ELearning Market Update (November 2008)

Following Ambient’s rather downbeat report on the e-learning market last month, there is more caution from professional investment advisers, mixed news from the 2008 US Training Market Report but also some optimism this month from a survey by Online Educa.

Doom and/or Boom - depending on what you read...

Let’s start with the positive. A recent survey by Online Educa found that the use of learning technologies is becoming increasingly attractive for businesses especially those faced with cost reductions.

Charles Jennings, Global Head of Learning at Thomson Reuters commented: "Do more with less’ is today’s corporate byword. Charles argues that if training departments do not adapt to ‘smarter’ approaches and increased focus on working to improve business performance, they will be marginalised and downsized.

Sue Martin, Global Certification Portfolio Manager at SAP, commented that investment in staff development remains a key factor in enhancing the ability to compete. "Against this background, e-learning could see its greatest upswing in years… In times of tight or zero travel budgets and increasing environmental awareness, the importance of learning technologies has to be given a second look.

This optimism contrasts sharply with a special report from the November/December 2008 issue of Training Magazine on the 2008 US Training Market. This report was prepared by training analysts Bersin. The report notes that an economic downturn usually spells trouble for L&D departments and 2008 is no exception. Their survey found that “average training expenditures, which include training budgets and payroll, have fallen 11 percent over the last year—from $1,202 per learner in 2007 to $1,075 in 2008.

This has been reflected in large reductions in training staff in large organizations as shown below.

training staff

In terms of e-learning the report found that in large organisations self study e-learning as a proportion of overall learning expenditure has decreased for the first time ever. This echoes the findings of the Ambient Insight report we covered last month.

elearning selfstudy

One of the very few growth areas in learning technology usage was rapid e-learning. The report observes that with tighter budgets, companies are reducing the number of expensive e-learning programmes they develop in favour of rapid e-learning approaches.

rapid elearning

It is not all bad news though for custom e-learning development vendors as more companies are outsourcing custom content development as shown below.


Full details of the research will be made available in Bersin’s 2009 Corporate Learning Factbook.

E-learning is changing the way organisations learn but is it a worthwhile investment?

Tom Bulford, of Penny Sleuth, recognises the growth in e-learning and says “e-learning was going to change the face of learning. And, to be fair, it has. The trouble is e-learning has not made much money for shareholders.“

He is advising investors to be cautious but to look again at e-learning during the recession as “it is a good deal cheaper and more efficient than trying to gather together all staff into one room for a session conducted by a professional trainer. Furthermore, such is the non-stop barrage of rules and regulations, that professional compliance training is to a large extent a recession-proof necessity.

Tom will not be encouraged though by the news this month of redundancies from two UK e-learning companies. Or by looking at the share prices of major US e-learning companies, Skillsoft are down 40% over the last 3 months and Saba down 68% over the same period. The Dow Jones was down by 30% over the same period.

Looking on the bright side

A number of e-learning companies have managed to steer a successful course of consistent and strong profitable growth over the last few years including Line, Copia and ourselves. From Kineo's perspective the market does offer opportunities for e-learning companies that are fast, flexible and offer cost-effective services to clients using low cost and open source tools. We were pleased to more than double our revenues this year over last year, and we had our best ever sales month in October. This probably reflects our focus on the growth areas identified by the latest market report namely rapid e-learning, custom content and low cost hosted services. However, this is no time for complacency and we continue to look for ways to deliver even better value to our clients.

Our success has enabled us to launch a new company earlier this year, Kineo Open Source, to provide a range of new services to help clients implement low cost open source solutions. The client demand for these new services has encouraged us to plan some further exciting new developments for 2009 so watch this space.

Maybe we should be in China?

A new report on China’s e-learning market says it has entered its "growth stage". Its market scale reached RMB17.5bn in 2007, 20.7% higher than RMB14.5bn, the similar figure in 2006. In terms of users, there were about 12.2 million people using online education in 2007, this is 25.1% higher than in 2006. If you're serious about e-learning, you've got to be looking at this market. And we are - so next month we will take a look at the e-learning market in China.

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