In the fourth and final part of his series of articles based on in-depth resesarch into the development of e-learning, Kieran Levis explores the real size of the market beneath the hype and the critiques.

Kieran is the principal of Cortona Consulting and the author of The Business of (e)Learning, published by Screen Digest. The report is based on a strategic analysis of the e-learning industry and a detailed study of the development of corporate and university markets in North America and Europe. This is the third of four articles which draw on the study.

Part One: Why e-learning often fails

Part Two: The pattern of e-learning adoption

Part Three: How big are e-learning markets?

A Learning Revolution?

The previous articles in this series considered why so many e-learning initiatives had failed, how big e-learning markets really are, and why the pattern of adoption has been so uneven. This final article looks forward and assesses:

- the extent to which a revolution is under way in learning and knowledge;

- the industries and companies where this revolution is starting - and those where it probably will not;

- how the markets for learning and e-learning are likely to evolve over the next 3-5 years;

- the major growth opportunities for suppliers;

- how e-learning markets will grow.

Is it really a revolution?

Something close to a learning revolution is in its early stages in certain industries. Different technologies are playing a big part in it, but the revolution is only partly about technology.

The fundamental reason for a revolution is the need in a knowledge-based economy for vastly more learning, both formal and informal, than was required in an industrial society, and for a more systematic approach to the sharing of knowledge. Knowledge workers need to process enormous amounts of information and to tap into the knowledge of others and the collective knowledge of their organisations. They also need to acquire large amounts of knowledge and skills throughout their working lives. Classroom training is a very ineffective and expensive way of enabling people to acquire knowledge. Organisations and people clearly need approaches that are both more effective and more efficient.

The e-learning industry to date has focused much more on improving the efficiency of the learning process than on learning effectiveness. That has led to some big disappointments, particularly with off-the-shelf content that was scarcely ever used, and with learning management systems (LMSs) that had little impact on learning outcomes.

However, valuable lessons have been learned from these and from the outstanding successes of organisations such as Cisco, IBM and Skandia in the corporate sector and the OU and Phoenix amongst universities. These have taken an approach to learning which can be said to be revolutionary, and their example will undoubtedly be followed by many more.

What it is

The key elements in the learning revolution are:

- an integrated approach to learning and the management and sharing of knowledge;

- giving the main priority to learners and their needs;

- a broader and deeper understanding of how learning does and does not work--and an emphasis on measuring outcomes rather than attendance;

- the abandonment of classrooms as places where teachers or trainers try to 'transfer knowledge' to learners;

- learning, both formal and informal, becomes a continuous process, and part of normal working life;

- modularising learning content so that it can be digested on a just-in-time basis at any time;

- much greater use of learning-by-doing and learning with, and through, other people.

Technology is the indispensable enabler of this revolution, not the instigator. All of the above approaches can improve effectiveness and some technological tools make a particularly useful contribution. Technology can also have a significant impact on the economics of learning, though not invariably.

What it isn’t

What the revolution is not about:

- The demise of the classroom. It remains an excellent forum for group learning, synthesising knowledge and understanding, and, occasionally, inspirational teaching

- Across the board savings. Big improvements can be made in efficiency, but some solutions are inherently expensive and learners still need to invest significant time to acquire mastery of complex subjects.

- People learning on their own by reading from computer screeens. Social interaction and practice are essential for most learning. Reading works better from paper.

- Transferring knowledge quickly by transmitting content. Only learners can acquire knowledge, and sometimes slowly means more effectively.

- Life-long learning for all. Serious continuous learning aimed at mastery of a subject will be the preserve of a (growing) minority of knowledge workers engaged in continuing professional development (CPD). Other adults have much less need and interest. Businesses will only invest in these where they can see a direct return in business performance. (In Europe, however, government bodies are investing significantly.)

- Companies outsourcing all their training. They may well outsource large amounts of it, but it is essential that they are the authors of their own learning and knowledge strategies. The most valuable content is not generic, and is frequently drawn from the company’s own knowledge.

- The learning process being automated. Learning is an essentially human activity, like thinking and loving. Technology can make it much easier to do, in different ways, at different times and in different places, but only people can do the learning.

The model of e-learning as some kind of machine for delivering knowledge to learners needs to be ditched, along with the sterile, behaviourist view of humanity on which it is based. eLearning is a set of very useful tools, and is only as effective as the way that they are designed and used. It is part of the solution – and sometimes part of the problem, It is never the whole story.

Where the revolution has started

Many companies in the US have used some form of e-learning, but the systematic approach to learning and knowledge has been confined to a comparatively small number of companies where:

- IT is mission-critical and used as a strategic weapon;

- knowledge sharing is critical to competitive success;

- large numbers of people need frequent briefings on new products and processes.

These conditions apply most strongly in the information technology, financial services and consulting industries, which account for a very large part of adoption to date. Even there, though, it is only a minority of early adopters who are taking the systematic approach. Other industry sectors which have made significant use of e-learning are: automotive, energy, and industries like airlines which have automated much of their sales and customer service operations.

