E-Learning's Global Migration
By Tom Barron
Overseas markets are the new frontier for U.S.-based e-learning firms, who are using a variety of means to establish roots on international soil. But homegrown competition is on the rise.
Riding the coattails of e-business as it spreads around the globe, e-learning is establishing itself in various forms nearly everywhere there are computers and networks to access it.
U.S.-based e-learning technology and service firms are often involved in these far-flung initiatives. But, some countries are nurturing their own e-learning content and delivery technologies to go head-to-head with American vendors.
An accelerating number of announcements in recent months herald the beginnings of a boom in e-learning in Europe and Asia, where interest is high and the necessary IT infrastructure is established or evolving quickly. Analysts put Europe about a year behind the United States in adopting e-learning technologies, though some say it's gaining ground. Asia is further behind, but no one discounts the ability of its rebounding economies to vault into the e-business arena--and e-learning--quickly.
Other regions are also being scouted by e-learning vendors. English-speaking countries including Australia, New Zealand, and South Africa, where content translation isn't an issue, are being targeted by many U.S. providers. Latin America is being charted by a smaller number of providers. The African continent is seeing the first stirrings of e-learning. And Israel, a hotbed of synchronous collaboration software development, has its own cottage e-learning industry.
"I've spent a lot of time during the past six or more months in Europe and Asia, and just about everyone I spoke with on the topic sees a significant increase in interest and activity," says Eilif Trondsen, director of SRI Consulting's e-learning practice. "I'd say the opportunities for e-learning firms are substantial."
Follow the multis
Anecdotal accounts like Trondsen's abound in the absence of hard numbers on international e-learning growth. A sizable component is attributable to the e-learning initiatives under way at the international facilities of U.S.-based, European, or Japanese multinationals. Europe-centered multinationals and smaller companies are catching wind of these initiatives through various industry meetings and are increasingly intrigued, particularly as more face the same skills gap for IT skills that American firms are grappling with.
American e-learning providers are capitalizing on their relationships with various multinationals to gain a toehold in overseas markets. But they won't necessarily be able to claim that growing demand all for themselves. Though several U.S. firms recently established beachheads in the United Kingdom and other European countries, and others are pursuing strategic partnerships with international technology firms, regional technology developers are moving quickly to develop e-learning technologies and content. For instance, a German consultant who attended a recent learning technology conference there counted 15 aspiring LMS developers with systems of varying sophistication. Scandinavian firms are also developing e-learning technologies.
Observers and studies point to the need for corporate IT skills as a key impetus driving overseas firms to investigate e-learning, just as it has in the United States. The Asia/Pacific region, recovering from its late 1990s economic malaise, will be the fastest-growing market for IT training during the next four years with a compound annual growth rate of nearly 20 percent, according to a recent study by IDC. Latin America is also expected to see double-digit growth of more than 15 percent during the same period. And even by 2004, Europe will still be feeling a shortage of IT skills that will amount to 20 percent of skilled IT workers, the study predicts. The projections include all forms of IT training--including classroom instruction--but e-learning will be a major source of the growth in IT training in all areas, says IDC e-learning analyst Cushing Anderson.
U.S. executives developing international accounts say demand is broader than IT-related content. Business skills topics, collaboration tools, and learning management systems are all on the wish lists of companies aiming to get in the e-business game.
Following is a look at how e-learning is taking shape in two hot spots, Asia and Europe.
The wild, wild east
In Asia, e-learning is evolving rapidly in several directions as the economies of the "Asian Tigers" rebound and those countries pursue e-business in all its forms. Japan, Singapore, and South Korea are shaping up as rival centers for corporate e-learning practices with their growing cache of telecommunications and technology developers. Giant neighbor China has ambitious plans to use e-learning to bolster its entire education system. A country with more than one-fifth of the world's population, a tacit acceptance of free markets, and a sprawling, antiquated education system, China represents the largest untapped reservoir for learning technologies, analysts say.
The scope of activity under way in China to establish an Internet economy and the services it enables is staggering. The Chinese government has proclaimed 2000 as the Year of E-Commerce, backed by massive investments to improve its telecommunications infrastructure. China's Ministry of Education has announced a fast-paced plan to provide e-learning to universities and primary and secondary schools, pledging the equivalent of tens of millions of dollars to the task. In July, Lucent Technologies announced a contract with China Education Television to provide networking technology for broadband access to 800,000 schools. In May, Beijing University launched a Web-based education portal it says will serve one million college students. And the government is urging Chinese companies to adopt e-learning as a way for employees to learn the skills they need to get in the e-commerce game.
"The word the government uses is encourage, but the meaning of the term is a little different from ours," says Todd Carter, who heads the e-learning division of U.S.-based FutureLink Corporation. The Irvine, California, company recently announced a partnership with China-based corporate e-learning provider Go4It.com, an anglification of the Chinese word Guofuwang, which means "nations wealth net." The two firms are working together to provide e-learning services and content, which they expect to begin offering this month.
