Making Business: Promoting eLearning in Enterprises

Ari-Matti Auvinen
Ari-Matti Auvinen
Senior Partner, Human Capital Investment Oy and HCI Productions Oy, Helsinki



Making Business: Promoting eLearning in Enterprises
(24th EUCEN Conference, Vienna University of Technology, 19 October 2002)


One of the expected trends in recent years has been the rapid growth of the eLearning market. However, many cases show that most market expectations have been by far over-optimistic. It is also obvious that the successful players in the eLearning business must have a number of various operational modes and thus various ”earning logics” – to be successful in the eLearning business requires several methods of earning. However, several different methods of earning also require a number of different competence areas of the eLearning providers.


Introduction

In this paper I will examine the various opportunities for higher education institutions (HEIs) (HEIs in my definition include all the tertiary education: universities, polytechnics etc.) to ”make business” with eLearning especially with corporate customers. I will approach the issue based on my experience in three different roles, which are:
- a private learning solutions consultant – the work I have been undertaking since 1993 in various Finnish, European and U.S. companies
- a lecturer in a polytechnic teaching New Media Business and, in particular, a course on eLearning as business
- a eLearning platform provider – based on the work in our company providing an eLearning platform by ASP (Application Service Provision).

I will concentrate to discuss the various business opportunities (or ”earning opportunities, if you like) of the HEIs in eLearning and explore some critical choices.



Various models of the eLearning business for HEIs

One could claim that in the business of eLearning for HEIs at least the following opportunities exist:
- eLearning technology provider (provision of eLearning platforms and solutions)
- eLearning technology-service provider (provision of eLearning platforms and solutions by alternative methods – such as ASP)
- eLearning consultancy provider (provision of consultancy in the design and implementation of eLearning solutions)
- eLearning content provider (provision of content – courses, materials etc.)
- eLearning support provider (provision of teacher support, tutoring, mentoring, technical support).

As we are exploring the various opportunities for eLearning as a business, we should also remember the role of the HEIs. The market of eLearning is in most of the European countries first developing and thus it is even more important to enable the market to form to its healthy direction. It should also be stated that the eLearning market is dominantly a market of institutional players – the so-called ”business-to-consumers” market is still missing and it is likely that this consumer market of eLearning will first be attractive in financial terms in a decade.

My principal view is that HEIs should not ”cannibalize” the eLearning market. In practical terms this means that they should not compete in such markets in which there already exist other actors - at least not with subsidised prices. It means also that HEIs should concentrate on such markets in which they are both by their content provision as well as their service competence unique.

So what could the HEIs do themselves and where should they build partnerships? I will explore in more detail three different aspects which are:
- HEIs as providers of eLearning technologies and platforms
- HEIs as content providers
- HEIs as support providers.



HEIs as providers of eLearning technologies and platforms

The market of the eLearning technologies and platforms has been quickly growing. At the moment it is obvious that in eLearning platforms there is no single market leader (which could claim to have a market share over 10 % of the market, let alone the dominate the market). The various estimates of the numbers of the various eLearning platforms on the market vary, but a common guess in that there are 5000 – 7000 various eLearning platforms.

This is – of course – far to high a number. The basic requirements for a good, working eLearning platform do not legitimate such a number of various products –good eLearning platforms include nearly always same or similar features. Most of these platforms have one or a handful of customers and are not viable in the long run. However, most of them have been developed by educational institutions often with direct or indirect public support. Unfortunately the NIH syndrome (Not-Invented-Here) seems still to be dominating many eLearning projects and much effort is wasted in developing new platforms instead of concentrating on the content and support of the learners.

My suggestion is that the HEIs partner with commercial eLearning platform providers in their business activities. Most of the eLearning platforms on HEIs will never reach market maturity and thus it is not likely that corporate customers would by services, which would be based on marginal technological solutions. This is not to undermine the role of HEIs in research and development work regarding eLearning technologies and platforms. However, when delivering courses by the eLearning method, the natural division-of-labour would be that the HEIs would use to already existing platforms and concentrate on other functions.


