building an elearning businessv2

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Building an e-Learning Business John Gordon

Building an e-Learning Business

John Gordon

JGO ltd, Scotland

Excellence in eLearning Ltd, Scotland

Abstract

In this paper we discuss the eLearning industry and develop some ideas on building and e-Learning business. The paper considers a series of case studies and describes a newexperiment in the development of an eBusiness for eLearning.

1 The eLearning Industry

1.1 IntroductioneLearning is the process of teaching and learning using electronic media, generally distributedover a network. For a thorough coverage of eLearning, see Anderson and Elloumi (2004).The market for eLearning is the market for the provision, delivery and administration oflearning services through the use of new media and network technologies.

Following the success of eCommerce, eLearning provides an effective pathway to bringeducation and training beyond national borders. With the deployment of technology,eLearning can make education and training accessible to even more people and more placesaround the world. eLearning is also a large information industry, which has showncontinuous growth over the past few years, and is now a key eCommerce based market.

The eLearning industry has gone through many of the development cycles as other hi-techindustries, and suffered from the dot-com boom and bust of 2000. It has now entered a periodof steady growth and the future bodes well for its development as a key element in the supportand delivery of education and training.

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1.2 Market Overview

Figure 1. Attributes of the Learning Industry

Learning normally takes pace in a stakeholder rich environment, with the learner interactingwith their organization, the training/education provider, the payment agent, fellow learners,and any awarding body. The end goal of a learner is acquisition and/or certification of a

competence or knowledge and understanding of a subject. In order to achieve this goal thelearner engages in the consumption of services and educational content, via infrastructuraltools. These relationships are shown in Figure 1 (Hamalainen et al 1996).

eLearning is one of the fastest growing, knowledge-based industries on both sides of theAtlantic and is the single most important transforming influence on education and corporatetraining and development across the globe (Sloman, 2001). However, it has not grown asexpected. In the US, for example, the market for eLearning content and services wasexpected to double in size every year, reaching approximately $11.5billion by 2003. Theactual figure for 2003, according to Clark (2003), was only $5.2billion.

Some of the reasons for this lack of growth are the general downturn in the hi-tech markets, aswell as a slow uptake of eLearning, and resistance to eLearning from end users (Sloman

2002). Even industry experts have recognized that the expectations of eLearning have beenunrealistic and overhyped (Straub 2002). Today, however, the eLearning industry isconsolidating and is growing in a more coherent manner.

There is however some good news in the growth of the American provision of eLearningfrom the traditional brick and mortar schools.

According to Allen and Seaman (2005) twenty percent of all higher education students nowtake online courses. This compares with under 1 percent in 1995, the growth rateunderpinned by these figures 18 per cent for online enrollments. There is also a push in theUSA to improve the provision of online programmes by allowing programmes with more than50% online to access federal student aid. According to Allen and Seaman, increasingnumbers of institutions across sectors see online education as essential to their strategic

planning. However, each institution must have a sustainable eCommerce and business modelto ensure that such an adventure is feasible.

2

eLearning Industry

move towards

digital libraries

(digital information)

electronic commerce infrastructure

- > electronic markets for courses

(virtual) universities

on the network

convergence of

digital technologies

global network connectivity

& information mobility

rapidly changing

content

Internet

globalization of

businesses & education

Computer

Technology

DocumentTechnology

Data

Communication

BUYER

SELLER

E-COMMERCE

SERVICES

...

...SELLER

BUYER

PRODUCTION USE

INFRASTRUCTURE

increasing costs

of conventional

education

TutorsLearners

life-long

learning

just-in-time,

on-the-job

educationeducation brokers

&

electronic markets

for learning

GET International LtdOy

eLearning Industry

move towards

digital libraries

(digital information)

electronic commerce infrastructure

- > electronic markets for courses

(virtual) universities

on the network

convergence of

digital technologies

global network connectivity

& information mobility

rapidly changing

content

Internet

globalization of

businesses & education

Computer

Technology

DocumentTechnology

Data

Communication

BUYER

SELLER

E-COMMERCE

SERVICES

...

...SELLER

BUYER

PRODUCTION USE

INFRASTRUCTURE

increasing costs

of conventional

education

TutorsLearners

life-long

learning

just-in-time,

on-the-job

educationeducation brokers

&

electronic markets

for learning

GET International LtdOy


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1.3 Segmentation of the eLearning MarketThe eLearning market can be segmented as follows:

Corporate

The corporate eLearning market is that concerned with the major corporations and otherprivate sector companies.

