Prudens Information Resources for the Internet

e-Learning Business Concepts

A Prudens e-Report

The Emergence of E-Learning

The development of the Internet brought about the widespread availability of education in the form of online learning, or e-learning. Educators, managers and public officials have seen e-learning as an answer to educating a burgeoning student population or training workers in a rapidly changing technical environment. Others have seen a great opportunity to serve education markets through e-learning.

The value of e-learning continues to be an issue. This is because e-learning is a disruptive technology that is forcing change on bureaucratic institutions. It is also controversial because it is a technical solution to which the function of education is being adapted. However, in the midst of debates on its usefulness, the value of e-learning is slowly emerging.

Approaches to Learning

The evolution of e-learning is influenced by forms of distance learning ranging from correspondence courses to the use of television and video tapes. The development of multimedia on CD-ROMs led to the development of computer-based training (CBT) and "edutainment", a combination of learning and entertainment directed at young learners.

With the popularization of the Internet, some CBT moved to the Web to become Internet-based training (IBT). But due to bandwidth limits, an approach to deliver educational content solely over the Internet is impractical in many locations and it has given way to a hybrid of CBT and IBT where the Web is a source of content updates. Where high-speed Internet access is available, or where enterprise Intranets are used, server-based IBT is common-place.

The E-Learning Market

E-learning markets include higher education, continuing education and corporate training. Although each of these markets have traditional providers, the Internet is causing traditional barriers to be removed and for each of these markets to be served by:

Based on the missions of these organizations, universities tend to teach more college students while corporations tend to do more training, but the Internet is causing significant change in these traditional roles.

The E-Learning Market

The education and training market in the U.S. is estimated to be nearly $800 billion, with about $75 - 80 billion generated by "for profit" business. Of that, e-learning comprised about $6.5 billion in 2002 and is scheduled to grow to about $26 billion in 2006.

Sources: eMarketer, IDC , and W. H. Hambrecht & Co.

Although the education and training market is relatively stable as a whole, there are dynamic changes occurring within it, primarily in the areas of higher education, continuing education and corporate training. Students and corporate workers are rapidly being introduced to online training. For example, the rapid increase in e-learning is accompanied by a decrease in instructor-led training from 71 percent to 41 percentile training according to IDC!

More than half of all colleges and universities in the United States offer courses over the Internet. Some offer a bachelor's and master's degrees entirely online. Students attracted to e-learning typically have full-time jobs and other obligations that prevent them from returning to the campus as regular students.

Even in the midst of an economic downturn, work force training remains a high priority for businesses. In poll after poll, the highest concern of IT managers continues to be hiring qualified workers and training the staff.

U.S. Government e-Learning

The U.S. federal government is expected to increase its spending on e-learning from $200 million in 2000 to $850 million by 2005, an increase of 35 percent per year, while IT spending at the federal level will rise only six percent in that same time period. The Army University Access Online, which currently brings educational programs to 15,000 soldiers, may have as many as 1 million students when complete. The Navy has its own e-learning project, which is also designed to reach over 1 million students.

The Global Market

The global market for e-learning is growing at over 25% per year and is expected to reach $69 billion by 2015. While the United States is the largest market for e-learning, the fastest-growing market is East Asia. China, for example, expects its online student enrollment to increase from 240,000 to 5 million-college students by 2005, according to a report in the state-run China Daily.

The E-Learning Model

The value of e-learning extends not only to the end user, but also to the organization that depends on the user's skills. Workers, especially those with technical skills, must continually upgrade their skills to remain productive in their current job, or to learn new skills that enable them to change positions. Workers also seek change to avoid "burn out" from the long hours and constant pressure found in the high tech sector.

One trend in e-learning is that organizations other than schools are becoming large-scale providers of learning services. Initially, private companies that adapted quickly to fast-changing technologies found a niche in providing training. They were soon joined by professional societies, trade groups and unions to provide a broad range of courses as e-learning expanded into non-technical areas. The Internet allows community-based training through the sharing of experiences or the provision of specialized P2P mentoring.

Off-the-shelf courseware on CD-ROMs, as found in CBT, is still a significant part of the e-learning process in some areas due the lack of bandwidth. Although courses can still be purchased like software, firms want customization, per-use payments, learning management and other services, too. The trend is to offer comprehensive learning services rather than learning content.

Business Concepts for E-Learning Organizations

There are several approaches to provide value in e-learning. Some of them come from the vestiges of higher education and traditional corporate training. Others are enabled by the Internet, and may be considered "cutting edge". All of them are growing and evolving. The concepts may be categorized as:

E-Learning in Higher Education

With relatively stable growth, the university has survived on low level of technology for face-to-face meetings between teachers and students. Nevertheless, e-learning is forcing a change. The explosion of online activity among universities is yielding mixed results in cost reduction and in the learning experience.

