Internet-based learning, popularly called e-learning, continues to prosper in spite of the dotcom downturn that many expected would stop it in its tracks. The exceptionally good mid-year results reported by the publicly quoted e-learning companies provides the evidence of this performance.
Financial analysts on Wall Street, who dismissed e-learning in the mid-1990s as dull and risky, are now lavishing praise on this small but growing industry for exceeding expected earnings in a difficult trading environment.
Irish analysts tend to share this view. "The results of e-learning companies are certainly holding up a lot better than those of other technical sectors," Conor Walsh of Goodbody Stockbrokers explains.
"Driving their success is the tendency for management to now see training as critical to the mission of commercial enterprises. In the past, they saw it as a cost rather than as an investment, which meant it was one of the first things they cut back when the market got a bit tight.
"E-learning is less costly than traditional classroom training. This cost-effectiveness gives it a decided advantage in a downturn, like the one we are now experiencing."
E-learning companies provide products ranging from online master's degrees in business administration to technical certification for programmers and other information-technology workers. It is rapidly expanding beyond traditional IT training to new markets, such as business and interpersonal skills and content aimed at specialist vertical markets like health care.
Universities are also making profits in this area, but the main growth is in the corporate training sector. According to a market data retrieval survey, over 70 per cent of traditional education institutions are now offering online courses. Two universities, Jones International University of Englewood, Colombia, and Capella University of Minneapolis are entirely Web-based. The elearners.com website has links to 24,000 online courses and 2,400 degree and certificate courses and learning resources.
The impressive return on investment that users of e-learning experience is fuelling this phenomenal growth. In a time of economic downturn, users find the cost savings of e-learning more attractive than ever. Users of e-learning can expect to save between 30 to 60 per cent of the costs on traditional classroom instruction, according to Brandon Hall, the New York e-learning analyst, accessible at www.brandon-hall.com.
These savings arise mainly from the hidden cost of time off the job, travel and subsistence that can amount to three times the price of classroom training.
Because of its compelling cost advantage, analysts expect e-learning to account for a larger share of corporate-training expenditures in the next few years. According to IDC, a world-wide provider of technology analysis and market data, the US corporate business skills' market will exceed $16.8 billion by 2004, based on a five-year compound annual growth rate of 17 per cent. In the future, they believe more corporate training will be delivered over the Web.
The American Society for Training & Development recently reported that the average US company is training more of its employees than ever before, with more dollars going to technical skills' training than any other type of training, and e-learning is gaining momentum among large companies. The report also found that corporations are blending the best elements of traditional classroom training with e-learning - which, with the increasing connectivity to the Internet, is the fastest-growing segment of the learning market.
With an eye on this development, Sun Microsystems recently moved into e-learning by purchasing the ISOPIA learning management systems company.
This is a significant trend with other big software companies like Microsoft, Oracle and Sun buying their way into e-learning. It coincides with the convergence of e-learning and knowledge management. According to Bank of America Securities, e-learning companies can enable enterprises to share critical performance enhancing information using just-in-time (JIT) e-learning.
This JIT e-learning enables employees to access pieces of information that are essential to the job in hand, as opposed to attending an entire training course to acquire it. Knowledge sharing and knowledge transfer of this kind is crucial to the competitive success of the world's best performing companies.
A study by AT Kearney, the global management consulting company, found that leading manufacturers who used knowledge sharing effectively had a return on assets of 40 per cent, as opposed to a group average of 18 per cent; a return on sales of 21 per cent, compared with a group average of 9 per cent; and total asset turnover of 9.8 times compared with the average of 2.9 times.
This is good news for Ireland, with more than 30 companies currently developing and offering e-learning solutions here. Five of these companies are thought to rank among the world's leading e-learning companies. Of these, SmartForce has made a name for itself as the largest e-learning company in the world today, leading the professional education market into the Internet age. It helps organisations like Dell, Computer Sciences Corporation, and PricewaterhouseCoopers to use e-learning to empower individual learners within their enterprises.
Riverdeep, an Irish based e-learning company working in the education sector, recently secured two Top 100 awards from the US Curriculum Administrator magazine. Its Internet-based products allow students who begin work in school to continue that same work at home, practising, reviewing, and completing assignments. Educators can monitor student progress as well as access a variety of lesson ideas, assessment tools, and reproducible materials. Parents can also participate in the learning experience by reviewing student portfolios, monitoring progress, and learning about new curricula.
WBT Systems, the Irish-founded provider of learning content management and delivery solutions, recently secured a place on the Tornado 100 list in recognition of its work in founding the Learning Content Management System (LCMS) Vendor Council that represents one of the most innovative segments of the e-learning industry.
NETg, with a portfolio of 1000 courses in professional IT, desktop and business skills, has its Global Innovation and Development Centre in Limerick. This centre employs professionals in teaching, corporate training, programming, instructional design, product development, graphic design, multimedia, quality assurance and software engineering.
Electric Paper Company, another Irish e-learning company, is essentially a niche player. Building on its success as a provider of an all-inclusive e-learning solution for the European Computer Driving Licence (ECDL), it has within the last year quadrupled its turnover and doubled its staff numbers.
As the e-learning industry continues to develop and expand into new markets, it has proven itself to be a reliable, recession-proof investment.