E-Learning Market Analysis Final Report Executive Summary for August 29, 2001 E-Learning Task Force Presentation

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E-Learning Market Analysis Final
ReportExecutive Summary
for August 29, 2001 E-Learning
Task Force Presentation
Prepared for the Minnesota State Colleges and
Universities

• August 2001

PwC
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What was the context for this report?
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What was the context for this report?
REPORT FORMAT
SECTION I. Distance Education and E-Learning
Delineates e-learning from traditional distance
education and addresses the impact of the
educational transformation taking place.
REPORT METHODOLOGY
The report is divided into four sections
providing a wealth of information on the
e-learning marketplace. Research was compiled
from industry reports, educational statistics,
best practices and benchmarks, and interviews
with e-learning representatives.
SECTION II. E-Learning Customer Segments Divides
the e-learning market into different learner
segments and identifies the demand by
programmatic area based on national and
state-wide statistics.
SECTION III. E-Learning Content and Service
Providers Describes the various products and
services offered by successful e-learning
providers, outlines strengths and challenges, and
matches each provider against a set of e-learning
capabilities.
SECTION IV. E-Learning Foundational
Considerations Outlines additional points for
consideration that are integral when developing a
successful e-learning strategy.
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What should MnSCU consider before developing an
e-learning strategy?
Through each of the studies commissioned by the
Minnesota State Colleges and Universities related
to e-learning, MnSCU is seeking answers to a
series of important questions, the answers to
which will provide the framework for determining
the systems strategic positioning for
e-learning. This report addresses the following
questions
SECTION I WHAT DOES E-LEARNING MEAN FOR MnSCU?
Although distance education embraces e-learning,
it is important for the development of a
strategic plan to state the distinctions clearly
and examine their implications. SECTION II
WHAT IS THE DEMAND FOR E-LEARNING? WHAT ARE THE
E-LEARNING NEEDS? Within and outside the state of
Minnesota, a large population of learners are
accessing courses online. Understanding this
market helps MnSCU focus resources on the right
mix of programs for a targeted set of learners.
SECTION III WHAT ARE OTHERS DOING IN THE
E-LEARNING ARENA? AGAINST WHOM WILL MnSCU
COMPETE? Due to changes in demand and improved
technologies, e-learning is a hot market. New
entries compete against a combination of
traditional education providers, many of whom
have incorporated innovative business models, and
for-profit non-traditional providers who are
aggressively launching well-funded e-learning
initiatives. SECTION IV WHAT ELSE SHOULD MnSCU
CONSIDER PRIOR TO DEVELOPING AN E-LEARNING PLAN?
Identification of targeted programs and markets
are just one element of a comprehensive strategic
plan for e-learning tailored to MnSCUs unique
environment and strengths.
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Section I What does e-learning mean for
MnSCU?
Section I of this report defines distance
education and outlines the features of learning.
E-learning is identified as a segment of distance
education that is characterized by the unique
features of the Internet and technology-enabled
learning. There are advantages and disadvantages
to this type of learning, but whatever those may
be, e-learning has catalyzed a transformation in
the education arena and institutions of higher
education are beginning to align themselves with
this new mode of education. It is important for
institutions developing an e-learning strategy to
understand and define e-learning for themselves.

• KEY FINDINGS
• There is a distinction between traditional
  distance education and Internet-based, online
  learning. Traditional distance education
  emphasizes the independence of the learners and
  the privatization of the learning process.
  However, online learning affords a certain degree
  of interactivity with others while at a distance.
  
• Whereas distance education is delivered through a
  broad range of delivery modes and media,
  e-learning, as a segment of distance education,
  is narrowly confined to Internet-enabled
  learning.
• E-learning provides students, faculty and
  administrators the opportunity to interact and
  collaborate in an efficient and effective manner
  without requiring physical proximity, it allows
  for real-time learning activities and discussions
  as well as independent learning initiatives.
• An IDC report states Web-based courses are the
  most widely-used mode of technology for distance
  education courses.
• The percent of 2-year and 4-year postsecondary
  education institutions offering distance
  education has risen dramatically, with
  asynchronous Internet courses leading the way,
  followed by one-way prerecorded video and two-way
  video with two-way audio.
• E-learning provides access to new ways to
  facilitate the learning process. In fact, the
  most significant difference between classroom
  based and technology mediated education is the
  shift from focusing on teaching to an emphasis
  on learning.

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Section I What does e-learning mean for
MnSCU?

