Elearning Market Update - January 2013
Shaping the future of learning
The ability of companies to innovate, to improve productivity, to react to change and to increase capacity is directly related to their investment in learning. For these reasons the training industry is one of the most important industries in driving economic growth. The nature of the industry is changing significantly though, and this month we look at how the learning solutions demanded by larger companies are reshaping the training industry.
Fragmented to consolidation
The training market has been traditionally dominated by small training providers. In 2009 the National Institute of Adult Continuing Education estimated that there were over 12,000 training providers in the UK alone. The shift to elearning over the last ten years has reduced the number of classroom training companies, but resulted in the growth of thousands of different authoring tool providers, learning platform providers and elearning content providers. Thus, despite the changes, the overall market continued to be characterised by thousands of small companies.
This is changing. In 2011 we saw a number of major mergers and acquisitions amongst large training companies. In 2012 this accelerated with some even larger acquisitions. We have seen multiple acquisitions and reported on many of these; for example, Plateau was acquired by Success Factors, who were then acquired by SAP, and Outstart was acquired by Kenexa, who were then acquired by IBM. We have also seen mergers and acquisitions of more traditional classroom training companies such as the Demos acquisition of Hemsley Fraser. In the generic content space companies such as SkillSoft are emerging as global giants through a series of acquisitions.
Why do it? Ambition and necessity
These acquisitions and mergers may in part be driven by ambition, but they are also necessary if providers are to meet the requirements of larger companies. The solutions required by larger companies are characterised by:
- Sophisticated, integrated solutions that combine a blend of learning including face-to-face sessions, webinars, self-paced elearning, coaching, assessments, accreditation and ongoing performance support
- A desire to use learning technology to lower cost, improve consistency, provide accessible learning, assess knowledge and deploy to large audiences quickly
- The need for global delivery of learning across different countries and often in different languages
Companies increasingly want to engage with training providers who can:
- Provide consultancy support on the overall solution
- Design blended solutions and understand the design and delivery aspects across all forms of learning interventions
- Deliver a wide range of interventions, either directly or through partners
- Provide an end-to-end solution from design through to accreditation
- Support the solution globally
This trend has also been reinforced by procurement departments who are reducing training supplier lists from many hundreds in some cases to a small core of suppliers. This means they are more likely to appoint larger global companies.
Here’s why it works
The factors above are consistent with the reasons for undertaking acquisitions and mergers. For example when Demos acquired Hemsley Fraser, their stated reasons on their press release at the time were:
- Hemsley Fraser’s clients will benefit from Demos’ substantial and solid geographical positioning throughout the world
- Hemsley Fraser’s Strategic Learning Consultancy, Assessment, Customised Design and Outsourcing represent added value to the Demos offer
- Hemsley Fraser, which to date has limited elearning capability, will benefit from Demos’ real know-how: design and tailor made production capacity
Thus, the merger was designed to create an entity that could provide integrated solutions, design and deliver a range of learning interventions and provide global support.
Kineo too – for good reason
These trends are likely to lead to further consolidation in the industry and see the emergence of a smaller number of significant global players. At Kineo we ourselves are not immune from this trend. We were acquired by City & Guilds at the end of 2012 and have joined a much larger group. We are merging the City & Guilds employer business into Kineo so that we can offer a complete range of integrated services from consultancy to delivery to managed training/learning solutions including accreditation as required. Of course, we’ll also be continuing to do what we do in elearning and LMS, but we know many organisations want to go much further.
Global support and delivery is also an important consideration as we look to leverage the City & Guilds operation in over 80 countries to complement Kineo’s current offices across Europe, America and Asia-Pacific. The aim through these developments is to ensure that Kineo will be one of the new leading global workplace learning companies emerging from the market restructuring, which is taking place in the training industry.
One thing seems clear: being good at just one thing, or in just one place, seems less and less likely to be a winning strategy if you want to partner with global organisations with complex performance and development needs. We’ll keep you posted as the market, and our place in it, continues to evolve.By Steve Rayson