Elearning Market Briefing - April 2006

This month we have had a look at what other commentators are saying about the e-learning market. We found one of the most insightful papers to be by Sarah Boehle in Training Mag. We have pulled out from the article what we see as some of the key trends and issues which are also present in the UK and European market. 

”As a fragmented e-learning market continues to mature, vendors must merge or partner with each other to compete. And customers are reaping the benefits”  Sarah Boehle

Sarah's article identifies a number of key trends including a move towards partnerships. These trends are:

Less differentiation resulting in an increasing focus on differentiation through price ie lower prices

This is a trend we are seeing in the UK and one which is also being identified in the US. The Learning Mag article quotes two analysts who report this trend as follows:

"In terms of tools and functionality, LMSs have become so commoditized that it's now difficult to tell one vendor from another in terms of what they offer," Joe Pulichino, director of research at the eLearning Guild. "They are all more or less the same. That means that the only way for vendors to compete is price, and prices for LMSs and for content in particular are dropping precipitously.”

“The larger players such as Thomson NETg and SkillSoft were beginning to be undercut by smaller, scrappier players such as MindLeaders and Element K, which were trying to gain [market] share by pricing aggressively," according to Trace Urdan, a senior analyst of educational services with Robert W. Baird & Co. "That has forced everyone in the market to start pricing aggressively."

Increased demand for a complete range of services

The article picks up another trend that we are witnessing here which is a desire for vendors that can help organisations maximise their investment in learning. This is picked up by two different analysts.

"Companies today are looking for vendors who can provide expertise in the form of ancillary services to guide them through [implementing and using products]," says Waldir Arevolo De Azevedo Filho, a research director with Stamford, Conn.-based research firm Gartner.

Peter McStravick, a senior research analyst with the learning services group of Framingham, Mass.-based research firm IDC, is witnessing the same trend. " Vendors are having to step up the services they offer around products because it's no longer a matter of giving people products and helping them implement them. Today, customers also want to know how you can help them improve their return on investment on products, or help align learning objectives with their company's business objectives."

Increased partnerships

The article highlights the increased number of partnerships which are being formed to provide organisations with complete solutions including implementation. The IDC say they have seen an increase in the number of partnerships that are in place—or forming—across various segments of the industry. "In fact, I haven't spoken to anyone who doesn't have a partnership of some kind. In a fragmented industry, it's the only way to survive," says IDC analyst Peter McStravick.

However, often it is the customer who has to make those partnerships happen. The article quotes Barbara Bridgford, a learning technology specialist with Southwest Airlines in Dallas, has had similar experiences. "The customers have to force the other vendors and the LMS provider to come together."

Mergers

In the UK we continue to see consolidation in the form of mergers. Recent mergers and acquisitions have included:

  • Kognita's merger with Edvantage
  • GBS Training’s meger with Atrium
  • Futuremedia's proposed acquisition of EBC
  • Huveaux's takeover of Epic
  • Redtray’s acquisition of BlueU
  • Adval's merger with Maxim (previously Knowledgepool e-learning)

Kognita's merger with Edvantage will make the new entity one of the larger European players with a combined turnover of £4M, a total of 41 employees and over 200 previous clients including Ericsson, Hydro, Belgacom, Siemens, HBOS, Experian, AkerKvaerner and AP-Moeller.

In the US Trace Urdan predicts that there will be continued consolidation among the remaining players on both the platform and content sides of the business. Interestingly he notes that consolidation will be driven by investors, not the industry. "These companies are generating enough cash to remain [afloat], but they aren't generating the kinds of profit margins that will keep investors happy over the long haul," he says. "At some point, investors are going to lose patience with them."

Market growth or contraction?

In the UK CIPD’s latest survey shows a different trend with the survey revealing that the average spend on learning and training development fell by 23% from £607 to £469.

In the US Joe Pulichino, director of research at the eLearning Guild, community of practice for training professionals tells a different story "Our research is showing that the learning market in general, and e-learning in particular, is still growing. Also, on average, more money is being spent on e-learning as a total percentage of overall budgets."

Whilst we have no hard evidence that spend on e-learning in the UK is increasing as a proportion of total spend this appears to be case from our anecdotal experience.

Rapid e-learning and informal learning

The Training Mag article had little to say about these trends which we observing in the UK. We continue to see a focus on rapid e-learning development within the context of blended learning solutions and more structured informal learning and performance support.

These trends are also picked up by Margaret Driscoll, Learning and Development, Consultant at IBM. “Two trends appear strong: do it yourself (DIY), and information-as-instruction. DIY e-learning appears to be gaining popularity with no sign of decline. There are an increasing number of DIY e-learning tools for authoring."

A recent survey on the future of e-Learning in 2006 by eLearning Guild highlights the market demand for rapid e-learning. A total of 656 people responded to the survey and the analysis of the data shows that Rapid e-Learning is the current big issue. 77% of the respondents reported that their organisations interest in Rapid e-Learning is increasing moderately (44%) or significantly (33%).

2006 the year of the Podcast?

When we dipped into eLearn Magazine’s predictions for 2006 we found a common consensus on the growth of podcasting and the use of video." Audio podcasting will become an accepted and desired method of delivering learning to the mobile workforce quickly and efficiently. Video podcasting will remain in its experimental stages as regards learning, but will gain a foothold toward the end of 2006. Corporations will begin to recognize the power of handheld game platforms like the PlayStation Portable (PSP), which has wireless Internet access, a USB port, and the power to easily download and play audio and video content. Designers will struggle to determine the best strategies and methods to deploy instruction on these devices."
Karl M. Kapp, Assistant Director, Institute for Interactive Technologies and Professor of Instructional Technology, Bloomsburg University, USA

" Although some wild and impractical uses for mobile learning will be proposed, podcasting is poised to be its first real widespread practical application. Finally, as people look at the data on their investments in LMSs and LCMSs, many will question whether they've achieved real cost savings and productivity improvements."
Saul Carliner, assistant professor of educational technology, Concordia University, Canada

“2006 will be the year of video. From video-on-demand services such as sports, to distributed video (Reuters allows Web sites to run video for free), to vodcasting and other forms of consumer video, we will be awash in video this year. In e-learning proper, the migration away from commercial LMSs to Moodle, Sakai, and Bodington will continue, as will the less visible migration from LMSs altogether. In other words, the universe is unfolding as it should."
Stephen Downes, Researcher, National Research Council Canada.

You can read the full list of predictions here.