Will Enterprise Software Companies Take over E-Learning?

By Oakes, Kevin | Talent Development, April 2003 | Go to article overview

Will Enterprise Software Companies Take over E-Learning?


Oakes, Kevin, Talent Development


"This concludes the formal part of our presentation. John and I would be happy to answer any questions," I said at the end of our last public earnings call, the customary close that invites industry analysts and shareholders to query me and my GFO. One of the first came from Conny Weggen, an analyst at ThinkEquity Partners, whom I've known for several years.

"Kevin, how do you assess the competitive threat of companies such as Oracle or PeopleSoft? Do you think Microsoft will pursue the e-learning market? Are these companies getting traction in the market?"

I can't say I was surprised. I've been asked those same questions every month for about 10 years. The only thing that changes on occasion are the names. You could substitute SAP, Sun, HP, Siebel, Lotus, or IBM, among others. The notion that large enterprise software players will enter and take over the corporate e-learning world is as old as the industry itself, but lately the projection comes up more frequently--primarily because many of these large players have become more serious about the e-learning industry. Whether through acquisitions, new product announcements, or increased marketing presence, enterprise software vendors are more visible in the e-learning space. As the slowdown in IT spending has continued and traditional markets have become more saturated, enterprise software providers are pursuing expansion into different verticals. When I talk with senior executives from other software industries, they all say the same thing: "XYZ enterprise software company is dabbling in our space." Dozens of ve rtical markers are affected.

I've said before in this column that most organizations will come to view the process of learning and managing their intellectual capital electronically as mission critical, much as they now view a CRM, ERP, or HRIS system. So, is it any wonder that these same vendors are interested in e-learning as a growth area?

The power of corporate learning technology is its ability to leverage corporate knowledge as an asset to increase worker productivity and, ultimately, business performance. Knowledge, learning, and information are seemingly natural areas to expand into because they can easily be rationalized as being synergistic with whatever traditional software industry these companies are currently in, all generally designed to increase worker productivity and business performance.

But will enterprise software players be successful in e-learning?

There have been multiple famous entrances and exits into e-learning over the past several years from several of the technology vendors mentioned. Some have been "in and out" of our industry as many as three or four times. For the most part, enterprise software companies have struggled to succeed in the e-learning space and will likely find the road ahead just as challenging. The main reasons are

* features, functionality, and software architecture

* fundamentally different markets

* focus.

Features, functionality, and software architecture. It's fairly well known that, from a product feature and functionality perspective, collectively the major enterprise software entrants have been significantly behind in their offerings relative to the existing leaders in the industry. Not unlike many technology markets, the messages have often been far ahead of the actual capabilities.

That could change quickly, many observers have said. Weggen's boss at ThinkEquity, financial analyst Trace Urdan, recently commented-accurately--that some ERP players spend as much as 20 to 70 times what a pure-play e-learning vendor spends on product development. But does greater spending ensure success? To date, it generally hasn't, and it's nor clear how much of the R&D budgets at the large IT companies goes into e-learning development. Perhaps someday that will be a big differentiator and enterprise software companies will produce greater innovation at a faster clip than pure-play vendors. …

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