• CONCLUSIONS
• There are advantages and disadvantages to
  e-learning for students, instructors,
  institutions and society. The table to the right
  outlines those benefits and disadvantages.
• As a mode for delivering education, e-learning
  has changed the educational landscape more
  rapidly than any other teaching and learning
  transformation. E-learning provides access to new
  ways of facilitating the learning process.
• The most significant difference between classroom
  based and technology mediated education is the
  shift from focusing on teaching to an emphasis
  on learning.
• Yet the implications go beyond the shift

• from teaching to learning also impacted is how
  educational material is packaged and sold, how
  libraries are used, the role of educational
  support personnel such as instructional
  designers, technology support staff, and
  marketing personnel, and the manner in which
  administrative support systems are expected to
  function.
• Although the focus of this market analysis is on
  e-learning, the development of e-learning
  statistics lags behind the rapid pace of change
  accordingly, in many instances this report must
  rely on distance education data. Until the
  e-learning data catches up, certain assumptions
  must be made about the correlation between
  distance learning developments and trends and the
  corresponding trends for e-learning.

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Section I What does e-learning mean for
MnSCU?

• IMPLICATIONS FOR MnSCU
• For many, e-learning is limited to Internet-based
  education for others e-learning embraces not
  only Internet-based delivery but also video
  cassette, video streaming, and other modes of
  technology-driven delivery. Determining the
  definition of e-learning is a necessary step
  toward the development of a strategy.
• Whatever the definition of e-learning,
  development of an e-learning strategy requires
  focusing on the student as learner, whereby the
  student is provided with the tools, technology,
  and service support needed to successfully
  complete an e-learning course or program.
• A learner-centric theme requires a different
  approach to content development and provision of
  services.
• Understanding and communicating the unique
  attributes of e-learning, its strengths and
  weaknesses, and how it complements other distance
  education modes of delivery are fundamental to
  developing and selling an e-learning strategy.

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Section II What is the demand for e-learning?
What are the e-learning needs?
Section II of this report provides information on
the demand for e-learning through a market needs
analysis. The first segment highlights key
demographic, economic, and education data for
Minnesota. The second segment breaks down the
professional and distance education market by
learner segment. Within each segment, market
penetration data on national and state levels,
key trends, and lists of competitors are
included. E-learning is a resource-intensive
endeavor, so strategic learner segment focus is
imperative when considering e-learning
opportunities. The information included in this
section should help MnSCU hone in on a target
audience.
A learner segment is a distinct group within the
entire population of learners. Each learner
segment has unique reasons for pursuing learning
opportunities. In addition, many of the segments
can be subdivided depending on their preferences
for a community experience and their preference
for a degree.
CORPORATE LEARNERS work for corporations and are
seeking education to advance their careers. The
purchase decision is made by the corporation and
not by the individual acting alone. Corporate
learners demand a broad range of educational
services. Targeting these learners would likely
require targeting corporations and industries.
PROFESSIONAL ENHANCEMENT LEARNERS are seeking to
advance their careers or shift careers. They are
interested in advanced (masters, doctorate)
degrees or non-degree work that furthers their
career. Professional enhancement workers may be
employed full- or part-time.
DEGREE COMPLETION ADULT LEARNERS are seeking to
complete a degree at an older age. They are
frequently working adults and must often balance
work and family needs with their educational
goals.
LIFE FULFILLMENT LEARNERS are interested in
education for its own sake. They enjoy learning
and the academic environment and view additional
education as a source of personal development or
as a hobby.
COLLEGE EXPERIENCE LEARNERS are preparing for
life. This segment includes many of the 18-24
year old residential college students for whom
the coming of age process that occurs in
college is often as important as specific
academic learning.
PRE-COLLEGE (K-12) LEARNERS are interested in
taking baccalaureate-level work prior to
completion of secondary school. This segment may
be interested in getting a jump start on
college.
REMEDIATION AND TEST PREP LEARNERS are interested
in learning as a prerequisite for an examination
or enrollment in another program.
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Section II What is the demand for e-learning?
What are the e-learning needs?

• KEY FINDINGS
• Of the seven core market segments, in the U.S.,
  Corporate Learners, Professional Enhancement
  Learners, and Degree Completion Learners are the
  segments where technology-mediated learning has
  achieved the greatest penetration.
• CORPORATE LEARNERS
• The corporate learning market has grown
  significantly over the past several years and
  growth is expected to continue. Many
  postsecondary institutions, especially community
  colleges across the country, are actively seeking
  to provide training to companies. Thus, the
  corporate training market presents an opportunity
  for institutions of higher education to expand
  their customer base and generate additional
  revenue from e-learning investments.
• Corporate web-based training is expected to surge
  by more than 900 percent between 1999 and 2003. A
  key reason according to Business Week is that
  online training is far cheaper than bringing in
  a live instructor.
• A survey conducted by the National Association of
  Manufacturers found that 37 percent of
  respondents were having difficulty introducing
  productivity improvements and 36 percent were
  having problems upgrading production technology
  due to employee skill shortages. This presents a
  tremendous corporate training opportunity.
• PROFESSIONAL ENHANCEMENT LEARNERS
• Based on an environmental scan of e-learning
  programs, there are five major categories of
  Professional Enhancement Learners. Business
  Education, Teacher Education, Health-related
  Education, Information Technology Education, and
  Manufacturing Education.
• E-learning opportunities in the business content
  area cover a wide range of courses and programs
  in the area of business skills and management
  education. Selected topics include general
  management, finance, customer service, and
  leadership.
• Between 1984-85, and 1994-95, the number of MBA
  degrees conferred increased by 40.
• To meet this demand, numerous postsecondary
  institutions and corporate e-learning providers
  have launched online MBA general management
  certificate programs.
• E-Learning opportunities K-12 professional
  development area has become an attractive market
  segment for companies, postsecondary
  institutions, and investors attempting to meet
  the needs of todays current educators and the
  hundreds of thousands of new educators entering
  classrooms across the next decade.
• Merrill Lynch estimates the market for teacher
  professional development is approximately 3
  billion.

