Management Update: Gartner s 2003 E-Learning Content Magic Quadrant

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1 IGG J. Lundy Article 19 February 2003 Management Update: Gartner s 2003 E-Learning Content Magic Quadrant The e-learning content market will grow in 2003, particularly the custom content area. Demand is fueled by more enterprises needing to migrate classroom courses to an e-learning delivery medium. Many CIOs and other executives are looking into e-learning initiatives for their enterprises, and content for e-learning is a must have capability. The e-learning content market will grow in 2003, particularly in the custom content area. Demand is fueled by more enterprises needing to migrate classroom courses to an e-learning delivery medium. Changes in the E-Learning Content Magic Quadrant The e-learning content market is growing because an increasing number of enterprises are realizing that quality content is a critical success factor for e-learning. The six market leaders in 2002 were: SmartForce (subsequently acquired by SkillSoft) KnowledgeNet Thomson NETg IBM Element K DigitalThink Those vendors remain leaders in Gartner s 2003 E-Learning Content Magic Quadrant, with the addition of Accenture Learning (see Figure 2). Figure 2 Gartner s 2003 E-Learning Content Magic Quadrant Gartner Entire contents 2003 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Challengers Leaders Ability to Execute Allen Communication Learning Services MindLeaders Comet Learning Intellinex Geometrix ATG Fuel Element K Accenture Learning NETg SkillSoft KnowledgeNet IBM DigitalThink SMG Sun emind CyberU CognitiveArts Ninth House Knowlagent Imparta As of February 2003 Niche Players Visionaries Completeness of Vision ATG Access Technologies Group NETg Thomson NETg SMG Strategic Management Group Source: Gartner Research Sun Sun Microsystems Several new vendors have been added to the Visionaries Quadrant CyberU, Knowlagent and Strategic Management Group. Quisic and OC Inc. have been removed from the Magic Quadrant, and they no longer operate under those names. The demand for custom content is growing, and vendors are positioning to respond to this need. For example, DigitalThink changed its strategy from being an off-the-shelf content developer to become a vendor of custom content. Demand is increasing because business units need content that is focused on what they do or offer; thus, unique, custom content is required. Leaders Quadrant E-learning content leaders have the highest combined measures of ability to execute and completeness of vision. They are doing well today and are prepared for the future. They must have strong channel partners, presence in multiple geographies, consistent financial performance and broad content support. Accenture Learning, which includes its wholly owned e-learning subsidiary Indeliq, focuses on custom content development across broad delivery mediums and simulation on a global basis. Indeliq focuses on simulation, and offers off-the-shelf content and the ability to customize content using its authoring tools. Accenture Learning leverages these and other tools, and it has won several large contracts for custom content development. The vendor has development centers in the United States, Europe and Asia.

3 DigitalThink in 2002 reduced its emphasis on its e-learning off-the-shelf content to focus more on its growing custom content business. It provides off-the-shelf IT, soft skills and financial services courseware. However, in the future, it will focus more on custom content development services. DigitalThink has a strong cash position; in 2002, it reduced the amount of cash that it spends. DigitalThink also added the L5 Learning Delivery System product in 2002, allowing customers to deliver Sharable Content Object Reference Model 1.2 content developed by DigitalThink or its clients. Element K has started to focus less on its legacy classroom training environment and more on its growing library of e-learning off-the-shelf IT content. In December 2002, Element K also began to offer KnowledgeHub, an authoring tool, to enable enterprises to develop their own custom content. KnowledgeNet was one of the pioneers in live e-learning courseware. Today, it offers much of its IT- and soft-skills-focused content in multiple delivery formats. It also offers a learning management system (LMS) and a learning content management system (LCMS) with its content. KnowledgeNet recently began to offer simulation courses for a number of technical areas, including Cisco System certification. Gartner expects that other vendors will begin to offer these types of courses. IBM has formed a learning solutions team to bring together its extensive portfolio of services, software, hardware, research and alliance initiatives to serve the learning marketplace. This enterprisewide team has established a significant presence in the custom content development service area by leveraging its knowledge base, which spans most leading industries. IBM also resells other vendors off-the-shelf content, including Thomson NETg. SkillSoft acquired SmartForce in September 2002, which now operates under the name SkillSoft. SkillSoft offers one of the largest off-the-shelf content libraries for IT and business skills content. SkillSoft is focused on integrating the two organizations products and operations. Thomson NETg is expanding its content library. In 2002, Thomson NETg internally developed hundreds of courses, and expanded its brand and local business skills content, by acquiring McGraw-Hill Lifetime Learning assets. Thomson NETg also licensed its content library to IBM and Sun Microsystems, which now can resell Thomson NETg content. In January 2003, Thomson NETg signed a deal with Safari Books Online to supplement its portfolio of corporate learning solutions. Challengers Quadrant E-learning content challengers can execute well, but they have limited vision. They have strong channel, product and financial capabilities, but they do not lead the industry in innovation or strategic insight. Allen Communication Learning Services, formerly known as Mentergy, has been in the custom content development business for more than 20 years, and offers good value. Allen recently completed a management buyout from Mentergy. It also added FastFlex RCD, a rapid custom content development service. Allen also offers authoring tools, including Quest and Designer s Edge. Comet Learning, formerly InstructionSet, focuses on custom content for retailers, manufacturers and consumers. It offers legacy off-the-shelf IT content. Intellinex, a subsidiary of Ernst &Young, specializes in custom content development for a variety of delivery mediums, and offers an extensive library of off-the-shelf courses in business skills, PC skills, financial planning, audit and tax, the Health Information Portability and Accountability Act for employers, and regulatory compliance. It also offers an LCMS and an authoring tool.

