IDC e-learning

By Kelly Robinson,2014-04-18 18:14
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Not as much buyer consolidation as you would like ? there will be a slight You may have many projects, but for a given company, for every project

Where the Market Is: IDC on E-Learning

Summary of a presentation by IDC’s Julie Kaufman

    By Stephen Downes

    March 18, 2003 Fredericton, New Brunswick

The information presented here will support industry’s mandate to:

    - assume a leadership role in cluster development

    - develop priorities and strategies

    - implement strategic actions to grow the cluster

    - champion the cluster

    Canada has a lot of strength in learning, and is in a position to assume a leadership role in e-learning. Though there has been a lot of hype about e-learning, a lot of the growth has been stealth growth, that is, from smaller companies.


    Though there has been an overall tech crash, e-learning remains strong. It is one of the top growth markets in Canada (third overall).

But what is e-learning? Defined as “synchronous or asynchronous learning that is

    conducted over the internet, intranet, Extranet or other internet-based technologies.”

    Major areas of e-learning include:

    - learning content

    - learning information solutions

    - learning services

    The e-learning market in 2001 was $US 5.2 billion, growing to $23.7 billion in 2006, an increase of 35.6% worldwide. These predictions have been revised down, in some cases

    significantly. For example, the Asia-Pacific market, expected to grow 97% over five

    years in 2001 was estimated last year to grow 15% over the same time.

    The U.S. is the largest market, both in terms of numbers of users and e-learning vendors. E-learning in the U.S. was part of the dot com boom, with a lot of companies spending on large e-learning system. When the market crashed they took a second look. “We just

    spent all this money. Nobody’s using the system.” That’s why there was a big decrease in spending in 2002.

Canada mostly avoided this, since we were able to learn from the problems in the U.S.

    Canadian investments were very tactical, department focused, and related to a business investment.

In Latin America, infrastructure remains the greatest stumbling block. Additionally,

    language is an issue. There aren’t many Latin American vendors, which creates

    opportunities for partnerships in the region.

The major barrier in Asia-Pacific is also infrastructure. In addition, language and

    software remain issues. As well companies haven’t focused on the region. Investment and

    growth has been slow in Japan; this has a lot to do with culture. Working online alone at

    a computer isn’t conducive to that culture. Growth will increase with the use of video

    classrooms and similar tools.

Eastern Europe is still working on developing a physical infrastructure. It had very high

    growth over the last few years because this was all brand new. In western Europe

    investment was strong until last year. It varies a lot by country. In Britain, the corporate

    investment is large, but in France there is not the same investment. This again is due to

    culture; they prefer to interact. Spain, though, has been a very quick adopter. Many U.S.

    companies are looking at Spain as a jump-point into Latin America.

E-learning adoption slowed dramatically starting in 2002 for a number of reasons:

    - economic environment e-learning is very expensive, and the large enterprise

    applications are being purchased

    - budget shortfalls

    - broader decusion-making unit (DMU) many more people are involved in the

    buying process

    - lengthy sales cycle eg., one LMS company is looking at a three year sales cycle

    - long implementation it’s taking a lot longer to implement LMSs, also,

    companies are creating custom content

Spending patterns also changed. In 2001, IDC thought LMSs and streaming video would

    be major things. But instead, synchronous courseware and collaborative tools became

    more important. This was partially because of 9-11 but also because people didn’t have to

    make massive investments in these tools. The LMS is being pushed into the future,

    toward the end of 2003. Online mentoring is also something further into the future. Video

    is not really expected to play a major role until 2005 or later.

Other inhibitors:

    - technology infrastructure issues

    - lack of capital expenditures

    - corporate culture and change management people need to actually use e-


    - learner acceptance “they tried e-learning, they hated it”

    - investment priorities learning is the first thing to be cut

    - content development and implementation costs

    - focused, dedicated training priorities


    - globalization probably the number one driver, especially for large organizations

    - shorter business cycles

    - cost rationalization

    - consolidation and deregulation eg., the financial services industry (regulation,

    too) people need to learn within days eg. After 9-11 the NY Port authority had

    to train everybody, 12,000 people, in two weeks “try doing that in a classroom”

     they did it in a week and a half

    - greater access to technology and internet

    - growing acceptance

So… all e-learning solutions are still experiencing growth. But while most of the hype

    has been about packaged content, most of the growth will occur in e-learning services.

