Market in Fresh Mood of Realism

Paul Taylor - Financial Times

Learning Management Systems Customers face difficult choices from a big range of systems, reports Paul Taylor.

"In the early 1990s, computer-based learning - usually based on the distribution of bespoke CD-Roms - was all the rage. Then came corporate "portals" and internet-based e-learning systems that were widely promoted as a fast, cheap and effective way to train and update the knowledge base of employees.

But the market for e-learning systems suffered when the internet bubble burst and corporate managements began to take a closer look again at IT budgets and projected returns on investment.

E-learning systems, it turned out, were complex to install, difficult to maintain and often promised more than they delivered. Interoperability problems, a lack of standards for content and frequent cost over-runs added to the malaise.

Donald Clark, the chief executive of Epic, the UK-based e-learning consultancy and content provider, describes the market for learning management systems (LMS) as "a double dip market" where the hype of the late 1990s often outran reality. "The second wave is much more realistic," he adds.

That is good news for the financial services sector which has been in the vanguard of the adoption of e-learning systems and "blended learning" which takes a pragmatic approach combining different training and content delivery mechanisms and usually incorporates "feed back" loops to reinforce learning and measure effectiveness.

Nevertheless, as Mr Clark notes, there is still lots of confusion about e-learning and learning management systems. "E-learning has as much to do with the management of change as the installation of a piece of software," he says. "You need to build a strategy before going near a buying decision on a LMS and, when you do, it must be aligned with actual need. If you don't have a learning strategy, then you don't have an e-learning strategy."

A "learning management system" is really an umbrella term that originated in the US and is applied to a range of software tools that facilitate learning administration, content management, learner support, learner management and reports.

The LMS software market, is dynamic but highly fragmented. There are literally hundreds of companies that claim to be LMS vendors or that provide general or niche vertical market content.

"Choosing the right LMS for your organisation can be difficult," notes Brandon Hall (www.brandonhall.com), a leading independent expert in e-Learning, in his latest guide to the sector. "The marketplace has given birth to a surprising array of products and services. This is undoubtly good for e-learning, but it definitely makes the LMS purchasing process more difficult," he says.

The lack of established standards further complicates the choice although a number of specifications have begun to emerge including the AICC (Aviation Industry Computer-Based Training Committee), IMS Global Learning Consortium and Scorm (the Sharable Content Object Reference Model) developed under the auspices of the Pentagon.

Most of the market leaders are US-based companies and include Saba, Docent, click2learn and Thinq. Some of these systems, including Saba, click2learn and Thinq, were originally developed as client-server systems and have been web-enabled using Java applets and other technologies. In contrast, some LMS, including Docent's offering, were developed from the outset for the net.

Aside from LMS vendors, another group of companies, including Edu-performance, SkillSoft, Templin Marketing and Netg, have specialised in providing generic e-learning system content. Other specialised content suppliers serve markets, including the financial services market, where issues, such as compliance, are particularly important.

While there has been much talk about market consolidation, the evidence so far is inconclusive. For example, the planned merger between SmartForce and Centra was abandoned in the face of customer opposition and falling share prices, and while some LMS vendors have gone out of business, others have sprung up to take their place.

Perhaps more significantly, traditional LMS providers face growing competition from the enterprise application software companies such as IBM, SAP, Oracle, Siebel and PeopleSoft, which have all added new e-learning functionality to their product lines over the past 18 months.

"They have redefined e-learning as a core business process that must be automated as with any other business process," notes Sam Adkins, an independent e-learning business analyst. "They contend that, as with any other automated business processes, learning must be integrated into application suites."

In fact, as Epic's Mr Clark pointed out in a white paper on learning management systems, buying a hugely expensive LMS does not guarantee e-learning success. He identified seven options for implementing e-learning, all of which have been tried by organisations. These are:

In a white paper published earlier this year, Mr Clark argues that the demand today is for less crude, monolithic solutions. "Learning is not like stock control. Learning is a complex set of people issues. The e-learning market has had to respond with less emphasis on large, single-sourced, Learning Management System-led solutions, to more sophisticated and integrated blends."

There is less emphasis on the technology and more on learning, he says. The industry is now being driven, not by technology vendors with "buy an LMS and catalogue of content", but by companies which focus on the business needs of the customer. These can be specific, such as recruitment, process, products or sales, or can be general initiatives based on reducing costs and/or increasing business efficiency.

"It is identifiable business objectives that matter, not visionary approaches to e-learning. Idealism is out, realism is in," he says.

For the first two or three years of the e-learning market, LMS vendors, egged on by vendor-friendly gurus, saw LMS roll-outs as the only show in town, he says.

"This has given way to a more considered approach, based, not on enterprise-wide software, but real business needs. If anything, there's a move towards LMS-lite solutions, away from the huge LMS systems of the late 1990s."

Among other trends, he notes, "motivation matters - learning is about people, not technology. An LMS and a catalogue of content may do nothing more than show people how dull e-learning can be. Any e-learning project must take implementation into account and that means motivation. "Motivation is in, passive delivery is out.

"What is hard to predict is the level of growth: markets in general have become more unpredictable and the fragmented nature of the still young e-learning market makes it difficult to both identify and extrapolate data."

What is beyond doubt, he says, is that e-learning is irreversible."