WE HAVE ARRIVED AT what may soon come to be viewedas a watershed in e-learning’s devel-

opment. Many predict market dynamics,increasing enterprise adoption and matur-ing e-learning technology will cause sig-

nificant changes in how organizationsimplement training and in how ven-

dors approach the market.

There’s no doubt e-learning is fast becoming a priority among top corporations—reach-ing a predicted global market of $35 bil-

lion by 2005, according to research con-ducted by Stamford, Conn.-based

Gartner Group. But as organizationsbegin to leverage initial success, learning

management isquickly becoming an

important piece of amuch larger enter-

prisewide computing pie.The new concept has been dubbed

Web services—compatible computersoftware systems that take full advan-tage of the Internet by sharing dataacross an organization. In theory, HRcould plug into accounting, whichcould connect to sales, and so forth. The goal? In a word:seamless. Procurement, installation, compatibility, scalabil-ity and usability across an organization’s full suite of bun-dled applications, including training.

While many agree Web services is years from fruition,many powerhouse vendors—the ERP, CRM and technologygiants—are building on the model, quietly positioningthemselves to play a much larger role in e-learning. By doing

so, they profess to deliver the enterprisewide data needed todraw the big picture and articulate training’s value in busi-ness metrics.

“Enterprises of any size ought to manage their learningand instructional assets as any other in an organization,whether they are financial, manufacturing or human assets,”says Chris Pirie, vice president of online learning at OracleUniversity, Redwood City, Calif.

For pure-play LMS vendors, the pressure is on. During thecoming year, current e-learning vendors will respond by attempt-ing to expand beyond entry-level LMS products, predicts JamesLundy, Gartner vice president. And while many of theseproviders may produce better quality products than their power-house counterparts, that alone will not ensure their survival.

“The powerhouse vendors will take 25 percent of the mar-ket share by the end of 2004,” says Lundy. “That’s a pretty fairprediction, because it’s mainly going to come out of theirexisting customer base. By late 2005, 50 percent of today’sindependent LMS vendors will cease to exist.”

Why Now?The e-learning market remains in flux, both on the

demand and supply sides of the economic equation. Needsdo not remain static, especially in trying times. Greatercorporate demand for business metrics has caused cus-tomers to look well beyond LMS basics for systems thatwill allow them to fine-tune training offerings using thelatest available data gathered from across the enterprise. >>

T R A I N I N G MAY 2003 1918 MAY 2003 T R A I N I N G

A PUSH FOR SYSTEMS

INTEGRATION, A

CONSOLIDATING

E-LEARNING MARKET

AND AN EVER-

INCREASING DEMAND

FOR BUSINESS METRICS

HAVE RIPENED THE

ENTERPRISE APPLICATION

MARKET FOR A SHOWDOWN

BETWEEN THE PURE-PLAY

LMS VENDORS AND THE

ENCROACHING

POWERHOUSES.

“The powerhouse vendors will take 25 percent of the market share

by the end of 2004. By late 2005, 50 percent of today’s independent LMS

vendors will cease to exist.”

— J A M E S L U N D Y , V I C E P R E S I D E N T , G A R T N E R G R O U P,

S T A M F O R D , C O N N .

B YJ O E L S C H E T T L E R

DAVID& GOLIATH

cern. If a large corporation’s current LMS does not fit withother important business suites—such as a CRM applica-tion, for example—they will dump it for one that does, nomatter how well it works to manage training. Companiesrarely succeed with the LMS they begin with. In fact, theaverage lifespan of an LMS is only three years, according toMETA Group, a Stamford, Conn.-based analyst.

To some extent, larger vendors benefit from their sheersize and recognizable brand names, regardless of the qualityof their applications and rather late entry into the e-learningspace. Signifying stability, bigger is often seen as better, saysJennifer Vollmer, analyst at META Group. “I think businessesare very torn with who to do business with. There is a lot ofconcern around the way the market is shrinking, which issomething that plays to the larger vendors.”

