The E-Learning market for corporations

Topics: BusinessManagement

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Last updated: April 17, 2019

The landscape of learning has never looked more promising for companies in the education business. Education is the second largest market in the US with revenues of over $ 625 Billion (Banc of America). About 10% of this figure is related to corporate learning. With these figures it is no surprise that both present and future developments in the learning market are closely being watched.

Economics and technology are key growth drivers for the market – economy is quickly becoming dependent on human capital, which forces all of us to increase our aptitude at managing and productively employing human capital, a task incumbent on our learning systems. The inevitable technological revolution continuously overhauls the workplace, thereby forcing workers to treat learning as part of their basic job description. Technology is not only a driver for more learning but it is also an enabler of electronic learning (e-learning). E-learning is quickly establishing its presence in corporations and institutions of higher education.

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There are many players in the learning value chain and among them the educational sector, as a main provider of knowledge, is one of the most active areas of the e-learning landscape. The number of colleges and universities offering e-learning is increasing by 33% annually (IDC). Universities are important buyers of technology solutions to deliver the knowledge but funding problems and other organizational issues make them more of a long-term market than a source of profits today.

As mentioned before, an important market is corporations that buy learning services in order to improve the skills of their employees across the organization. We believe that this is where the highest growth potential is present and we will focus our analysis on this market.The growth of corporate learning market (and the adoption of online learning as well) is being fuelled by various changes in corporations. Technological advancements are causing a shift in the structure of workforce dramatically increasing the demand for skilled employees. This increased demand for skilled employees is causing a skills shortage and finding and retaining skilled employees has become a serious problem, as cited by many CEOs.

The old solution of simply replacing the workers with obsolete skills with those possessing the right skills is not working as well anymore. As a result of all this, companies are increasingly viewing learning as an investment (as opposed to a cost) and the criteria for choosing a learning provider is the ability to prove that learning occurs and productivity improves as a result of the process.This shortage of skilled employees is also causing a widening wage gap between high school and college graduates so the market is also fueled by the employees’ “pull” seeking better jobs or retaining the ones they currently possess. Another reality is that product life cycles are shortening thus requiring corporations to continuously innovate in order to stay ahead of the competition. For every new product brought to market certain parts of the organization (manufacturing, marketing and sales for example) have to learn about and very quickly put this knowledge to work. The growing globalization of corporations also creates the need for multilingual education, as well as multi-location availability of training courses.All these changing realities create demand for learning and the classic learning solutions have certain drawbacks and only partially solve the organization’s needs.

The classic classroom learning is difficult to deploy across an organization that is spread geographically. It is costly to customize and update, difficult to track and monitor in terms of effectiveness, is overly human intensive, lacks automation and scalability and it is fragmented and costly.We see online learning as a solution for these problems because it brings the following benefits:* Online learning is integrated and scalable.* Employees can access learning around their work, family and personal schedule. Online learning is convenient and flexible, accessible 24 / 7.* Online learning is cost effective not only in terms of traveling and accommodation expenses component but also in terms of organizing the learning event itself.

Regarding traveling and accommodation costs it is estimated that as much as 40 cents per dollar spent on in-person corporate learning goes to travel costs (Merrill Lynch). The cost benefits of e-learning may be indicated by two examples: The cost of a Cisco Systems instructor led course is $1200-1800 compared with only $120 over the web. Novell used to pay $1800 for a four-day certification course that now costs $700-800 over the web.* One of the most important benefits of online learning is that it delivers learning when an employee needs it (in other words “just-in-time”) as opposed to attending classes just in case the materials will be needed at some point in the future. This immediacy of learning causes a much higher retention compared to the classroom model.* Learning management systems allow corporations to know who is participating, in what type of corporate learning, how they performed and what is the level of improvement.* Online learning has the ability to create a program designed and structured specifically to address an individual’s needs based on interests, career objectives and job profile.* Online learning is also driven by return on investment, thus by the need to improve productivity as a result of learning.

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