Report from eLearning Forum, August 2001

Founded in 1999 as the Silicon Valley eLearning Network, eLearning Forum is becoming recognized as a thought leader on eLearning trends and best practices. The forum’s goals include promoting the understanding of eLearning worldwide, providing a forum for resolving issues impeding the progress of eLearning, identifying emerging best practices, and hosting a global virtual conversation on vital eLearning issues. Members of the community of practice include corporate chief learning officers, eLearning executives, researchers, consultants and developers.

eLearning Forum meets monthly at the headquarters of SRI in Menlo Park, California. In addition, the recently formed Washington, D.C. chapter meets every other and holds quarterly meetings in Europe three or four times a year.

In August 2001, the eLearning Forum in Menlo Park tackled two enormous issues:

1.      eLearning in China

2.      business models for eLearning

Report from China

Sun Ying Shea, CEO of  Go4It (Go4it.com.cn), talked with the Forum live from Bejing, China, via Interwise

Last year, eLearning was not on the map in China. Today, a study shows it is now one of the top 30 initiatives among Chinese companies. Most market growth in China has been in the corporate eLearning space, specifically multinational organizations with dispersed worldwide locations. Lately, she has seen mid-size Chinese-based companies looking at eLearning as a way to improve the way they learn and work. She foresees the eLearning market growing rapidly in the next three to five years, first in the telecom sector, then in the finance/banking industries. What will drive this adoption rate, Sun stated, is localized content, technology, and services from Chinese companies.

eLearning Business Models

Tom Barron, Senior Consultant in the Learning on Demand (LoD) Program of SRI Consulting Business Intelligence, led a discussion on how new developments are reshaping the eLearning business. He began with the key drivers of change (noting that no one player has more than 6 or 7% of the eLearning market):

1. Alliances
2. New Technologies
3. New Competitors
4. New Market Strategies

The main thrust of the alliances driver has been interoperability. And, usually, learning management (LMS) vendors have been the hub of these alliances.   Alliances allow vendors with point solutions to integrate their way toward more comprehensive solutions, and thus compete with broader offerings.

Barron noted that interoperability standards under development could eventually make alliances less important,  igniting a discussion of how far standards have come toward that goal.  Have compliance with SCORM or AICC significantly impacted the end-user experience in terms of working with an LMS?  One participant commented that he was surprised to hear customers at a recent Saba users group say content still needs to be converted prior to being input into the LMS. Another forum member divided the use of standards into two categories: Those who just say they are using standards versus those who are actually using standards as part of their recipe in creating content. Most buyers now know to ask the question regarding standards (the question appears on most RFIs today), but the majority of buyers are overly optimistic over the extent to which emerging standards yield interoperability.

The group generally agreed that eLearning standards are just not fully baked yet. Buyers Beware: eLearning vendors are still implementing interoperability promises already made, and the industry has a long way to go before  “plug and play” of different eLearning components is a reality. The Advanced Distributed Learning (ADL) Initiative has succeeded in fostering industry buy-in for its standards initiative, a key milestone, and has begun to roll out a certification program to verify compliance with its SCORM model.

The group turned to the structure of current alliance networks, which have begun to pull in large technology integrators and professional service firms.  The big 5 consultants have demonstrated growing interest in the eLearning space,  and large ERP and CRM companies are beginning to  move in.

One forum member commented that it would be wise to look at more mature markets that have historically used the supply chain design, not concentric circles. He believes the eLearning industry will evolve towards the supply chain model where each node is equally important.

Another trend afoot in terms of business models is the growth of hosted services. Barron noted the growing traction of hosted eLearning offerings and cited several reasons for hosting’s appeal:

1.      Hosting allows eLearning adopters to “test the waters” without making a major financial commitment.

2.      Security concerns are beginning to wane industry wide as larger firms embrace the hosting model.

3.       Hosting is way around overburdened or unresponsive IT departments.

4.      Technology for integrating data between a hosted service and an organization’s enterprise software is steadily improving

5.      Organizations can buy time using a hosted solution while interoperability issues are ironed out.

6.      Organizations can launch hosted eLearning initiatives in far less time than required by behind-the-firewall integration.

The downside?  Hosting is arguably more expensive than purchasing eLearning software over the long term, and robust integration with enterprise software is still a problem. It seems the eLearning vendors who survive will be the ones who can offer  both hosted and licensing alternatives to fit the needs of different buyers.

The group also discussed technology advances, new competitors, and new market strategies. Tom shared his thoughts on market strategies for the growing eLearning market:

§         Alliance-based offerings versus end-to-end providers

§         Certification-driven eLearning

§         Outsourced (hosted) eLearning

§         Value-chain approaches

§         Vertical industry strategies

The last half hour, the discussion was opened up for comments. Below are just some of the opinions shared by the members of the eLearning Forum on today’s business models.

q       It will be interesting to see what happens as eLearning becomes part of a bigger picture, not just something the training department uses, but something c-level executives are spearheading.

q       The completion rates are still low for eLearning. Sessions need to be more engaging.

q       One eLearning model is not sufficient. Organizations may be willing to pay for learning today, but vendors must evolve to meet customers’ needs.

q       In response to one member who stated “we need to get people to use this crap,” another member commented that the eLearning interface needs to be well designed, or else the content and technology will be perceived as weak or ineffective.

q       One indignant member believed there is a value conflict among eLearning vendors—that eLearning is something other people should do. He asked for a show of hands as to how many members had actually completed an eLearning course—over 75% of the group raised their hands—not too shabby.

q       Some vendors see themselves as software-only, some as services—these vendors need to align.

q       Completion rates are not the only metric for effective measurement of eLearning.

q       Last, but not least, the group heard from the academic side: eLearning may have started for training, but educational usage is going to be huge. The growing trend among educational institutions seems to be towards digitizing learning and knowledge. Questions remain as to what infrastructure will be adopted and the best way to migrate. Once these questions are answered, the educational market will grow significantly.

InterWise Webcast

Two dozen members attended the August session remotely, joining four dozen in Menlo Park. They tuned in from Canada, UK, India, Norway, Finland, Germany, and China as well as California, Indiana, Maryland, New Jersey, New York, North Carolina, Tennessee, and Texas.

eLearning Forum thanks InterWise, and particularly Kathy Woolner, InterWise marketing manager and eLearning Forum member, for making this happen. InterWise enables one to conduct a virtual meeting without incurring telephone charges. Among other things, it also records a live session for replay.