As business systems grow in complexity, so do the purchas-ing decisions. A couple of years ago, independent trainingprofessionals primarily made procurement decisions, buttoday the questions are slightly different, says MargaretDriscoll, director of strategy and ventures, Lotus Software,IBM Software Group, Cambridge, Mass. Increasingly, trainingprofessionals are being asked to consider a company’s overallIT strategy, something they know little or nothing about, shesays. As a result, IT will increasingly have a greater stake, andcontrol, in purchasing enterprisewide LMS systems.

Meeting such enterprisewide demands may require greaterknowledge and experience from vendors, say the power-houses. “We are going from questions about content andproduct design to understanding the really hard-coreplumbing of the underlying technology,” says Mike Wegner,senior director of learning system innovation at SunMicrosystems, Broomfield, Colo. “That’s the kind of thingthat the technology giant brings to the table on this kind ofquestion. If I were talking to a customer, I’m concernedabout things that they might not even be aware of yet.”

As such, IT personnel may soon begin to prefer workingwith a single vendor’s products across the board. “Cus-tomers, to a great degree, are tired of the hassle of integratinga bunch of systems,” says Deborah Quazzo, president ofThink Equity, Chicago. “They’d prefer to see an applicationby a big guy.”

Still, initial training offerings from the bigger players havebeen slim, Quazzo says, which she believes to some degreehas been intentional. “They’ve wanted to raise some dust andthen see what the real market demand is before they madean investment.” Until now.

The GoliathsSome of the players bringing big-pictureperspectives from outside the trainingmarket include technology giantsthat have already dipped a toeinto e-learning waters (SunMicrosystems), are incorpo-rating training into HR sys-tems or within a CRMmodel (PeopleSoft andSiebel), or have yet to makea concerted effort to capturethe industry (Microsoft),among many others.

PeopleSoft, Pleasanton,Calif., is best known for itssuite of products to managehuman resources, but the com-pany has steadily expanded its focusto include CRM, supply chain man-agement and human capital managementapplications. With the company’s acquisitionof LMS vendor Teamscape, PeopleSoft added a LMS toits product line in December, further committing itself to thetraining market.

“We want to have all of the transactions in the humancapital management area,” says Jason Averbook, People-Soft’s director of human capital management product mar-keting. “That’s where we see the entrée—by having HRdata, such as performance reviews, trigger training activity.You don’t have to go someplace completely different in thesystem for training information. Training can be inserted,as you need it.”

PeopleSoft recently announced that Detroit PublicSchools will be the first customer of its new EnterpriseLearning Management solution. The school district willuse the system to design, deliver and promote curriculumto its 22,500 employees in more than 275 locations. OtherFortune 1,000 contracts are “in the pipeline,” according tothe company.

Siebel Systems is approaching the market from a similarvantage point. Founded in 1993, Siebel has established itselfas a leading CRM provider—with more than 3,000 globalcustomers that produce nearly $2 billion in annual revenues.

Siebel hopes to duplicate its CRM success in what it dubsERM, or employee relationship management. CRM was

T R A I N I N G MAY 2003 21

However, IT spending overall is down, which could forcemany smaller e-learning vendors to either merge or disap-pear. All told, current economic and market conditions makethe e-learning ground fertile for larger vendors to take root.

From the vendor side of the equation, to some extent thepure-play LMS vendors could be doomed by their own suc-cess, says Trace Urdan, senior analyst for Think Equity, SanFrancisco. “We are at a place where corporations are regard-ing it as a real and increasingly important technology,” saysUrdan, “but the part that has always been problematic forthe pure-plays is that buyers see the need to be integrallylinked to some of their existing ERP systems.” Organizationsare ready to take analytics to another level—a demand thatthe larger vendors feel they are primed to fill.

Part of a powerhouse vendor’s appeal rests in its prom-ise to move metrics not directly related to training. Ven-dors market such an enterprise product not on the capa-bilities of its individual pieces per se, but from the

position that the whole is greater than the sum of itsparts; managing e-learning involves more than what canbe tracked by an LMS alone.

“You want an LMS to have all of the features, but that’s alittle bit yesterday’s game,” says Scott Saslow, director ofERM for Siebel Systems, San Mateo, Calif. “If you look at allof the LMSs on the market, the features are all there. What’simportant today is a company that understands how this fitsinto larger business initiatives. Can they design a systemwhere those activities are truly intertwined?”