IDC (2003) admits that the worldwide corporate e-learning market is not growing at the rateonce predicted. However, they are still confident that it is growing. IDC now predicts thatmarket growth will be affected by the global economic slowdown but that normal marketgrowth (IDC 2003) will resume in the near future.

IDC predicts that the worldwide IT education and training market will reach $23.7 billion by2006, and that worldwide corporate e-learning market to be $6.6 billion for 2002. (IDC2003).

Formal Education

The costs of formal education continue to rise, in the USA there has been a 50% increase inreal terms in the cost of sending a teenager to college compared to 15 years ago, while thenew media universities have a much lower student cost base, with for example the annual costof attendance at the UK Open University of the order of $5-600, compared with $10,000 at atraditional university (Clark 2003). There is less dependence on the campus and morelearning at a distance and eLearning. This allows for the development of a new private sector

provision. For example, Sylvan Learning Systems has purchased six schools with a total of60,000 students in Latin America and Western Europe since 1999. Apollo International aimsto have a 100,000-enrolment range in 10 years (Kuchment 2003).

The traditional universities have responded by creating their own international, for-profitonline learning ventures aimed mostly at adults. A good example of this is the InteractiveUniversity (http://www.interactiveuniversity.net). Nevertheless, the traditional universitieshave been deploying eLearning technologies to support their own content and service

provision. It is now accepted that one area of major growth of eLearning in university

education is in the support of traditional delivery, not in solely delivery at a distance. Indeed,it is increasingly expected by both students and faculty that eLearning supports classroomdelivery.

According to Gartner Research, (Harris et al 2003) Supplemental use of e-learning fortraditional instruction outpaces its use in purely remote instruction for faculty and studentsalike. E-learning will grow as a primary instructional resource in higher education through2007, when more than 70 percent of students will use e-learning as a supplement to traditionalinstruction. Institutions must plan for geometric, rather than arithmetic, growth in e-learningsystem capacity.

The development of the use of eLearning can be exemplified by the success of traditionaluniversities rolling out eLearning through traditional channels and even into the provision of

high school credits. For example, Brigham Young University (http://www.byu.edu) has manythousands of enrollments and appears to be profitable. Similarly, the development of theInteractive University was based on the provision of High School credits leading to thedevelopment of University programs.

Government

All governments in the developed world have accepted eGovernment, which includeseLearning, to support modernization. All new policies generate new eLearning possibilitiesand can be rolled out more quickly using technology. Since the numbers employed ingovernment, and its agencies such as the health service, are enormous, there has been a searchfor lower-cost solutions to satisfy increases in demand.

For example, in the USA the Gov Online Learning Center (http://www.golearn.gov) claims to

have made a saving of $20m in its first 20 weeks of operation, this is extrapolated to claimthat the savings over a 10-year period will be $1 billion. In the armed forces there was a $143million contract in the US for eLearning in 2000. (Clark 2003).

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The United Kingdom National Health Service University (NHSU) has a budget of tens ofmillions of dollars to create a cleaner to consultant learning service for Western Europes

biggest employer. The National Health Service has 145,000 new employees per year with aconsequential very large training need. (Clark 2003).

Informal or Life Long Learning

There are huge cultural barrier to overcome in the roll out of technology to support learning inthe consumer sector. There is a trend for governments to increasingly ask students to fundtheir own learning. In addition, learning providers are being forced to use technologicalsolutions to reach their customers. The consumer market grows as more learners pay for theirown learning.

This allows the learning model to change from a short sharp fix, when the learner is young, toa life long engagement with the learner. As the individual develops through life, they neednew skills and newcontent delivered to them, allowing the eLearning delivery sector to growin a different manner to that of classroom delivery.

2 Business and Revenue Models for E-Learning

Timmers (2000) defines a business model as an architecture for products, services, andinformation flows, including a description of the various business actors and their roles; and adescription of the potential benefits for the various business actors; and a description of thesources of revenues.

In the literature there is a range of business models and taxonomies of business models. Aninteresting analysis of business models is available in a course written by Michael Rappa(2006), where he has identified 38 business models grouped into 9 types. This exemplifiessome of the confusion which arises when organizations attempt to enter the eCommerceworld for eLearning. We shall see how hype and exaggeration has led to significant failuresin major projects. There is also confusion and failure in modest projects.

However, in any business we have four major fields for consideration the product/service,

provider/customer relationships, infrastructure and finance.So when we start on any eCommerce based eLearning project, the owner of the project shouldidentify all possible revenue streams, clearly understand the various customer valuesdelivered on these streams, and the relationships underpinning these values including supplyand delivery partnerships, and have clear understanding of the enabling infrastructure.