    We have seen a shift away from packaged content and toward custom solutions. Every

    business problem is different, and businesses are looking at spending the money to get

    exactly what they’re looking for. The LMS and infrastructure market is still growing, but


Top 10 trends to watch:

    1. Shift in focus from software solutions to content

    2. Shift in focus from packaged content to custom development

    3. Non-IT training gaining market share rapidly

    4. Collaborative solutions are gaining acceptance eg., virtual classrooms and

    online collaboration

    5. Hosted service acceptance on the rise people don’t have the bandwidth and they

    don’t have the capital

    6. Interest in online video will continue to wane before making a comeback ina few


    7. Not as much buyer consolidation as you would like there will be a slight

    shrinkage in the decision-making unit

    8. Not as much industry consolidation as you would like there are some

    acquisitions, and these will continue, but not nearly at the pace people it will be

    LMS vendors may consolidated, but content probably won’t, because of the

    different levels of expertise that are required

    9. Service providers will have a bigger role to play

    10. The financial status of providers will play a bigger role in the decision-making

    process people re looking for providers that are going to be safe

    Competitiors: the problem with e-learning is that it’s so fragmented it’s hard to say who your competitors are. There are something like 500 companies in Canada. Some major

    regions in the landscape:

    - Pure plays someone who just does e-learning (over 50% of their revenue is e-

    learning); they are usually small, usually innovative 45 % of the overall market

    - Traditional IT providers who are looking at getting into the e-learning market. A

    lot of the very large firms have identified e-learning as a strategic investment.

    IBM is looking at $7 or $8 million in revenues from this space. Sun Microsystems.

    Microsoft. Accenture has an e-learning division. Ernst and Young. EDS. They

    may in some cases be competition, but they may also be fantastic partners. EDS,

    for example, will look to partners to develop content for their clients. 35%

    - Complimentary providers they have a solution that is complimentary to e-

    learning even if e-learning isn’t their strength. Advertisers, for example – their

    entire business model is educating a client. Educational institutions are considered

    complementary partners to the corporate market. Publishing houses: they have a

    lot of content, and they have been trying to develop e-learning, but it’s not their

    strength. 15%

    - Channel and distribution providers some companies, like Ingram, have started

    selling integrated solutions this can be competition or a partnership opportunity.

    Software and hardware companies play a influential role: Cisco, for example. 5%

E-learning continues to be a fragmented industry and it’s going to stay that way. Here’s


    - large number of small providers in niches

    - wide variety of services and core competencies thatkeep more players in the

    industry there are so many ways to do e-learning

    - it’s still a high growth market, attracting new people

    - Less reliance of the geographic location of the provider

We will see the roles played by complimentary providers and other providers shrink;

    most of this will be taken up by IT companies.

Most of the e-learning market (60%) is content, and most of the content market (70%) is

    technical content. This is mostly provided by large technical companies. But they are

    expensive and inflexible. Smaller companies can be more reactive and cheaper.


2 comments from Vcenture capitalists:

    - There are so many companies, how can they distinguish themselves?

    - Contracts are always short term how can you obtain longer-term contracts?


Contract length is an issue. Try to develop an outsourcing model with a client

    relationship. You may have many projects, but for a given company, for every project

    you’re at the table. Develop a relationship over time.

The number of companies will continue to be an issue. Talk about what we do and do

    well. Venture capitalists don’t understand the detailed market segments. We need to

    educate VCs, banks, and make them realize that there are different types of companies

    out there.


What jurisdictions have been successful in marketing themselves through a branding of



We found some, but not very many that have been successful. One that did stand out was

    a group out of Malaysia / Singapore. Pushing Singapore as an e-learning hub.


Do you have any information about the size of the market for the transfer of proprietary

    information to the customer, and how would we address this?


We haven’t really come up with a model yet. “Let’s talk about this offline” (this seems to

    be IDC-speak onstage is “online”, off-stage is “offline”


What is the future of the online university related to e-learning


Private domain eg. Being developed by IBM, Unisys, etc. they are trying to reduce

    travel costs, and they understand the infrastructure

Public domain

    - general public university Canada has been extremely slow into moving into an

    online world based on university structure, funding, risk, and marketability. A

    couple of courses here and there, but that’s it.

    - Pure online university the US is being more aggressive there is significant

    demand in the US, but not in Canada. But there is a demand externally, Asia-

    Pacific for example. Africa and the middle east are other areas, because of the

    lack of educational institutions.

Still need to do research on which models are working.

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