As IT and knowledge sharing attain strategic significance in more companies and more industries, the systematic approach is likely to spread, and will include some old economy businesses too, as the examples of GM, Ford, Dow and Shell illustrate. The competitive pressures to adopt the systematic approach will be irresistible in industries where knowledge, IT and intellectual capital are of strategic importance.

The rationale for taking a more thoughtful approach to learning is so powerful in all industries--and the savings and other benefits in many cases so significant--that few sectors will be untouched. However, for many companies and industries, adoption will be much slower and more tactical. For them, e-learning will be a useful means of training more people more quickly and less expensively, rather than a transformational experience.

How corporate markets will change

Learning markets will change in a number of ways over the next 3-5 years, but they will not coalesce:

- Learning and e-learning markets will continue to be made up of many segments with different characteristics. The market share of a few large suppliers will rise significantly, but these markets will continue to be 'fragmented.' It is unlikely that a small number of suppliers could dominate them.

- e-learning will cease to be seen as a distinct category and will often converge with knowledge management. An integrated knowledge and learning strategy will be a high priority for many companies. They will keep control of that strategy--and of mission-critical content--in-house, and increasingly distinct from IT management.

- One of the most visible changes will be the entry of skills development into the mainstream. Most e-learning to date has been about enabling people to acquire knowledge - many programs ostensibly about skills are really explaining concepts and testing understanding. Considerable progress has been made by suppliers like Cognitive Arts and Indeliq on programs which simulate how people acquire skills through discovery and repeated practice. Technologies like DVD are making these kinds of program more affordable.

- Companies will tend to outsource, and certainly to automate, learning wherever that is cost-effective. They will also outsource serious content development to competent specialists, and only develop simple presentation material in-house.

- Sales of 'complete' services will rise relative to sales of software licences. Enterprise-wide planning systems will converge with, and often absorb, learning management systems. A growing proportion of e-learning will be conducted over the Web rather than on corporate intranets and will be provided by specialist service providers.

- Buyers will become much more discriminating and seek to measure learning outcomes and effectiveness more than illusory savings. Many will demand performance-related deals with suppliers, rather than buying libraries of content

- The role of corporate training departments will continue to evolve away from instruction and towards facilitation.

- IT training will continue to represent a large part of the total e-learning market, but its relative share will decline as companies use networked learning for skills development and company/product knowledge.

- Much of the market for off-the-shelf catalogue content will become commoditised--but there will be several attractive niches, such as those already developed for business schools. Overall this area will see less buoyant growth than custom content.

- Synchronous learning methods will continue to focus on front-line sales and service staff, notably in the US.

- More interactive and collaborative methods will increasingly be deployed for knowledge workers engaged in continuing professional development. Asynchronous group learning has proved a highly effective and inexpensive technique in a university setting, and more companies will surely start to make use of it for learning aimed at mastery.

Growth opportunities

The biggest growth opportunities for suppliers in the medium-term will be for

- Systems integration and consulting, including outsourcing. Large organisations like Accenture and IBM, with many capabilities, are the only ones who can pretend to be offering complete solutions to corporate customers.

- Services of many kinds based on an understanding of business and learning needs.

- Customised courseware, particularly when incorporating effective simulation. More than any other technology this has the capability to improve learning effectiveness and business performance.

- The development of portals and other tools which aid both learning and knowledge sharing.

- Hosted ASP services, which offer convenient access to learning capabilities without the headaches and costs of enterprise-wide implementation. The latter, however, is probably necessary for the systematic approach to knowledge and learning. Service providers will need to offer more than just access to a wide range of generic content. A wide range of suppliers, not confined to major players today, will offer hosted services. The competencies required are different from those of technological development.

- Learning content management systems with good authoring tools and collaborative learning features offer major benefits in re-using content and access to a wide range of learning materials. LMSs without such capabilities will soon cease to be attractive to many corporations.

There will also be significant growth, though small markets for:

- Good instructional design--frequently lacking in many self-paced programs at present, but essential for learning effectiveness.

- Mentoring and coaching services of various kinds.

- Ways of making asynchronous group learning business-friendly.

Market Potential

Despite the hype, despite the mistakes and disappointments, and the present economic downturn, there are powerful reasons for believing that the markets for new approaches to learning could become very large:

- Firstly, knowledge and human capital are becoming the most valuable economic assets in more and more sectors. As noted earlier, in a knowledge-based economy, we need vastly more learning, both formal and informal than we did in an industrial society.

- Secondly, companies worldwide currently spend about $250 billion dollars a year on training, and a great deal of it is wasted. Classroom teaching is a very ineffective and expensive way of enabling people to acquire knowledge.

- Thirdly, we have the shining example of a few innovative businesses and universities, who have clearly demonstrated that the intelligent use of technology can bring about radical improvements - both in the effectiveness and the efficiency of learning.

We believe that global corporate markets for e-learning will take a fifth of that $250 billion by 2010, and reach something like $50 billion. The US, with its much bigger IT sector, will account for nearly half of this, and Europe, slightly less than $20billion.