3 An eCommerce View of the eLearning IndustryAnalyzing the value chains can provide an effective way to understand the structure ofinformation system applications. This approach to the understanding of eLearning as anindustry and to be practiced as eCommerce can be guided by the business models for Internet-

based management education proposed by Enders and Hutzschenreuter (2001), who identified

three business models related to eLearning as follows (Enders, et al, 2001):Theintegrated model: those institutions that carry out the entire process of creating content,

packaging it, marketing, distributing, and delivering it to customers by themselves.

The packaging model: those companies that specialize in taking content from others,packaging it and delivering the packaged materials to customers.

The broker model: those companies or institutions that engage in delivering pre-packagedmaterials from different providers to customers.

The processes involve six major activities crucial to eLearning. They are: content creation,content support, content packaging and wrapping, content distribution, support

services, and delivering to end users, these processes then form a value chain.

These ideas come together to develop a model of the eLearning value chain (Figure 2). One

of the best models is due to Paul Stacey (2002).

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Authoring and

Development

Tools

eLearning Specific Hardware

Enterprise

Systems

Delivery and

collaboration

Tools

Content

Portals

Markets

Life Long

Learning

Corporate

Government

Formal

Learning

Authoring and

Development

Tools


Enterprise

Systems

Delivery and

collaboration

Tools

Content

Creation

Portals

Integrators

Distributors

Markets

Life Long

Learning

Corporate

Government

Formal

Learning

Content

support tools

Packaging

and

wrapping

Support

Services

Authoring and

Development

Tools


Enterprise

Systems

Delivery and

collaboration

Tools

Content

Portals

Markets

Life Long

Learning

Corporate

Government

Formal

Learning

Authoring and

Development

Tools


Enterprise

Systems

Delivery and

collaboration

Tools

Content

Creation

Portals

Integrators

Distributors

Markets

Life Long

Learning

Corporate

Government

Formal

Learning

Content

support tools

Packaging

and

wrapping

Support

Services

Figure 2 eLearning value Chain (Based on Stacey 2002)

4 Market Trends and DriversTo predict the development of the eLearning Industry, a clear idea must be obtained on itstrends, drivers and inhibitors. One view of the main drivers, trends and inhibitors for theindustry in 2004 is expressed in Figure 3. These trends, drivers and inhibitors were identified

based on a series of meetings held during 2003 and the early part of 2004. The participants atthese meeting were a mix of academics and business persons.

eLearning Market

Drivers

Shadow of Economic downturn

Government funded initiatives

New technologies eg simulations

Accessibility

Globalisation

Shorter Business Cycles

Cost rationalization

Ageing populations

Trends

Market is no longer technology led

Market dominated by few players

Maturing user demands

eLearning converging

with Enterprise Systems

Common Business Models

Increase in home working/learning

Market Inhibitors

Technology and infrastructure

Lack of capital spendCorporate culture

Change ManagementLack of engaging content

eLearning Market

Drivers

Shadow of Economic downturn

Government funded initiatives

New technologies eg simulations

Accessibility

Globalisation

Shorter Business Cycles

Cost rationalization

Ageing populations

Trends

Market is no longer technology led

Market dominated by few players

Maturing user demands

eLearning converging

with Enterprise Systems

Common Business Models

Increase in home working/learning

Market Inhibitors

Technology and infrastructure

Lack of capital spendCorporate culture

Change ManagementLack of engaging content

Figure 3 Trends, Drivers and Inhibitors for the Elearning Industry

5 eLearning EnterprisesThese trends, drivers and inhibitors manifest themselves in the development of the newenterprises of the eLearning Industry. The eLearning landscape is filled not only with dot-coms but also with big corporations, for-profit spin-off ventures, and big and smalluniversities--all vying for a piece of the growing marketplace. This section attempts toidentify the various eLearning enterprises that have emerged over the years. The enterprises

include: corporate universities, virtual universities, strategic educational partnership, contentcompanies and technology companies.

The Corporate University Enterprise

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In recent years, large corporations have set up their own learning centers. Since 1990, thenumber of corporate universities has jumped from 400 to about 2000 and the number ofstudents increases at 30% a year (Jones, 2000). The main mission of these centers is to useeLearning to improve employee skills and to invest in human capital while saving on time andmoney. Because these learning centers provide service exclusively to their corporateemployees, they are often called a "corporate university". The corporate university training

can save hundreds of millions spent on employee training and education (Jones, 2000).Employees can take courses and learn them at any time and in any place.