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Section II What is the demand for e-learning?
What are the e-learning needs?

• Our nations schools will need to hire about 2.2
  million teachers by 2010 (Bureau of Labor
  Statistics).
• Currently, 19.9 of all distance education
  courses, including 31 of all distance education
  courses at four-year institutions, are targeted
  at current or prospective teachers.
• E-Learning opportunities in the health-care
  arena, particularly in nursing, cover several
  distinct program areas including bachelors and
  masters degrees, licensing and certification
  renewals and post-masters programs. Unlike many
  other occupations, nursing has well-defined
  educational requirements that must constantly be
  updated in order for nurses to retain their
  license.
• Between 1996 and 2006, the number of nurses are
  expected to increase 21, for a total increase of
  411,000.
• Between 1996 and 2006, the number of home health
  aids are expected to increase 76, for a total
  increase of 378,000.
• Currently, 10.2 of all distance education
  courses offered are targeted at nurses.
• Web-based IT training represents the largest
  portion of training currently delivered online,
  covering topics in database and enterprise
  services, desktop applications, Internet,
  operating systems, and application development.
  Leading technology companies such as Microsoft,
  Cisco, Oracle and Novell have developed
  multi-course certification programs available
  online and delivered by dozens of partners
  through Web portals and/or proprietary Web-based
  libraries.
• Approximately 50 of IT company executives cited
  the lack of skilled workers as the most
  significant barrier to growth in 1999-2000.
• Skills of IT professionals become outdated in 3-5
  years and Sun Microsystems Chairman and CEO has
  commented that employees at technology companies
  face an annual 20-25 skills obsolescence.
• Employees in the manufacturing sector monitor
  workplace conditions to ensure emplooyee health,
  comfort and workplace efficiency. Safety
  coordinators, directors and managers comprise the
  majority of occupations within the industrial
  safety group. The primary objective employers
  seek to attain is staff quality control.
• Employment projections for manufacturing in 2008
  indicate that the industry will be one of two
  that experience declines in employment.
• Unlike the rest of the Nation, the manufacturing
  sector in Minnesota is projected to continue to
  expand. Manufacturers are expected to add 41,000
  new jobs (MnSCU - Industry Image Research -
  Precision Manufacturing Partnership).

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Section II What is the demand for e-learning?
What are the e-learning needs?

• DEGREE COMPLETION LEARNERS
• The total market for degree completion students
  is 9.1 million. Part-time enrollments for
  undergraduates between 17-24 years of age is at
  2.9 million while the part-time enrollments for
  undergraduates above the age of 25 is at 5.3
  million (NCES).
• Students 25 years of age and older now represent
  43 (6.1 million) of all post secondary
  enrollments, up from 28 in 1970.
• More than 90 of MnSCUs students are employed
  full-time or part-time.
• According to a Noel-Levitz Market Research
  report, about half of lifelong learners surveyed
  are degree-seeking. 26.4 of the adults surveyed
  stated the primary objective is to complete a
  bachelors degree 19.5 stated the primary
  objective is to earn a masters degree.

• CONCLUSIONS
• The corporate market offers higher education the
  greatest opportunity to expand its customer base
  and generate additional revenue.
• Business education, teacher education,
  health-related education, and information
  technology education are the largest market
  segments in distance education for professional
  enhancement learners nationwide.
• The demand for manufacturing education appears to
  be a unique demand within Minnesota, as
  manufacturing remains the States second largest
  industry.
• Adult degree completion learners are increasing
  in numbers. Since students over the age of 25
  tend to work part-time or full-time, the need for
  more flexible learning environments has become
  more pressing.

