition fully develops, returns would be expected to attain levels around the cost of capital.

In general, the total number of players will tend to increase from left to right in the value chain. This means that a unit increase in value is more significant downstream than upstream. For example, in NSW where the total number of VET learners is about 400,000, a decrease in Service Provider cost (if, say 30% of students were online) of $5 / month, would result in an annual saving of $7.2M or a capitalised equivalent of $100M (at 7% cost of capital).

The object of applying on line technology - and, more particularly standardisation to communicate nationally using that technology - is to maximise the Value, particularly to the downstream players in the value chain. This will normally be done by maximising benefits and minimising costs, but in some cases value will be increased by incurring increased costs but reaping more than proportional increases in benefits.

From the VET sector requirements listed in Section 4.2, those which can be directly addressed by the application of technology and communications infrastructure are:

• improving access for all clients;
• producing informed clients capable of exercising effective choices about learning;
• facilitating an effective training market;
• employing appropriate and effective uses of technology; and
• developing staff with new competencies.
  (National Flexible Taskforce 1996, Final Report, Brisbane: Australian National Training Authority)

National consistency in standards will help to ensure that the maximum benefits are gained from these directions, and in particular one of the priorities for 1998, which is to maximise the value for public expenditure.

The application of technology, and particularly online technology, can support the attainment of the VET sector objectives and can assist in overcoming the barriers to flexible delivery which have been identified. Standardisation increase interoperability along and across the value chain and thus enhances the benefits to be gained via online technology implementation via three mechanisms:

• Facilitation of the interfaces, and thus access by teachers to content, and by learners to teachers in the diagram above
• Gathering of economies of scope at each stage of the value chain, for example allowing content for different courses to be delivered via the same infrastructure
• Gathering of economies of scale, for example, allowing a greater number of learners to share the same satellite broadcast.

It will be shown below that in most cases the application of open standards, further enhances the benefits of online technology application in the VET sector.

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Last modified on February 26, 1998.