Virtual University Enterprise

A virtual university is not a new phenomenon. The idea of giving the individual theflexibility to take a course anytime, anywhere; to interact with professors and other studentsin small learning communities; and to choose from a wide range of course offerings hasinspired many innovations since the 1980s. In recent years, the number of schools followingthe virtual university model has increased.

What sets the virtual university enterprise apart from other enterprise models is its absence ofa physical classroom. All the learning and teaching is done 100% online.

Examples of virtual university enterprises University of Phoenix Online(http://www.schoolguideusa.com/university-of-phoenix-online.html) or the online offering oftraditional universities such as Brigham Young University (http://www.byu.edu).

Strategic Educational Partnership

The strategic educational partnership could be the most promising and viable model of all.Universities, colleges, industry, and IT software companies are banding together at anaccelerating rate. The basic driving force behind the strategic partnership is the power ofeconomies of scale based on collaboration. The more collaboration allows more resourcessharing among the partners, bigger access to the market place, and faster transition intoeLearning (Carnevale, 2000). The strategic alliance is a loosely coupled partnership in whichthe content providers retain control of its intellectual property. The partners still maintaintheir brand name independent from the alliance.

Depending on the type of institutions involved in the collaboration, three major variations ofthis enterprise are observed. They are the partnership between dot-com and businesscorporations, dot-com and educational institutions, and among educational institutions.

Distributed Learning Model

The collapse of many educational adventures over the past few years, not only in the collapseof dot com based ideas, but also in the collapse of highly funded eVersity models has led tothe development of new models. For example, the emergence of distributed learning model isshowing promise for the future of the eLearning industry with innovative technologies, wherethe learning community is distributed across a physical map of the world along with anelectronic one. This model has flavors of a bricks and mortar approach blended with asignificant electronic support network. Here the broker forms a chain of delivery partners

who act as local fulfillment agents for students, allowing the handling of local tutorialsupport. In this model, the University or Accreditation supplier acts as a curriculum andlearning content supplier and/or as a quality agent assuring that the learning has taken place.With this model, the broker can still place a great significance on Brand, the brand deliversthe experience, and the quality agent assures quality. (See for examplehttp://www.interactiveuniversity.net).

6 Examples of eLearning Business in the ValueChain Case Studies

6.1 The example of the ITI Techmedia Games ProjectITI Techmedia, was setup by the Scottish Government with the aim to bring Scotland to theforefront of the global market for digital media and communications technology. The

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company has an investment fund of 150m over 10 years to develop a range of pre-competitive technologies with global market potential. The ITI Techmedia is market-driven,100% commercially focused and committed to positioning Scotland as an important worldcentre for the creation and marketing of new intellectual assets which will achievecommercial value and stimulate economic benefit for Scotland.

Games-Based Learning is the focus of our first R&D programme which began in September2003. The programme is intended to capitalise on the potential growth in what is currently arelatively immature market.

Games-Based Learning is part of the wider e-learning services market which, in NorthAmerica alone, is forecast to be worth USD80 billion in 2006. The technology developed as aresult of the programme is intended to overcome the main barrier to growth in the Games-Based Learning market namely, the complexity involved in the development of learningmodules. ITI Techmedia plans to develop a differentiated creation and authoring platform thatwill greatly simplify the development process. It will allow effective and engaging learning to

be created and delivered quickly and easily by learning experts.

The research phase of the programme is now complete and the early stages of technologydevelopment are underway.

ITI Techmedia carried out a series of studies during 2003 to 2005 which gave a marketingview and a technology foresight for technologies to be deployed in the eLearning space.

6.2 The Royal Bank of ScotlandThe following information is based on a presentation by Brian McLaren (McLAren, 2003).

The Royal Bank of Scotland is No 2 in Europe, and No 5 in the World ranking by marketcapitalisation. The RBS has been involved in staff training and development for manydecades based on traditional chalk and talk within a traditional training centre and using ageneric curriculum. In 1995 the Bank sold the training centre and in 1997 moved to trainingconsultancy as a base for provision to its employees. In 1998, RBS started to build a businesscase for eLearning. The case was based on the Retail Business looking for a consistenttraining model; the Corporate Communications objective to standardize & improvecommunication, and HR beginning to look at the implementation of e-HR. There wassignificant business sponsorship from within the Bank. A Training & Communication

Network (TCN) was built consisting of a network of PCs offering: Access to the GroupIntranet via ISDN; Satellite delivered Virtual Classroom and an internally built LearningManagement System. This network was initially rolled out to 650, and by 2003 had reached1,800 location. Within the Bank the initial target audience was 26,000 retail staff.

