E-learning Market Update October 2011

Lots of market activity to report this month. Kineo’s Steve Rayson has been taking the temperature at recent events in the US and Europe. His eye was also taken by recent acquisitions and he came across a refreshing challenge to e-learning vendors. Also we share an update on the relative size of UK players based on most recent published accounts.

This month has seen further consolidation with Edvantage being acquired by Lumesse. The Talent Management companies continue to look to consolidate in the sector and the Lumesse acquisition follows acquisitions of Plateau by Success Factors and Learn.com by Taleo.  Matthew Parker, CEO at Lumesse commented: "Acquiring Edvantage gives Lumesse an award-winning learning and content platform that will enhance the 2012 product roadmaps for both Lumesse TalentLink and Lumesse ETWeb.”

This sounds similar to SuccessFactors which says it is integrating Plateau “into a new offering called SuccessFactors Learning”. Thus it appears Talent Management companies are actively acquiring companies to accelerate their own product development and fill in gaps in their current offerings faster than they could organically.

The issue of consolidation was also on the agenda at the European Learning Industry Group last week. A leading global company challenged whether custom e-learning vendors could meet the needs of large global companies without further consolidation. Their view was that most e-learning vendors are often located in single countries and are simply too small to service the needs of larger global companies. They urged smaller companies to merge or work in partnership or be left behind.

It was a good robust session as they further challenged the whole industry to innovate and to create solutions that deliver real business results rather than making up names such as social learning and 70:20:10 models. They remarked that e-learning suffered from the hype cycle where things were over hyped and disappointed initially even though they subsequently matured and delivered benefits later. Their view was that mobile learning is currently in the hype cycle. It was refreshing to see a clear challenge to in vogue thinking and they didn’t stop there. Their view was that e-learning content development is a commodity and they buy it “like buying pencils”. They claimed that all vendors were fairly interchangeable at a local level.

Strong stuff but they have a point. Larger corporates are global entities that have very specific and complex needs which vendors need to understand. It is difficult to see how small, single country vendors can appreciate the issues facing corporate clients across multiple geographies. The company concerned was of the view that there are currently only two serious global vendors namely IBM and Tata. Whilst we might take issue with the conclusions we would fully agree with the logic that e-learning vendors have to grow, merge or consolidate on a global basis to be serious players. This has driven our own strategy at Kineo and which is why we have opened up offices in the US, Europe, the Middle East, Africa, New Zealand and China.

In the UK it is difficult to draw comparisons between companies and relative sizes. The IT Training Magazine last year published a Top 10 list by revenue of bespoke e-learning companies in the UK. The magazine is not about this year so we pulled the accounts of the previous top three UK companies for 2010 to see what has changed.  We were pleased to find that we were actually the biggeset e-learning company in the UK by revenue in 2010. Huge thanks to all our clients for making that possible.

However, in some ways this only confirms the point about size. At Kineo whilst we have a global presence with over 100 people in the UK, over 50 people in China, and growing teams in the US, Middle East, Pacific and Africa we know we have more to do to operate on a truly global basis to meet the needs of global clients. For us to be top of the UK e-learning companies by revenue, reinforces how fragmented the UK market is with many small and UK only companies.

The e-learning opportunity remains very large as companies realise the benefits it can delvier. At ELIG there were some fantastic stories of how e-learning is helping companies to deliver on their business strategies. Some of the success stories so far include:

• McDonald’s in the UK, achieved higher levels of hygiene and saved over £4m through the implementation of a blended programme with e-learning and workbooks supported by on the job coaching.
• Ford trained 24,000 sales staff with e-learning reducing  training costs by 74%, reducing time to competence and increasing sales by 2.4 cars per sales person.
• British Airways delivered a more flexible workforce with cabin crew training to enable working across different planes and saved £984,000 on training costs.
• Marks & Spencer cafes achieved an increase in customer satisfaction, a 6% sales increase and a reduction in costs through a targeted e-learning programme.
• Ikea met the training needs of a global operation through e-learning and compressed training time by 50%, saving over €1.2m.
• The NHS have delivered a fourfold increase in radiologists qualifying through the support of e-learning. They reduced one training component from 16 weeks to 7 weeks with e-learning and reduced the average reduction time to competency by 29%.

We can look forward to many more success stories with the latest Towards Maturity survey report due out on 4^th November. Laura and Nigel have done a fantastic job in getting 600 organisations to participate. Laura is prepared to share some good news in advance of the release of the report and says there is a strong belief that e-learning will help them move faster to meet the needs of their business. As e-learning companies we have to play our part and continue to up our game and to meet the challenges so well outlined at ELIG. Bring it on.