Theirs will be a joint offering of FutureLink-hosted IT e-learning content from its partners, which include Element K, NETg, and SkillSoft. That content is being localized--translated and tailored to accommodate cultural differences--by Go4It (see "Boom Market for Content Localization" on the content translation phenomenon). Much of the initial offering will focus on the IT skills needed by companies to move into e-commerce, Carter says.
"They've got outstanding contacts with the government, which you have to have in order to do business over there," he says in describing Go4It.com, which was launched last April. The firm is headed by the former chief of Hewlett-Packard's China operations and a past director of the U.S. Information Technology Office.
FutureLink's strategy is typical of U.S. e-learning providers seeking to establish themselves in Asia. Partnering with local firms is seen as critical for overcoming the barriers to entry, particularly with the need for government and industry contacts. A similar strategy is behind a recent $1 million distribution agreement between SmartForce and Malaysia-based Precision Portal, a consortium that includes two large telecommunications providers and an IT training firm. Together, they will market the company's e-learning offerings to Malaysian businesses.
"We look for companies that have knowledge of their market and who can leverage their relationships," says Tim Ellinger, vice president of international channel sales for SmartForce. Ellinger spends much of his time circling the globe developing partnerships to extend the e-learning giant's reach into foreign markets; he was tracked down for this article at a conference in Hong Kong.
"We're seeing incredible demand right now--we can't localize content as fast as people want it, and [customers] are even willing to use English content while we catch up," Ellinger says of SmartForce's Asian clients. English-speaking businesses in Malaysia, Singapore, and Hong Kong are among the first in Asia to fully integrate e-learning while their native-language counterparts are in hot pursuit, he says.
Technology-savvy Singapore is home to a bold initiative that aims to create Asia's first knowledge portal. The company, 1to80.com, a subsidiary of computer manufacturer Acer Group, has been aggregating both English and native language e-learning content on a variety of topics that it offers through the portal. The company recently announced a contract with Reno, Nevada-based eduverse.com which will provide language training content to the portal's Chinese customers. It also counts Los Angeles-based OnlineLearning.net, a provider of adult education content including e-learning courses from UCLA, as a strategic partner.
"Singapore is going crazy for e-learning, and it is well-aligned with what they're trying to do--become the knowledge hub of Asia," says Trondsen of SRI. "It's possible that Singapore will become the leader of e-learning in Asia."
Meanwhile, Hong Kong is shaping up as a locus for primary and higher-education
related e-learning in Asia. Some 500 million Asians seek access to higher education, according to a recent article in the Chronicle of Higher Education, a number that would require spending increases of 40 percent or more for traditional education. "That leaves governments no choice but to look for solutions outside the traditional, elite systems of instruction," writes author David Cohen. Numerous education-related e-learning initiatives that target China are based in Hong Kong, including a recently announced alliance between education-related ASP Campus Online and synchronous tutoring provider Tutornet.com.
Remarkably quiet on the e-learning front thus far has been Japan, considering it's the second largest IT market in the world behind the United States. Observers say that will soon change as the country, free from its recessionary chill, bounds into the e-commerce arena. "It won't be long before that market explodes," assures Ellinger, who points to a partnership with Japanese telecom NTT as a key alliance for SmartForce.
"Japan is the big gorilla in Asia," agrees Trondsen, but businesses in another highly industrialized country, South Korea, will beat their Japanese counterparts in adopting e-learning, he predicts.
E-learning hits the Old World
Asia represents massive longer-term potential, but Europe is a near-term reality in large-scale adoption of e-learning. Multinationals with roots in the United States have formed the vanguard of e-learning adoption, but a rising tide of national and regional firms there are now seeking e-learning and other trappings of e-business. U.S. e-learning providers are increasingly setting up offices or alliances in Europe to reach these "indigenous" prospects.
The United Kingdom is becoming the stepping-off point for U.S. firms seeking e-learning business in Europe. DigitalThink recently established its first European office in London, as did THINQ (formerly TrainingNet). In April, THINQ acquired The Graduate Group, creator of e-learning and training portal The National Training Index, and a Web-based registry of 1,600 independent IT trainers. Synchronous e-learning provider InterWise in June announced the expansion of its European operations, which includes offices in the United Kingdom, Switzerland, and France. KnowledgePlanet.com says it is in the midst of establishing offices in the United Kingdom and Japan.
Paul Pastrone, vice president of international for DigitalThink, is finishing a tour of duty in London, where he has overseen setup of the San Francisco-based company's new office. Pastrone says the London base is essential for developing new clients as well as supporting alliance partners KPMG and EDS as they steer their customers toward DigitalThink. "It's critical that we have our own facilities here to respond quickly to customers," he says.
Other companies are relying on both acquisitions and partnerships to secure European business. Globallearningsystems.com, a startup based in Vienna, Virginia, says it has raised up to $35 million in venture capital. It announced a merger in July with the European Training Group through acquisition of member company SPC Training, based in the Netherlands. ETG is a collection of IT providers that are active throughout Europe, says Globallearningsystems.com co-CEO Bernard Luskin.