By 2003, there were 350+ hours of interactive custom learning content developed making theapplication the largest e-learning initiative in UK.

The benefit of this project to the Bank was a 7:1 Return on Investment reported, which isequivalent to 7 times more training for money spent. There was a recorded reduction in

workshop time yet more training offered, and a reduced time to market.

There were also significant issues from the HR point of view, before the TCN was rolled outlack of training was consistently one of two top reasons for leaving, after lack of training

became the 7th highest reason (link to cost of turnover).

One of the most interesting aspects of eLearning within the RBS, was its influence in thetake-over of the National Westminster Bank by the RBS. In the bid document for thetakeover, there were forecast deliverables based on the roll out on the TCN to the NationalWestminster retail business. It was intended that 1000 new satellite installations and 1150new TCPC installations. The roll out of this infrastructure was to realise a benefit of 22.5m

projected over 5 years.

It was estimated that RBS Training had reduced its headcount by 50% due to the roll out of

eLearning, and a similar reduction in head count at National Westminster was expected.

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By 2004, the take-over was finished, and RBS and Nat West was now integrated. It isaccepted that eLearning was a critical success factor in training for IT Migration - the largestIT integration project in Europe. Within the training for IT migration alone,

36,450 staff trained in new system within 12 week period prior to conversion

838,500 hours of training completed during this period

277 hours of training material developed

6 delivery channels used - online the key

Estimated savings of 10.8m realised

quality of training accepted as higher than traditional means

The interesting aspect of this case study was that the company decided not to consider thewhole value chain, but to develop its own infrastructure, processes and procedures. To thisextent RBS was acting in a similar way to many universities. They have not developed acorporate university in name, but have in actuality. So RBS only use outsourced courseware,everything else is developed by the RBS IT team, with the virtual classroom and learning

portal being developed inhouse.

So if we look at the Value Chain above, we see that RBS use it as follows:

Authoring and

Development

Tools

eLearning Standard Hardware

Enterprise

Systems

Deliveryand

collaboration

Tools

Content

Creation

Outsource

Portals Markets

RBSCorporate

Contentsupport tools

Packaging

and

Wrapping

Support

Services

RBSCorporate

RBS

Corporate

RBSCorporate

RBSCorporate

RBSCorporate

Figure 4 RBS in the Value Chain

So, RBS have protected their eLearning provision from the market, and have installed acorporate resource which can be directed at strategic objectives.

6.3 UK eUniverstity (Samuels, 2005)

The United Kingdom eUniversity was a public sector funded project. The project waslaunched in 2000, with the aim of attracting overseas students to study online with UKuniversities. The project had 62m of public funding, but the project was cancelled afterattracting only 900 students. The project was subject to a UK parliamentary committeeinquiry. The main conclusion was that the UKeU failed because it took a supply-driven ratherthan a demand-led approach, concluding there were three areas where such an approach led tofailings:

UKeU pursued a narrow concept of elearning

There was a distinct lack of marketing and market research

There was too much emphasis placed on the development of the technology platform.

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The project also failed to attract private sector funding, despite a target of 50% funding fromthis source. This shows that there was no private appetite for the project.

Both the UK Department for Education and Skills (DfES) and the Higher Education FundingCouncil for England identified marketing - and inadequate market research in particular - as akey cause for the failure of UKeU. It appears that the UKEU executives were caught up inthe dot-com hype and assumed that there was huge market for internet-based learning.

Marketing in the project was given a low priority with a spend of 4.2m on sales andmarketing. It appears that plans to spend 12m on marketing were shelved, with a spend of14m on platform development and 11m on content development approved. The UKeUdecided to develop its own eLearning platform at a cost of 14m, rather than acquiring anexternal technology platform. The platform was develop by Sun Microsystems and wasrolled out to UKeU in September 2003. However, of the 900 students recruited by UKeUonly 200 were supported by the platform.

It appears that the UKeU started on addressing the global market, rather than to concentratingon supporting organic growth focusing on selected UK postgraduate and continuing

professional courses, aiming to reproduce the full student experience of a conventionaluniversity. This implies that they would address the full value chain including the sourcing of

products, channel management, online delivery and cash collections.