HEIs as content providers

The one area in which the HEIs really have a strength is the content and the content provision. The HEIs have in this area huge advantages: the professional, qualified staff, the wide reservoirs of learning content in various formats, the reputation on the market etc.

In any area – also in eLearning – ”content is king”. The content of an eLearning course and material (in this case content includes not only the information and knowledge embedded in the course materials, but also the design of the course, routing of the students etc.) is the key success factor.

The earning by content has been a particularly difficult business in the whole Internet commerce and only few areas of content have been able to create at any point even reasonable revenue based on the content. Some HEIs have developed a strategy of free provision of the course content – the users would pay only for the credits (and thus exams), but the content per se would be free.

However, the content alone is not sufficient. Although the good, high-level content is the key and absolute prerequisite for successful eLearning business, the success requires also other elements, such as the provision of support and a service approach.



HEIs as support providers

There is a reasonable amount of research in distance education and also in eLearning showing that the real success of eLearning lies in the support functions. The support is understood in this context to cover not only ”content-driven, academic” support, but also study progress support, technical support etc.

The HEIs are well qualified in providing the ”content-driven, academic” support. In many cases the HEIs have also a good competence in study progress support, although it might be provided by other persons than the academic staff.

The eLearning Business is A Service Business

My experience leads me to judge that eLearning business is fundamentally a service business. Would the HEIs want to be successful in this business and serve the corporate world, they must take the comprehensive service approach. This is due to a number of reasons.

Picture 1





The first reason – as discussed above - is the similarity between the different eLearning platforms and environments. On the market we find a number of good, pedagogically well-designed eLearning platforms. At the moment – and neither in the foreseeable future – there is no clear market leader. It is not possible to gain remarkable competitive advantage through technology leadership in this area.

The second reason is the ”solutionware” approach by customers. Customers are looking for solutions for their training and performance problems, not for a technology solution in particular. The opportunity to outsource much of the eLearning solution is preferable for most customers, as they are still in many cases starting pilots and experimenting the eLearning approach.

And the third reason is that service can be used successfully in the differentiation of the various eLearning platforms. The service can include, among others, provision of the eLearning platform by ASP (Application Service Provision), support services, learning material authoring and brokering services etc.

However, it means also that a successful eLearning provider cannot rely on only one competence set. The competencies required are not only technical, but they also include service competence and pedagogical competence. HEIs do have a strong pedagogical competence which should be complemented with a technical and service competence, would the HEIs want to successful on the eLearning market.

As picture 1 shows, the earning logic in different areas is varying. The eLearning platform marketing is often happening through service (e.g. as an ASP model). In my opinion the HEIs can provide a better service (and also serve the whole market structure better), if they would find alliances with the eLearning platform providers. It might be that it is preferable that a HEIs would not be using only one platform, but several regarding the needs environment.

The eLearning earnings should be based on the idea that there are several sources for earning, which behave differently. In some cases, these might be based on volume and utilization (such as the ASP fees), in some cases these might be based on daily fees (such as consultancy).



Towards an Integrated Service Provision

At the moment, on the market of eLearning there can be seen a ”push” of technologies and technology-related services to the customers. The market at the moment is very much platform –driven and many players on the market assume that the procurement (let alone the development) of an own eLearning platform is absolutely the first step to take.

However, the needs of the various customers do not start from the platforms – the needs start most often from educational, training and performance needs. The vehicle to deliver improved competence in modern world might be an eLearning solution.

As visualised in picture 2, I understand that to be profitable in the eLearning business, earning must be done by several methods. Thus the fulfilment of the customers’ needs by a system-selling approach requires that the eLearning providers have a full set of required competences.
Picture 2





The varying set of competences – with a good service track record - ensures that the eLearning customers can assess outsourcing and other models of their eLearning service as a realistic option.

The HEIs can serve various customers at their best, if they can find out realistically their own strengths and cooperate with other players on the market. This requires a good understanding of the potential for the division-of-labour, but also a comprehensive service approach, in which the customers of HEIs can use the ”one-stop-service” approach in procuring their eLearning.