4 MindLeaders focuses on off-the-shelf business skills, IT and desktop content, and also provides custom content development. It is one of few vendors, in addition to IBM, to offer OS/390-focused e- learning content. Recently, it has focused on a variety of partnerships to enhance its market presence as a one-stop, integrated e-learning provider. Visionaries Quadrant E-learning content visionaries have strong vision, but they are limited in their ability to execute. They generally have good content and related strategies, but they may not have broad relevance in the market. CognitiveArts targets soft-skills content development and focuses on simulation as a key part of its deliverables. In 2002, CognitiveArts added learning strategy, curriculum design and client enablement consulting services as part of its overall offering. CyberU is a relatively new vendor in the e-learning content market. It is one of the first independent content aggregators; it offers content from Element K, emind, Thomson NETg, SkillSoft and several other vendors. Gartner expects that other content providers will follow this approach. emind focuses on financial services content and compliance applications. It has expanded its library to offer fixed-income content. It also provides custom content solutions to financial services clients that require them. Imparta offers off-the-shelf and customized simulation-based e-learning as part of a blended solution that focuses on management, sales and marketing skill sets. Knowlagent, a call center LMS and content provider, announced on 13 January 2003 that it had acquired Simtrex, which provides call center simulation training software and custom development services that are used to create customized simulation training content. This move strengthens Knowlagent s position in the call center e-learning space. Ninth House has moved to the Visionaries Quadrant. It focuses on professional and organizational skills development content. In 2002, Ninth House introduced its Instant Advice product line, which is composed of short video overviews of a particular business subject area, such as how to conduct a performance review. Strategic Management Group (SMG) provides simulation products and services that accelerate time to value of corporate initiatives. SMG focuses on custom simulation content development and has expertise in sales, product life cycle management, shareholder value and business skills, including change management, leadership and project management. Sun Microsystems offers an extensive array of off-the-shelf Unix, Java and network computing content and custom content development, and resells other vendors off-the-shelf content. In 2002, Sun licensed Thomson NETg s Content library; Sun now can resell and customize Thomson NETg courses. Niche Players Quadrant Because e-learning content offerings can be varied, the Niche Players Quadrant features vendors that focus on a number of different areas. E-learning content niche vendors have limited vision and weak ability to execute in the general market. In a focused market (for example, a geographic, vertical or product segment), their influence may increase.

5 Access Technologies Group focuses on soft-skills training, such as consultative selling, using customizable content via its Simentor series of simulation-based reinforcements. Fuel focuses on custom content development services. It is known primarily in Europe. Geometrix supplies Web-enabled, three-dimensional animation capabilities. It focuses on medical, IT and regulatory segments. Advice to Enterprises The breadth of vendors in the 2003 e-learning content Magic Quadrant means that enterprises have many options. Gartner suggests that enterprises evaluate off-the-shelf content for quality and review examples of custom content before signing contracts with vendors. E-learning should complement the entrenched training initiatives. Successfully implementing e- learning requires a strategy and vision. It is more than moving training to the Web. An e-learning architecture is a key part of deployment. When cascaded properly, it can enable business units autonomy, even though they are still tied to the established framework. Content is the secret ingredient that makes e-learning successful. Good content is not inexpensive, and proper budgeting is required to make the necessary investments in content and content management of the learning objects that are developed. Constantly evaluate how learning programs can help achieve enterprise goals. Tailor the e-learning program to the needs of your workforce. For most employees, that means starting with business skills courses. Carefully manage the first use of e-learning, providing as much help as the student needs. Support the new, strategic e-learning initiatives as they emerge. Work harder at competitive analysis. Bottom Line Good content is the cornerstone of a successful e-learning program. Careful selection of e- learning content vendors can help to ensure that quality content is deployed. Students will take additional e-learning courses if the initial experience is a quality one. Written by Edward Younker, Research Products Analytical source: James Lundy, Gartner Research For related Inside Gartner articles, see: Management Update: 2003 E-Learning Predictions Highlight Increased Deployment, 11 December 2002 Management Update: A Growing Market Battle to Deliver E-Learning Systems, 20 November 2002 Management Update: Simulation Winning Application for E-Learning, Numerous Benefits for Enterprises, 18 September 2002.