In summary the Targets and Achievements of the UKeU

Year 1

5600 students target

900 students recruited

145 students registered on platform

Cost

50m

56,000 per student Closed 18th June 2004

6.4 Online Learning LtdAnother company which attempted to cover the value chain was my own Online LearningLtd. We were set up in 1993 developing online professional content for a range ofcompanies. This produced a small profitable company with a small headcount. OnlineLearning Ltd was part of a cottage industry in effect. However, as the dot-com boom movedinto high gear, we spent about 750k developing our position on the value chain. We madesimilar assumptions to the UKeU and came to the same end. It is instructive to look at someof the data from the company accounts over the years 1996 to 2001.

The first diagram shows the growth in headcount as the company developed its technologyand content. There is a reasonable growth in turnover, but not enough to support technologyand content development and company sales. The company sought investors to pay for thedevelopment of the company. The borrowing was based on the growth in value of thecompany as an eCommerce based dot com. However, when the dot com collapse happened,the valuation of the company dropped rapidly, and it was not possible to borrow or findinvestment for the company to continue. The company closed.

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Employees

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Figure 5 Online Learning Ltd Employee Figures

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Figure 6 Online Learning Turnover Figures

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Figure 7 Online Learning Ltd Valuation to 2001

6.5 Interactive UniversityThe interactive University is a company set up by the Scottish Government to sell Scottisheducation to export markets. The company is a broker, taking Scottish education productsand services and selling the over an ecommerce platform elsewhere. The IU was set up as alean organisation with a fairly small initial funding, and set up as not for profit.. Thetechnology used by the IU came for a university provision, fully developed and paid for. Thequalifications being sold were from the Scottish Universities and Colleges. The broker modelis based on developing a value chain, with local partners. The products are sold viaeCommerce, but customers are supported by local support partners. The IU describe theiroffering as distributed education with course materials and examinations provided by theawarding body and local learning partners provide educational context, support andinfrastructure

The IU focus on foundation, undergraduate and general postgraduate programmes all withpotential for large numbers per centre.

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The IU business model can be described as IU a distributed education model, scalable to largenumbers, up to 50% of fees are retained locally (generating strong economic activity withincountry) and 20% of fees for student returned to awarding body but only assessment andquality assurance required. So the IU has cut the amount of eTraffic between the originatinginstitution and the support centre. This is quite different from the UKeU which attempted to

provide a full university experience online, with support from the centre.

The IU has simplified the value chain as shown below:

Distributed Education

The IU value chain

SQA

Scottis

hUniversities&

Colleges

Students

SQA

Scottis

hUniversities&

Colleges

Students

LocalLearningPartners

IULearning Services

Customer Services

Technical Services

A better way of learning

IULearning Services

Customer Services

Technical Services

IULearning Services

Customer Services

Technical Services

A better way of learning

Figure 8 IU view of the value chain

Any technology developed by the IU, or source by the IU is used to maintain the businessrather than developing technologies at large capital spend. There are problems with this valuechain, in that the IU is a broker, and there is always the problem of the supplier missing outthe broker in the chain altogether.

Today the Interactive University is still running (2006), expanding into China, working withschools in Hong Kong and developing relationships with teaching Universities

7 The object learning economy modelAccording to Downes (2002) the object learning economy is based on the construction,supply and consumption of learning object. Learning Objects cane be defined as smallreusable containers of learning content. Such objects can be discovered and assembled intolarge resources to support learning. There are many standards for learning objects, and howthey can be assembled, rendered into learning systems, and how their consumption can betracked. We are now beginning to see services and products which enable businesstransaction to take place. The products and services are typically services from:

Course Portals

Course Packs

Learning Object Repositories

Certification and Review

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Publishers and Digital Rights Managers

Security and Authentication services

eAssessment Services

Downes offers the following examples of course portals

TeleCampus - http://teleeducation.nb.ca/ Unext / Cardean University - http://www.unext.com

Hungry Minds - http://www.hungryminds.com/

Fathom -http://www.fathom.com

There are many others, the one I use most frequently is Learn Direct Scotlandwww.learndirectscotland.com.

Course packs consist of collections of learning objects packaged to support a course, thesecan be offered on any learning management system, if they are constructed to standards.Course packs can be constructed form libraries or repositories of content such as

Merlot - http://www.merlot.org

CAREO -http://www.careo.org

POOL - http://www.newmic.com/pool/

8 Open source business modelsOne of the most exciting developments over the past decade has been the stabilisation of theideas behind open source software and open source digital content. There are now a range ofopen source intellectual property contracts which allow for the distribution of software andcontent without payment. These contracts also allow for the development of the content orsoftware through a community of users. Examples of such software arewww.moodle.org.www.drupal.org andwww.sourceforge.organd for content we have the Open KnowledgeInitiative from MITwww.oki.org. amongst others.