"We're aiming for a relatively balanced growth in both the United States and Europe," says Luskin, who held high-level posts with the interactive media divisions of Phillips and Polygram before helping launch Globallearningsystems.com. "SPC is one of the top five IT training firms in Europe, and the partners [of ETG] are evolving into a global alliance," he says.
U.S. executives differ on how quickly European companies are adopting e-learning in the absence of definitive market studies. While Luskin compares European and American adoption to a horserace, DigitalThink's Pastrone is less bullish. "There's definitely a lag in terms of understanding and uptake," he says in comparing European and U.S. adoption rates. "It's not so much about lack of concept as it is about doing the homework to decide how they will pursue e-learning."
Most agree, however, that different European countries are moving toward e-learning at different speeds, with the United Kingdom and Scandinavian countries among the early adopters and industrial powerhouse Germany on the more conservative side.
Indeed, both the United Kingdom and Scandinavia are home to their own burgeoning e-learning industries. British media giant Pearson LLC has announced its intention of becoming a global e-learning player and backed that with three major purchases of U.S. providers in recent months. Smaller U.K. e-learning providers debut regularly. Trondsen points to Scandinavian technology powerhouses Nokia, Ericsson, and ABB as three companies well-positioned to offer e-learning technology and services in Europe.
"I see the Nordic countries as advanced laboratories for e-learning in Europe in the near future," says Trondsen, lead author of a recent SRI report on worldwide growth of e-learning. Their embrace of new technology--Scandinavian inhabitants boast the world's highest per-capita use of the Internet and mobile communications devices--lends itself to rapid development and adoption of e-learning, he says.
German companies may be less aggressive in pursuing e-learning, but activity there is also heating up. Thomas Kovari, a consultant with German firm M.I.T. Newmedia, says the firm's Fortune-class clients are clamoring for more information, including statistics on implementation costs. Training and e-learning providers are still relatively small and fragmented in Germany, and the volume of German-language e-learning content is still low, he says.
"The decision makers are in a good mood at this stage," he says. "But the overall concern is, what comes after this hype phase?" A lack of success stories among German firms puts a damper on more widespread adoption as German firms study their options, Kovari says. U.S. providers are eager to cater to the German market; Saba has been most prominent among them, according to Kovari.
The push by U.S. e-learning firms into Europe and points east has a reverse tide, though efforts by international firms to establish themselves in the crowded U.S. market amounts to a comparative trickle. Notable examples of the counterflow include Pearson's recent purchase of U.S. training provider Forum Corporation, along with two other education-related acquisitions. Israel-based Gilat Communications purchased three U.S. e-learning providers in the last year, which together form its new U.S.-based e-learning subsidiary, Mentergy. The company is seeking business globally.
Cultural hindrances
Though none threaten to be showstoppers, several factors could hamper rapid adoption of e-learning overseas--or at least the expansion of U.S.-based e-learning providers in those markets. In Europe, challenges include language barriers that call for native-language content development for local companies unwilling to adopt English, and cultural barriers to e-learning as defined and marketed by U.S. firms. In Asia, uneven development of the data network infrastructures needed for e-learning adds to those barriers.
Tom Laubenthal, a partner with Ernst & Young who leads strategy and business development for the consultancy's e-learning subsidiary, Intellinex, points to comparatively low-grade hardware on Asian desktops and "last mile" network constraints. "There needs to be an upgrade in the desktop for e-learning to really take off [in Asia]," he says. Japan is behind in that regard compared with Singapore and Hong Kong, though Laubenthal says the country could catch up "in a matter of months."
Cultural barriers to computer-mediated instruction are also a factor. "We must be careful not to assume that the same e-learning models that work here can be applied worldwide," says Trondsen. In Japan, computer usage is still comparatively low compared to Western countries, and using a computer for learning is going to take some getting used to. "There's a stronger preference there for face-to-face interaction," he says.
Another major issue involves privacy law and the degree to which companies in various countries can share information internationally. China restricts the flow into and out of its network borders, and that could complicate pan-Asian e-learning offerings. The Internet pipes into and out of China are "hideous," says FutureLink's Carter, but "the backbone once you're in there is among the best in the world."
In Europe, strong labor laws can interfere with sharing employee skills data across borders. "We have highly complicated laws related to privacy matters here," says Kovari of Germany's M.I.T. Some users of U.S.-developed LMS systems in Germany have had to disable learner-skills tracking functions to conform to German laws, he says. Other European countries and the European Union have privacy regulations that could hinder implementation of LMS systems.
There's also a degree of national pride among some European countries that puts U.S. firms at a disadvantage in competing with homegrown providers. Though multinationals don't present a problem, national and smaller firms in various countries may prove challenging for U.S. providers, particularly those seeking entry without local partners. SmartForce is in the midst of shifting from direct sales to partnering arrangements in Germany, France, and Italy to accelerate its growth there, says Ellinger.
There's no better way for U.S. companies to get in the door than to partner, observes Trondsen. "It will be interesting to see who forms the best relationships."
Published: September 2000