The e-learning industry appears to be stabilizing in the recession. E-learning companies in business today have survived the dot-com meltdown and have adapted to the challenges of a recessionary market. It sure looks like there is a light at the end of the tunnel.
It’s Another Train
There is a light, but it isn’t the way out. The e-learning industry is on a collision course with the enterprise application (EA) industry. SAP, Siebel and PeopleSoft now offer integrated learning management system (LMS) modules in their EA suites. IBM has three new Web-services-ready enterprise components: an LMS, a learning content management system (LCMS) and a virtual classroom. This product development has occurred within the last year.
And It’s a Really Big Train
Enterprise application vendors will be formidable competitors for at least three major reasons: Enterprise-wide e-learning accounts are rare, EA customer bases are huge compared to e-learning vendors, and EA vendors have enormous pricing power. To add to this situation, e-learning vendors have been engaged in ruthless competition amongst themselves. In many cases, they have talked customers into switching vendors after a competitor’s contract expires. Vendors may regret showing customers how easy it is to switch to another solution.
What’s Driving It?
There are two things driving the EA vendors into this space: the attraction of profits and the need to expand mature product lines. The international corporate market for e-learning is now more than $8 billion. The sector is strong, but it has one major weakness: The industry is fragmented, with revenues scattered across thousands of vendors. The EA vendors are exploiting this fragmentation in an effort to consolidate those revenues into their own coffers. These big players always need to get new products into their pipelines. E-learning products will help offset the saturation in the maturing enterprise suite market.
Who Will Stop the Train?
Nothing will stop the encroachment of the EA vendors. LMS vendors have been at the forefront of e-learning for the past two years, and they will be the first to deal with the oncoming train. Those e-learning firms with a scalable technology and a broader message may even give the EA firms a run for their money. In hindsight, it seems that Saba and TEDS were quite clever when they changed their marketing messaging to “human capital development.” Content firms are better positioned for the next few years. In fact, they may find that these EA firms will need to become content resellers. Service vendors will adapt quickly to the new customer needs. The initial shoehorning of e-learning courseware into integrated enterprise suites will create lucrative service opportunities.
A New Form of Locomotion
Ironically, the technology that will enable parity between EA and e-learning vendors is Web services. No matter what enterprise vendors say, their intention of integrating disparate products with Web services isn’t about “getting along” with competitors. It’s about expanding into the lucrative medium-sized business market. Web services will allow vendors to sell “bite-sized” components and services via the Web. Non-enterprise companies will finally be able to afford enterprise applications.
Most EA vendors are in the process of upgrading modules with Web services interfaces. E-learning vendors with Web-services-ready products will be able to plug into the EA suites via Web services interfaces. E-learning technology vendors must accelerate their Web services development if they expect to be in a defensive position to fend off the EA vendors. Questionmark and Element K have already announced Web services products.
Is It Time to Get Off the Train?
Not just yet. But it might be wise to avoid booking a trip too far in advance. Ask your e-learning vendor when their products will be Web-services-ready. The answer may have an impact.
Sam Adkins is an independent e-learning business analyst. The viewpoints expressed in this editorial derive from his report, “When Industries Collide: E-Learning Convergence with Enterprise Application Suites,” published by the Internet Time Group.