This allows us to develop new business models in virtual space. Without detracting from therights of the developers of software and content, we can start to develop services, such asteaching and assessment without have to develop a significant value chain, with thecorresponding costs and prices.

There are now major government initiatives to develop open architectures for thedevelopment of oen source software and content . For example the elf project in the UKwww.elf.ac.uk, is an example of an architectural framework where technologies and resourcescan be developed.

9 The ex-el experiment - designing a company on thevalue chainThe final case study that I would like to look at is an experiment that I initiated six monthsago. My research team have designed a service which is fully virtual. There are no physicalresources on the project. All servers are outsourced, all software is open source, all content iseither home made or open source. There is a team of 6 academics working on the project,with no funding in place. We have set up a standard company, we do not own telephones,and no-one has a salary. The project is located at www.ex-el.org. At this point in time (2006)we have a licence form the Scottish Qualifications Authority to deliver a series of professionaldevelopment diplomas in the area of eLearning.

Our first diploma (in eAssessment) started in January 2006, with our first students due to

complete in June 2006.

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http://www.fathom.com/http://www.fathom.com/http://www.learndirectscotland.com/http://www.merlot.org/http://www.careo.org/http://www.careo.org/http://www.newmic.com/pool/http://www.moodle.org/http://www.moodle.org/http://www.moodle.org/http://www.drupal.org/http://www.sourceforge.org/http://www.sourceforge.org/http://www.sourceforge.org/http://www.oki.org/http://www.oki.org/http://www.oki.org/http://www.elf.ac.uk/http://www.elf.ac.uk/http://www.ex-el.org/http://www.fathom.com/http://www.learndirectscotland.com/http://www.merlot.org/http://www.careo.org/http://www.newmic.com/pool/http://www.moodle.org/http://www.drupal.org/http://www.sourceforge.org/http://www.oki.org/http://www.elf.ac.uk/http://www.ex-el.org/


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The company is supported by Drupal for content management, Moodle for learningmanagement, mySQL for database management and so on. We have made some content, andare using outsourced content for the remainder of the need. Our tutors are paid on the basis ofstudent fees, we have no sales force.

This project is an attempt to build a fully virtual company, perhaps on a cooperative basis todeliver qualifications validated by the Scottish Qualifications Authority up to post graduatelevel, with no physical resource. There will of course be xml and pdf documents sent to theSQA, with physical diplomas being sent by snail-mail to graduate sand diplomates.

So, looking at the value chain, we can identify where ex-el fits.

Figure 9 ex-el in the value chain

10 Final ThoughtAs long as the eLearning industry continues to develop and keep pace with technology,corporations are expected to embrace it as shown in their spending on eLearning (Eure, 2001).Meanwhile, the education market for working adults continues to grow as the economyexpands and businesses need to retool.

In the long-range, the future for eLearning is everything but gloomy. Workplaces arecontinuously evolving; technologies are constantly advancing and renewing; technical andmanagerial skills are always needed. There will always be demands for training and learning.The efficiency and convenience of an eCommerce based eLearning will continue to deliver amarket advantage over the traditional offering of bricks and mortar schools.

It is expected that eCommerce methods and technologies will roll-in to traditional Learninginstitutions, improving their offering. This may be a great opportunity for offerings fromdeveloping countries, with eLearning providing resources to a high standard across theInternet.

Through the consideration of the case studies, I believe that there are a series of lessons to bepointed out.

The first lesson, learned by UKeU is to understand the complexity of the learning system, andto apply resource where is can generate future revenues, via marketing.

The second lesson is that any ecommerce based elearning offering must focus on marketingby:

Develop end user fulfilment first

Do not attempt to build on the basis of end to end technology solution

For each dollar of technology development spend a dollar on marketing

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The third lesson to learn is that eLearning is not simple content consumption, it is true that:

Users resist

Learning is about communication

Learning is about knowledge

Solutions must be scalable

In conclusion, like most ecommerce application, the client is king, not the supplier technologyor the content being used. It seems to be true that monolithic systems tend to fail, it is betterto build up from smaller applications. It could be that eLearning providers could follow thestructure of a travel agent the learning course becomes learning journey. However, we haveto be able to satisfy the human need for people to meet people, it is very difficult to approachthe full university experience. However, eLearning is maturing, it is possible for a distributedsystem to evolve melding the broker model with local human support. The basicinfrastructures and standards are working and becoming more stable. However, mistakes arestill being made in the design of eCommerce business models.