Online learning programs continue to be well attended. According to the Sloan Report, "Entering the Mainstream", over 90% of all public universities offer at least one course online, and 49% offer online degrees. For corresponding private universities, the numbers are lower. Fifty-five percent offer at least one online course, and 20% offer online degrees.1

Higher education administrators have viewed online learning as a way of avoiding the construction of new universities needed for the second generation "baby boomers", known in California as "Tidal Wave II". Many other programs around the country, such as the Western Governors University, were started to meet this need. Over 30 public virtual universities are currently in existence.

The Western Governors University (WGU)

Since 2001 over 200 students have graduated from the WGU. It has students from every state and in the military at overseas bases. As of 2005 there are 3,100 students, generally adults who works part-time. Courses are passed and degrees granted on a competency basis, rather than a number of credits. Enrollment is now more than 3,100, more than double the total of a year ago, and up from 225 four years ago. More than 200 new students are enrolling each month.

In Western Governors' programs, students are tested on "competencies" rather than focusing on course credits. But to learn those competencies, they take online courses from participating colleges in the region and elsewhere. The key to Western Governors' growth spurt appears to be a very traditional field: teacher education.

Universities have also begun to offer corporate training. In order to compete successfully, universities must advertise, streamline programs and introduce new technology to meet the needs of their prospective clients. For most schools, corporate training is a new experience with differences in objectives and delivery.

Capella University, Jones International University, and the University of Phoenix Online offer online courses in competition with the offerings from the "not-for-profit" traditional and virtual universities.

The University of Phoenix Online

The University of Phoenix Online has become one of the nation's largest private universities. Its success is unusual, if not unprecedented, since it is both an accredited educational institution and a profitable public corporation. Its success is based on its experience as a traditional provider of continuing education to 100,000 students at 140 locations across the country. In 1989, the University of Phoenix established an online model for part-time students with full-time jobs. Its concept included small classes, part-time faculty, and a limited investment in facilities. It has grown to serve about 20,000 working professionals with a faculty of 15,000.

The University of Phoenix Online provides customized training programs for major corporations such as American Express, AT&T, Federal Express and Microsoft. Its success has been difficult to duplicate, but is carefully watched by universities attempting to establish online programs for the same type of student.

Corporate E-Learning

Corporate e-learning is the new name for training in many organizations. It is being provided by corporate virtual universities, e-learning providers, and e-learning portals. Corporate e-learning is growing slowly, from 8.8% of all training in 2000 to 10.5% in 2001. The ASTD forecasts that in 2004, 25% of corporate training will be e-learning.2

A corporate online university is more than a name change of a corporate training program. The new name also signals a change in the status and approach to training. With the online university, courses offered throughout the entire enterprise will have the same content from site to site. The online university can also be used to train customers, and may have a positive impact on sales if the program is successful.

Online Corporate Universities

  • Cisco Network Academies are found in 88 countries and all 50 U.S. States where 14,000 teachers train 144,000 students. The academies use a hybrid approach to learning, including online courses.

  • DOI University, the U.S. Interior Departments "corporate university" uses NETg and SkillSoft Corp. courseware to provide training to 75,000 employees in its many bureaus, including the National Park Service, the Bureau of Indian Affairs, the Bureau of Land Management and the U.S. Geological Survey.

  • General Motors (GM) University has contracted with UNext to supply its 88,000 white-collar workers with business courses.

  • IBM's Global Learning Institute, staffed by 3,400 professionals in 55 countries, delivers over 10,000 courses to 290,000 employees.

Some e-Learning companies3 are willing to work closely with corporations to transfer corporate training programs to the Internet or an Intranet. They also provide offerings on a wide range of topics as well as provide services to manage the training with what is known as learning management software (LMS).

E-learning companies can often assist in the development of a learning portal, a "one stop" learning capability typically hosted on a Web site, or on an in-house server. These companies can provide a range of services and can become the "de facto" training department of an organization, providing a learning management systems (LMS), authoring tools, learning assessment tools, Webcasting, online community communications, knowledge management, and technical support. Portals may also aggregate the offerings of other e-learning providers.

University and Corporate Partnerships

A university can form a partnership with a private course developer to transform classroom courses into online courses. The corporate partner might also invest in infrastructure in order for the courses to be available on the Web. Other points of agreement may address the ownership and use of the online courses, and under what conditions the university might give credit for the successful completion of a course. However, educational purists who object to any influence of the profit motive on campus have long objected about what they perceive to be intrusions by the corporate sector into academic life.

Dr. James E. Burke is a Principal in Burke Technology Services (BTS). BTS provides business assistance to startup technology companies, or organizations planning or integrating new technologies; develops and manages technology projects; performs technology evaluation and commercialization, and assists in technology-based economic development.

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