• IMPLICATIONS FOR MnSCU
• Development of an e-learning strategy requires
  determining for each market segment whether there
  is alignment between the segment and the
  institutions overall mission and goals. What is
  the degree of alignment of these market
  segmentscorporate learners, professional
  enhancement learners, degree completion learners,
  life fulfillment learners, college experience
  learners, remediation and test preparation, and
  pre-college (K-12) learnersand MnSCUs mission?
• Identification of a particular market
  segmentrather than a particular programis one
  approach to identifying a market niche from which
  an e-learning strategy can be developed.
• Specific market segments have proven to be
  successful e-learning targets for several
  successful providers.
• A number of questions surface around the notion
  of market penetration, such as
• Is the market segment significantly robust to
  support additional entry or is it an already
  crowded market?
• What untapped markets are significantly large to
  warrant investment to establish its own niche
  e-learning offerings?

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Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?
Due to changes in demand and improved
technologies, e-learning is a hot market.
Entering this market means competing against or
collaborating with traditional providers, many of
whom have incorporated innovative business
models, as well as for-profit non-traditional
providers who are aggressively launching
well-funded e-learning initiatives. Section III
of this report outlines e-learning trends and
highlights the five major areas of activity
within the broader e-learning market. Case
studies of select vendors are included, providing
MnSCU with a glimpse of the types of
characteristics and capabilities needed to
succeed in this market.

• KEY FINDINGS
• Over the past several years, there has been an
  influx of private investment into the education
  market, but the economic slowdown in recent
  months has curtailed this influx of funding. In
  1999 and 2000, education ventures received 5.5
  billion in equity investments. As a result,
  hundreds of companies were formed, may of them in
  the corporate e-learning space. However, more
  recently there has been a contraction in venture
  investing. Moreover, many companies receiving
  initial funding are finding access to additional
  capital extremely difficult.
• In 1999 and 2000, a handful of strategic
  investors capitalized on the fertile investment
  climate. Companies such as Kaplan, Sylvan,
  Pearson, and Thomson, among others, announced
  sizeable investments and/or acquisitions in
  postsecondary and corporate e-learning
  businesses. These companies aim to develop
  comprehensive solutions for customers that
  integrate technology platforms, proprietary
  content resources and value-added services that
  meet customers complete needs.
• The vast amount of private equity directed to
  single-solution corporate e-learning ventures has
  led to a wave of consolidation activity in the
  e-learning space. Leading companies are making
  targeted acquisitions to enhance their solution
  set. However, those companies and organizations
  lacking a differentiated e-learning offering will
  not likely attract partners and/or investors
  necessary to support ongoing operations in a
  consolidating market.
• Availability of robust learner support services
  such as mentoring, 24x7 tutoring, FAQs, and live
  technical support have become important elements
  as vendors and organizations gain a better
  understanding of learner needs in an online
  environment.
• The convenience and flexibility inspired by
  online delivery of content continues to blur the
  distinctions between the corporate and
  postsecondary markets, particularly within the
  context of targeting Corporate Learners,
  Professional Enhancement Learners, and Degree
  Completion Adult Learners. Many for-profit
  companies are targeting customers that would
  traditionally turn to postsecondary institutions.
  

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Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?

• Within the postsecondary e-learning market,
  institutions have begun to look beyond the core
  student base in hopes of attracting a much wider
  audience for an institutions offerings. During
  the past several years, both the number of
  web-based distance learning programs and the
  number of students enrolled in web-based distance
  learning courses have increased dramatically with
  a handful of prominent institutions launching
  highly visible ventures.
• Within the corporate space, for-profit providers
  have eagerly invested in e-learning solutions to
  help their customers capture the anytime,
  anywhere benefits of education and training
  delivered online.
• In reviewing the market, five major areas of
  activity within the broader e-learning market
  warrant more detailed analysis. These are
• Information Technology Education
• Business and Management Education
• Teacher (K-12) Education
• Nursing Education
• Workforce Training
• A close look at the successful traditional and
  for-profit providers of content for these five
  areas demonstrates a similarity in certain core
  characteristics as defined in the Criteria for
  E-Learning Success Scorecard.

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Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?