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11 ReferencesI. Elaine Allen & Jeff Seaman (2005) Growing by Degrees, Online Education in the United

States, 2005,November 2005; Published by the Sloan Consortium (Sloan-C)http://www.sloan-c.org.

Anderson, T., and Elloumi, F. (eds) (2004). Theory and Practice of Online Learning.Athabasca University, 2004

Bachman, K. (2000). Corporate eLearning: Exploiting a new Frontier. WR Hambrecht & Co.Retrieved August 10, 2004, from http://www.wrhambrecht.com.

Carnevale, D. (2000). 2 models for collaboration in distance education. The Chronicle ofHigher Education, 46(37), May 19, 2000, A53-A55.

Clark, D. (2003). The markets for e-learning, Epic White Paper, 2003. Retrieved August 12,2004, fromhttp://www.epic.co.uk/content/resources/white_papers/markets.htm

Downes, S (2002): The Learning Object Economy,NAWeb 2002, October 20, 2002

Enders, A., and Hutzschenreuter, T. (2001). The Positioning of Business Schools Through

Internet-Based Management Education, in S. Smithson, J. Gricar, M. Podlogar, S.Avgerinou (eds.) Global CoOperation in the New Millennium, the 9th EuropeanConference on Information Systems, Bled, Slovenia, June 27-29, 2001, 495-505.

Eure, R. (2001). E-Commerce (A Special Report): The Classroom --- On The Job: CorporateE-learning Makes Training Available Anytime, Anywhere. Wall Street Journal, Mar12, 2001, R.33.

Hmlinen, M., Whinston, A., and Vishik, S. (1996). Electronic Markets for Learning:Education Brokerages on the Internet. Communications of the ACM, 39(6),June 1996,51-58.

Harris, M., Yanosky, R., and Zastrocky, M. (2003). Supplemental Beats Remote in Higher-Education E-Learning. Research Note COM-20-0839, Gartner Research Inc. 19 May

2003,IDC (2003).Begin Act II: Worldwide and U.S. Corporate e-learning Forecast, 2002-2006,

January 9, 2003, Pub ID: IDC1007530, http://www.idc.com

Jones, D. (2000). Will business schools go out of business? E-learning, corporate academieschange the rules. USA Today, May 23, 2000, 01B

Kuchment, A. (2003). Dollars and Degrees.Newsweek International, January 13, 2003

Lundy, L., Arevolo, W., and El-Gabri, H. (2003). Client Issues for E-Learning. ResearchNote, Key Issues, K-21-1690, Gartner Research Inc, 3 October 2003

McLaren, B. (2003) Supporting Integration and Growth at the Royan Bank of ScotlandGroup, eLearninternational 2003 World Conference, Edinburgh, 2003www.elearninternational.co.uk/speaker_presentations.asp (Accessed April 2006)

Rappa, Michael, Business Models On The Web,http://digitalenterprise.org/models/models.htmlaccessed 24 April, 2006.

Samuels, M.: (2005) UKeU: the sorry tale of elearning scheme Computing 03 Mar 2005,www.computing.co.uk

Sloman, M. (2001). The e-Learning revolution. Wimbledon: CIPD.

Sloman, M. (2002). Scottish Enterprise Research Report. eLearning Age, September, 2002

Stacey, P. (2002).BC eLearning Value Chain & Market Map. New Media BC E-Learning SIG15-Feb-2002. Retrieved August 3, 2004, fromhttp://www.canarie.ca/conferences_f/elearning2002_f/presentations_f/marketmap.pdf

Straub, R. (2002).Hi tech hope will never blossom amid chaos. Times Higher Education

Supplement, 26th

July 2002, p. 12

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http://www.sloan-c.org/http://www.epic.co.uk/content/resources/white_papers/markets.htmhttp://www.epic.co.uk/content/resources/white_papers/markets.htmhttp://www.elearninternational.co.uk/speaker_presentations.asphttp://www.elearninternational.co.uk/speaker_presentations.asphttp://digitalenterprise.org/models/models.htmlhttp://digitalenterprise.org/models/models.htmlhttp://www.computing.co.uk/http://www.sloan-c.org/http://www.epic.co.uk/content/resources/white_papers/markets.htmhttp://www.elearninternational.co.uk/speaker_presentations.asphttp://digitalenterprise.org/models/models.htmlhttp://www.computing.co.uk/


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Timmers, P.: Electronic Markets: Strategies and Models for Business-to-Business Trading.2000: Wiley.

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