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13 July 2004
The Scotsman
On-line Scots university weaves worldwide web

SCOTLANDíS Interactive University, created to market and sell Scottish degrees on line across the world, has exceeded all targets for its first full year of trading.

The IU, headed by the technology entrepreneur and investor David Farquhar, has reported a profit and established itself as a global leader in e-learning.

The IU is a spin-off from Heriot-Watt University and is funded by Scottish Enterprise. After just 18 months it has more than 60,000 on-line students and provides 4.5 million-plus learning hours a year.

The Edinburgh-based firm had projected a loss for its first year, but in the first published accounts since its creation in October 2002, sales have reached £1.4 million, giving it a modest operational profit.

This is in contrast to the failure of its English counterpart UKeU, which was launched in 2000 with the aim of attracting overseas students to study on line with UK universities. It has now been shut down after failing to attract sufficient students or investment, despite spending £32 million of public money.

David Farquhar, the chief operating officer of IU, described the last 18 months as "remarkable" and said he expects IU to double its sales next year, asserting that it has "only begun to scratch the surface" of a global e-learning market estimated to be worth about £15 billion.

Mr Farquhar said: "We had projected to make a modest loss but in fact we made a profit. It is a difficult market but with sound planning and a good proposition you can achieve quite a lot. We established ourselves on a sound educational basis based around content, context and community.

"The Interactive University has proven its business model. We have been able to drive huge efficiencies - we have got something like 220 per cent efficiency improvement. That has come from understanding the business better and understanding the market better."

The company, which has 38 staff based at Edinburgh Park, designs, animates and tailors existing degrees and courses from Scottish universities and markets them as on-line products. It also offers local partner institutions a role in providing complementary face-to-face tuition. Revenue is generated by the student paying an annual fee which is split between the IU and its partner university.

Within 18 months the IU has achieved the goal of successfully entering its target sales regions of south-east Asia, China, India, the Middle East, and South America. It now has partnerships with 40 countries, making it one of the largest e-learning facilities in the world.

In the past year it has had a 75 per cent increase in student numbers. The major breakthrough on the domestic front came when its Scholar programme entered the English and Scottish marketplace.

Scholar hit the headlines in May 2003 when it was sold during the SARS outbreak to Hong Kongís education authorities. It enabled them to make online materials available to 30,000 students stranded in the aftermath of the virus.

Created by Heriot-Watt to support secondary-school learning for Highers and Advanced Highers, Scholar was also adapted for the English market to include five A-level subjects - maths, physics, chemistry, biology and computer studies. It now has 100 per cent take-up by local authorities in Scotland and is the biggest programme of its kind in the world.

Mr Farquhar added: "The emergence of global education provides a unique opportunity for Scotland to take advantage of the reputation of its universities and colleges to play a leading role in the development of international education.

"The focus in East Asia is on specialised management courses like hospitality, retail and tourism whereas in the Middle East it is still on IT.

"Our primary focus in China is going to be at university-entry level where we perceive there to be a big skills gap in English language and computer competence.

"The new markets we are looking to penetrate are Europe, North America, India and we are working with the World Bank to find a financially viable solution to Africa."

A spokesman for Scottish Enterprise, which initially provided £2.3 million in funding, said it had guaranteed a further £1.2 million, which would take the IU up to 2006 and sustainability.

He said: "The interactive university was set up to exploit the e-learning knowledge base and reputation for teaching excellence we have in Scotland. These results show how far we have come to achieving this and we remain fully supportive of the IU and its attempts to become a global leader in this field."

A Scottish Executive spokesman said: "Interactive Universityís success in e-learning reflects the innovative approach of the company and the first-class reputation which Scottish higher education enjoys around the world.

"Lifelong Learning Minister Jim Wallace showed his support for their work when he announced an agreement between Interactive University and the Nanyang Institute of Management, Singapore, during a visit to the country late last year."



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