• INFORMATION TECHNOLOGY EDUCATION
• Information Technology Trends
• IT training is a highly competitive e-learning
  market. Many for-profit entities have crowded
  this space.
• IT is a commoditized content market. Those
  companies and institutions achieving the most
  success in the online IT space posses sufficient
  scale, experience, or innovative delivery modes
  to differentiate themselves.
• The rapid rate of technological innovation has
  dramatically reduced the lifecycle for software
  and hardware products. Developing web-based IT
  Courseware that can successfully meet the
  requirements of learners under these market
  conditions requires not simply strong
  instructional design methodologies and content
  expertise, but also deep financial and human
  resources.
• Although IT certification is valuable, building a
  broad set of IT skills is more valuable. Leading
  online IT training providers need to furnish
  customers with multi-platform, multi-vendor
  education environments that test professionals
  flexibility and problem-solving abilities.
• Information Technology Competitive Landscape
• By far, the most competitive of the e-learning
  markets, the online IT space includes -- or will
  soon include -- the largest companies in the
  training industry.
• Several leading high tech vendors have launched
  substantial e-learning initiatives to supply both
  internal employees and external constituents with
  online courseware and resources.
• Additionally, global instructor-led IT training
  companies also represent potential threats in the
  online IT space although there efforts to date
  have been limited.
• Information Technology Providers
• New Jersey Institute of Technology NJIT has a
  strong regional brand built on decades of
  successful distance learning programs in IT. NJIT
  offers one of the broadest online undergraduate
  and graduate IT degree programs in the US. The
  school is ranked among the most wired
  universities by Yahoo! Internet Life.
• University of Phoenix UOPs reliance on the
  synergy between its physical and online
  classrooms may give it the necessary edge to
  maintain its growth and stay ahead of its
  competitors. The institution stands out in the
  crowd for its strong brand, competitive academic
  programs and early entrance into Internet-based
  education.
• SmartForce has established a strong brand name
  in the two years since it embarked on an
  Internet-dominated business model strategy. As
  one of the only e-learning companies with
  revenues greater than 150 million, SmartForce is
  able to generate enough cash to keep shareholders
  happy and fund necessary research and development
  as well as acquisitions.
• KnowledgeNet The management team of KnowledgeNet
  was able to raise significant capital at a time
  when the venture market was drying up.
  Additionally, its recent launch of a learning
  management system bolsters its ability to offer
  total IT training solutions.

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Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?

• BUSINESS AND MANAGEMENT EDUCATION
• Business and Management Education Trends
• There is a mixed quality of current business and
  management offerings. One particular challenge
  for effective migration of business content
  online is the difficulty in translating certain
  management behaviors and concepts to a web-based
  environment. In addition, many institutions and
  vendors service the corporate market have
  employed a content library that places heavy
  emphasis on quantity, not necessarily the quality
  of the courses available in the library.
• With the initial wave of online business skills
  content of mixed quality and interactivity,
  vendors are striving to develop courseware that
  actively engages learners and approximates
  realistic business environments. The first group
  of companies aiming to develop realistic business
  scenarios and role playing opportunities for
  learners garnered significant venture capital
  resources, secured high profile partnerships with
  leading business schools and extensive media
  coverage.
• There are few postsecondary institutions tapping
  the corporate market. Despite a number of high
  profile partnerships between e-learning vendors
  and leading business schools during the last 18
  months, few institutions are using the Internet
  to deliver business skills content and
  certificate and degree-granting programs to
  corporate customers.
• Business and Management Competitive Landscape
• IDC predicts that revenues of web-based
  soft-skills training, of which business skills
  and management education represent a significant
  portion, should exceed those of online IT
  training by 2003.
• Currently, several of the more high-profile
  content companies in the management education
  space, including Unext, Quisic, and Ninth House
  Network, have struggled to gain market traction
  even after raising sizeable sums of private
  equity and developing high quality and
  encouraging learner centric online courseware.
• Several leading online IT companies have entered
  the business skills and management education
  market, seeking to leverage their experience and
  installed base in new content verticals.
• Among postsecondary institutions seeking online
  education opportunities, migrating executive
  education programs to the Web represents the most
  popular initial step in the business content
  arena. The challenge form these organizations is
  to differentiate their online business programs
  from those of other institutions.
• Business and Management Providers
• University of Maryland University College UMUC
  benefits from a long history of providing
  degree-granting programs to U.S. military
  branches that should enhance UMUC Onlines
  efforts in this expanding market. Additionally,
  the organization achieved good visibility and
  brand establishment with its early entrance into
  the postsecondary e-learning market.
• UNext With strong financial and distribution
  support provided by Thomson Learning, a key
  strategic investor, UNext appears to have the
  operational resources necessary to capitalize on
  the business skills and management education
  online opportunity.
• SkillSoft SkillSofts library of content gives
  it a significant competitive advantage over other
  content competitors in the corporate e-learning
  arena. The content depth of its library makes it
  an attractive partner to other companies.
• American Management Association The AMA brand is
  internationally recognized and respected. Its
  efforts at keeping course offerings timely,
  cost-effective and valuable to member companies
  and their employees are a hallmark.

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Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?

