Thursday, September 21, 2006

The changing face of custom e-learning

Last year we did some research looking at the changing nature of custom e-learning production within large corporates in the UK. A couple of key trends were clearly emerging that I think will have a profound impact on the e-learning market - especially given that custom e-learning content has been one of the more bouyant parts of the market.

Firstly, it seemed clear that pretty much all of the organisations we researched were increasing the amount of company-specific e-learning they were doing. But, they were also radically changing their patterns and amount they spend on it too. Most organisations had historically used specialist custom content vendors to develop their content, often having a short list of preferred suppliers. Whilst these arrangements were still in place, the budgets for projects were becoming significantly reduced. Whereas historically they might have spent £50-100K+ per project, now they are trying to get similar work done for £5-10K.

Secondly, as well as exploring offshore production to cut costs (usually with variable success), companies are also increasingly adopting rapid authoring tools - Lectora, Breeze, Articulate, Atlantic Link, etc. to enable self-authoring of content within L&D and line of business. This shifts the point of production completely, but creates a lot of other issues internally as well.

We expect both these trends to continue, and to interconnect. Corporates need to diversify their content production strategies to deal with the increased scale of need, and the associated focus on reducing cost and time for development and maintenance. For volume content, corporates will increasingly mandate the development tool in order be able to self-maintain the outcomes. They may pay one vendor to develop some customised templates that are proven to pre-integrate with their LMS (a topic for another day!), they might pay another company to provide instructional design input to projects, and yet another to quality assure any outputs.

Who will actual content development and production - good question? Some of it will be done internally, some will be done offshore, and some will be contracted out whole as a discrete (yesteryear-like) project with a reasonable budget allowing some creativity and investment in custom media. But the majority will be "fit for purpose", quick to produce, cheap and easy to maintain.

If the above really happens ,and I believe it is inevitable, it will have big implications for the skills and resources needed within L&D to manage it effectively. It will have even bigger implications for the large number of vendors that make a living by delivering whole projects. Nice big £100K+ projects will still be there, but they will become few and far between, the main focus is switching to the mass of "fit for purpose" content that corporates need everyday.

As the corporates also start cherry-picking single service components (template development, instructional design, media production, project management, quality assurance, content input, ...) rather than buying whole projects, I believe the writing will be on the wall for many vendors.

How will they survive this? Some will specialise and down-scale. Running a £0.5-2m custom e-learning company is a lot easier than running a £3-5m one. Others will offshore and automate tools to slash development costs further to compete. A few will aggregate and rise above it - move up the value chain and do a total BPO on learning development, but it will be only a few in each geography. The rest??? Start diversifying now!

1 comment:

Barry Sampson said...

I think you can chalk this one up as evidence of your visionary nature! I can remember you saying three years ago that corporates would have to change the way they developed elearning content because the then prevalent model of large, expensive custom built content wasn't sustainable.

In house creation of content was something that many people I met talked about, but few actually did (unless they had large scale production teams that were often as expensive as custom content).

That's shifting dramatically, and I speak to more and more people shifting to using 'end user friendly' tools like Articulate to produce their own content.