• TEACHER (K-12) EDUCATION
• Teacher (K-12) Education Trends
• Traditionally, K-12 educators have completed
  professional development requirements through
  on-site presentations and workshops and by
  attending conferences and seminars. Currently,
  most online professional development vendors have
  found much slower teacher adoption rates of
  online courses and resources than they had
  anticipated.
• The dearth of qualified K-12 educators has
  spurred many states to create accelerated,
  alternative certification programs for
  individuals considering education careers. The
  rise of alternative certification programs in
  states and major urban districts aim to help
  offset the poor retention for new teachers and
  schools difficulty in attracting qualified
  candidates for selected subjects.
• Several of the leading online professional
  development companies would like to develop
  partnerships and/or working relationships with
  schools of education and professional development
  consortium. These partnerships would introduce
  vendors online products and services to large
  groups of future classroom educators and create
  new distribution channels in which the
  institutions could participate.
• Teacher (K-12) Competitive Landscape
• The dramatic demographic data concerning the
  demand for preparing new educators has made the
  K-12 professional development market particularly
  attractive to leading companies such as Sylvan
  Learning Systems, Kaplan, Pearson and
  McGraw-Hill. However, the professional
  development market both online and offline
  remains a tremendously fragmented market.
• Online professional development companies
  delivering web-based resources and continuing
  education courses and programs are gaining
  customer acceptance remains a challenge.
• Teacher (K-12) Providers
• Walden University The Walden University brand is
  well known in graduate distance education, and
  the Sylvan investment will help Walden launch the
  sizable marketing campaign required to break into
  the undergraduate space and gain serious
  traction. The synergies with other Sylvan
  companies also give Walden a strong competitive
  advantage. .
• Lesley University Lesley has a strong reputation
  in graduate programs in education and aims to
  capitalize on that national reputation as it
  migrates course content and degree offerings to
  the Internet. With an e-learning commitment
  directly from the Presidents Office, Lesley is
  guaranteed the necessary financial investments to
  maintain its first-mover advantage in delivering
  online education degrees.
• Riverdeep/TeacherUniverse In addition to Teacher
  Universe, Riverdeep has made some key strategic
  acquisitions and partnerships that allow the
  company to penetrate the K-12 market in different
  ways. A traditional publisher of K-12 curricular
  CD-ROM products, Riverdeep enjoyed solid brand
  awareness as it migrated its content online and
  filed its 2000 initial public offering. .
• TeachStream The companys 10 years of experience
  selling professional development resources into
  districts, and its high-quality content drawn
  from more than 200 annual classroom visits,
  position TeachStream as a leading provider of
  professional development online. Securing
  contracts in several major U.S. school districts
  also bodes well for TeachStream as
  superintendents, principals and teachers look to
  solutions that can be used district-wide.

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Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?

• NURSING EDUCATION
• Nursing Education Trends
• The American Nurses Credentialing Center reports
  a continued decline in employer support of
  nurses continuing education. This trend places
  increasing pressure on nurses to identify
  cost-effective solutions to meet continuing
  education requirements as they become responsible
  for the costs associated with license renewal.
• Constant advances in medical fields require that
  nurses possess a command of new developments and
  research findings. As online learning becomes
  more prevalent in institutions, it will be
  imperative that providers keep courseware
  up-to-date with the latest findings and
  innovative technologies to deliver those
  offerings.
• Nursing Competitive Landscape
• Even in its infancy, the nursing content market
  is crowded with many small players. For-profit
  and not-for-profit postsecondary institutions
  recognize they must offer online degree
  courseware or risk losing existing enrollments as
  well as any hopes of expansion.
• Not-for-profit players benefit from a legacy of
  accreditation and an understanding of nursing
  regulations in their state. The discerning
  student migrates to these institutions because
  they have the best guarantee that the credit
  hours and degrees offered will be accepted by
  their employer.
• For-profit institutions and companies, benefiting
  from better access to cash either through private
  investment or solid margins, have an opportunity
  to capitalize on opportunities deliver online
  degrees and certification programs at competitive
  pricing.
• Nursing Providers
• University of Central Florida As an early player
  in this market, UCF is in a solid position to
  carve out a healthy piece of the online nursing
  content market. UCFs commitment to online
  learning spreads across a number of subjects,
  indicating its Virtual Campus will receive
  appropriate funding in order to keep its online
  programs relevant and competitive.
• Duquesne University Duquesne has consistently
  been rated as one of the top 10 Catholic colleges
  in the United States, and the schools commitment
  to online education comes straight from the
  Universitys President and Provost. This
  high-level support should help Duquesnes School
  of Nursing attract sufficient resources to
  establish itself in a fast-growing online nursing
  marketplace.
• Kaplan College KaplanCollege.com is building on
  the brand and reputation that Kaplan has built
  over six decades. KaplanCollege.com is a leading
  distance education provider in the U.S.,
  delivering web-based courses to more than 8,000
  students in 1999.
• ANA The ANA and various state nursing
  associations have decades of experience
  supporting and advocating for nurses in the
  United States. As such, these associations have
  the trust and respect of their constituency.
  Continuing education has been a longstanding
  membership benefit of ANA and state associations
  and online learning only enhances their overall
  service offerings.

18
Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?

• WORKFORCE TRAINING
• Workforce training is increasingly becoming a
  necessity among corporations that strive to
  succeed in an information economy.
• Training in the areas of information technology,
  manager and supervisory skills, technical
  processes, and occupational safety are among the
  most common types of training.
• More and more companies are incorporating
  technology-based training into their overall
  training strategy.
• Large companies offer their employees
  comprehensive e-learning solutions with
  customized content and learning management
  support.
• Small- to mid-sized companies, that do not have
  sufficient resources, rely more on training
  vendors, many of which offer customized training
  solutions at reasonable prices.
• The customized training market is over-saturated
  with training vendors that provide training in
  information technology, finance and insurance,
  and retail.
• A fewer selection of training vendors offer a
  selection of courses in manufacturing and
  health-related fields.
• MnSCU has already established close partnerships
  with the many of the states major employers.
• Opportunities exist for further collaboration and
  customized training in selected areas.
  Specifically, MnSCU should consider customized
  training for employers within the manufacturing
  and health-care industries.

19
Section III What are others doing in the
e-learning arena? Against whom will MnSCU
compete?

• CONCLUSIONS
• High distance learning skills availability is
  integral to the success of an e-learning program.
  Whether or not an organization has the right mix
  of skills (e.g., IT support, course developers,
  designers, marketing, finance, student services,
  etc.) is a key component of a successful
  e-learning program.
• A strong brand and an entrepreneurial
  organizational structure that supports innovation
  through flexibility and agility are also critical
  success factors for an e-learning initiative.
• Other criteria for success are important facets
  and

• should be considered by an organization planning
  to enter the e-learning market.
• MnSCU has already established close partnerships
  with many of the states major employers. This is
  a key strength and MnSCU should leverage its
  existing relationships.

• IMPLICATIONS FOR MnSCU
• A criteria for success scorecard can be used as
  a tool to identify those programs and/or MnSCU
  institutions that demonstrate strengths in
  various capabilities.
• Using the scorecard requires determining which
  capability and capacity criteria will be used to
  identify strengths and weaknesses.
• The chosen criteria provide a mechanism for
  identifying which e-learning programs are ready
  to be marketed to a broader e-learning
  environment.
• The same scorecard criteria can serve as an
  internal tool for evaluating proposals supported
  by FIPSE funding.
• Opportunities exist for further collaboration and
  customized training in selected areas,
  specifically, customized training for employers
  within the manufacturing and health-care
  industries.

20
Section IV What else should MnSCU consider prior
to developing an e-learning plan?
In conducting our research we started by focusing
on direct market activities from a supply and
demand perspective. Thus, the primary emphasis
of this report is the presentation of a picture
of the direct e-learning marketing segments and
providers in postsecondary education. However, in
addition to understanding the market and the
competition, an institution or system considering
whether and how to implement a successful
e-learning initiative must also assess several
additional facets of its organization and
capabilities. Section IV of this report provides
an overview of these additional marketing
considerations including strategic partnerships,
governance models for e-learning, funding
factors, branding, and Internet adoption trends.

• KEY FINDINGS
• Strategic Partnerships
• As competition in the e-learning market
  intensifies, both educational delivery and
  service providers are assessing innovative ways
  of partnering with others to strengthen their
  portfolio of service and product offerings.
• Leading e-learning institutions and companies
  have developed partnerships principles to serve
  as criteria for selecting e-learning partners.
  Some of these include the opportunity to venture
  into new markets, the opportunity to mutually
  gain something out of the relationship, the
  opportunity to enhance the brand, and the level
  of commitment to the e-learning initiative.
• Although much of the e-learning activity has
  occurred within the past ten years, several niche
  organizations are emerging. Determining which
  vendors are strong prospective partnerships for
  MnSCU depends on MnSCUs vision for e-learning
  and other factors that are critical for
  successful partnerships.
• A partnership is an agreement between two or more
  parties to work together to achieve common aims.
  Surveys of partnerships and workshops of
  practitioners have produced a set of factors that
  describe successful partnerships. These include
  respect and trust between different interests,
  commitment of key interests developed through a
  clear and open process, and collaborative
  decision-making.
• Governance Models
• Several universities and higher education systems
  have created distinct distance education or
  e-learning delivery structures to capture and
  leverage their collective assets as well as to
  emulate those characteristics critical for
  success in the distance end e-learning
  competitive environment.

21
Section IV What else should MnSCU consider prior
to developing an e-learning plan?

• Seven building blocks provide the foundation on
  which to formulate an e-learning governance
  structure. These building blocks include
  technical infrastructure, distance learning
  delivery modes, leadership, support services,
  policy, program planning, and funding issues.
  Addressing these various components is critical
  to the success of a strategic e-learning program.
  
• A number of objectives have been identified as
  drivers of e-learning organizational strategies
  and structures. Not all objectives are equally
  critical or applicable to every situation. As
  MnSCU considers development of an organizational
  structure for delivering e-learning, the drivers
  of e-learning need to be clearly established and
  prioritized.

• There are numerous ways in which to organize an
  e-learning governance model. Three approaches
  outlined in the report include 1) a technical
  service model whereby institutional autonomy is
  maintained for all e-learning functions, while
  technical resources are leveraged across the
  system 2) an e-learning delivery model whereby
  the development and delivery of courses and
  programs is across all institutions, leveraging
  the breadth and size of the system and finally
  3) a comprehensive service center delivery model
  provides a seamless interface of e-learning
  support services for students and faculty.

22
Section IV What else should MnSCU consider prior
to developing an e-learning plan?
23
Section IV What else should MnSCU consider prior
to developing an e-learning plan?

• Branding
• A brand is the distinctive characteristic that
  makes an organization or a product stand out and
  establishes its emotional appeal. Brand gives the
  consumer a reason to buy and to keep buying.
  MnSCU has a strong local brand however, brand
  recognition within the national and international
  education arena is not as well established.
• There are various ways in which MnSCU can address
  the issue of branding including the three
  approaches listed.

• Internet Adoption Rates
• Internet adoption rates are important factors to
  consider when developing an e-learning business
  plan. Adoption rates can help determine which
  geographical regions and learner segments to
  target.
• In Africa, South America, Eastern Europe, and
  Asia (except Hong Kong, Japan, Taiwan, Korea, and
  China), Internet connectivity is low. This will
  serve as a major obstacle to expanding
  technology-mediated education.
• The top fifteen countries with the highest
  percentage of Internet penetration (e.g., percent
  of total population connected and online) include
  European, North American, and Asian Pacific
  countries. Of these countries, three site English
  as the primary language -- Australia, U.S., and
  Canada. These fifteen countries also boast high
  literacy rates ranging from 94 in Taiwan to 100
  in Iceland, Finland, and Australia.

24
Section IV What else should MnSCU consider prior
to developing an e-learning plan?

• CONCLUSIONS
• Strategic Partnerships E-learning requires
  organizations to develop comprehensive product
  and service offerings to meet the needs of target
  market segments. Being able to provide e-learning
  to existing or new markets may require strategic
  partnerships with those companies and/or
  institutions that are deemed an asset to the
  organization.
• Governance Models A governance model for
  e-learning provides the foundation by which
  e-learning processes and functions occur thus,
  it is a natural step to develop an e-learning
  governance model that makes sense in the context
  of the institution.
• Funding Because of the extensive role of
  technology in both the delivery and support of
  e-learning, financial planning for e-learning is
  integrally linked to funding of the technology
  infrastructure. Effective IT funding strategies
  require aligning revenue solutions with strategic
  initiatives.
• Branding A major characteristic of the
  for-profit e-learning providers is the fact that
  they seem to have clear specializations -- a
  clearly defined and differentiated brand. This is
  important when rolling out an e-learning
  initiative, as the brand provides the learner
  with a reason to enroll in a course and/or
  program.
• Internet Adoption Analysis of Internet adoption
  rates reveal that Europe, North America, and Asia
  Pacific are the key regions where Internet
  penetration is high.

• IMPLICATIONS FOR MnSCU
• Additional strategic considerations include the
  appropriate governance model for organizing and
  delivering e-learning, development of innovative
  partnerships and strategic alliances, development
  of alternative funding strategies, adoption of a
  MnSCU brand, and consideration of Internet
  adoption rates to better focus on target markets
  and regions.
• Through a broad range of external consultancies
  and internal analyses, MnSCU has plowed a massive
  field as it explores its future in the e-learning
  environment. Determining how to use this
  information is one of several critical next steps
  in the overall development of an e-learning
  strategy.

25
What are some next steps for MnSCU?

• WHAT ARE THE HIGH-LEVEL NEXT STEPS FOR MnSCU?
• Synthesize the key points gathered from each
  report, looking for major points of intersection
  and disjunction.
• Use analysis of current programs, institutional
  goals, market segmentation, and Internet adoption
  rates to identify prospective targeted market
  segments.
• Based on the key market segment, identify
  programmatic areas of focus, tied to MnSCUs
  capabilities and mission goals.
• Identify a MnSCU e-learning brand and design an
  e-learning governance structure to promote and
  deliver the brand.
• Integrate branding, program development, and
  marketing with funding strategy.
• Use current strengths and weaknesses to identify
  and explore prospective partnerships that share
  mutual visions and complement one anothers
  needs.