In the short term, perhaps the greatest advantage the pow-erhouses have over the LMS pure-plays is their ready stableof existing clients. Since many large corporations already usesome portion of the enterprisewide vendor applications,compatible LMS products are a natural add-on sale.

As early e-learning adopters look to further imbed train-ing into larger enterprisewide configurations, compatibilitywith existing business systems will continue to be a top con-

20 MAY 2003 T R A I N I N G

Perhaps the most speculation regardingtechnology giants entering the e-learningmarket has centered on Redmond,Wash.-based Microsoft. The company is taking adifferent approach than most of its com-petitors, opting—for the moment atleast—to offer customers “best-of-breed” solutions through its partnerswhile it focuses more on platform andother technologies that will supportenterprisewide applications.

“In the past, we haven’t had a goodstory,” says Tom Masters, product man-ager for Microsoft’s learning strategy,global life learning and readiness group.“A salesperson in the field, with a cus-tomer interested in an e-learning enter-prise solution, would ask, ‘What’s ourposition on this? What are we doing?’ Wehad no answer. We needed to changethat. In partnership with Click2Learn andother vendors, there is a business oppor-tunity for Microsoft to go after theseenterprise accounts.”

For e-learning management,Microsoft chose Click2Learn’s Aspen LMS,configuring the product to be compatiblewith its .NET Web services platform. Willthere ever be a Microsoft LMS? Only if abusiness case can be made and customersask for it, says Masters. “I think we prefer

simply to deal with clear-cut core tech-nology.” For now, Microsoft has gone sofar as to label the new LMS Aspen.NET.

Yet, before Microsoft could offer anenterprisewide e-learning solution, it hadto become a learning organization first.Over the past three years, Microsoft hasreevaluated its learning strategy and hasbegun the process of streamlining trainingefforts to become more centrally focused.It’s a big company, with diverse trainingneeds—nearly 64,000 employees withoperations in more than 62 countries.

Microsoft has worked to establishwhat it calls a quantitative performancetree—methods to determine how best toblend technology with other structuralchanges to optimize training’s valueacross an organization. “I think that’swhat customers are after, almost morethan even they are the specific technol-ogy,” says Masters. As both a vendor anda company working to optimize enter-prise e-learning, Masters offers others thefollowing bits of advice:

Develop a consistent vision. “Wereally needed to have a vision of wherewe wanted to be. Why are we doing thisconsolidation? What’s the value we willget out of it? What will the end-gamelook like? Then we learned we needed

groups to work around the infrastruc-ture. It’s easy for relationships to getstormy when everybody keeps theirdepartmental hats. How can I trust youto take care of my needs if we all consoli-date to one infrastructure?”

Fragmenta-tion is a realblocker. “Thereis beginning tobe more of afocus, and I thinkwe are realizingthe detriment off r a g m e n t e dlearning, bothfrom a cost per-spective but alsoa time-to-marketperspective in terms of getting our peo-ple ready. We have all of these productcycles happening continuously, and thatputs a strain on our learning to keep upwith the products and make sure peopleare ready to provide service and sell ourtechnologies and solutions.”

Enterprise e-learning is morethan a portal. “There is a need for alearning portal, one place where peopleconsume various kinds of learning. Butwe also have many different businesses

that focus on widely different audiences,which have a need to also be able totake learning services on a kind of a lacarte basis—maybe drop them intoWeb sites or maybe tie them to mobileapplications, things like that. That’s

where we really need aWeb services versus just astandard por tal-l ikeapproach. That’s .NET.”

All of the answersaren’t found in a vendorsolution. “There is toomuch pressure from theenterprise customer. It’s notselling or licensing thetechnology, it’s figuring outhow to support the cus-tomer and provide them

with an array of services after you havemade the sale, and I think that’s where itwill drive the change in the vendor land-scape. So yeah, I think the players in thisfield will look very different in five years. Ithink they will be more like the IBMs andthose who are strong in enterprise today.For sure the players who are going to bearound will have to partner with some-body and make alliances or be acquired inthe next few years … or be gone.”

—J.S.

“You want an LMS to have all of the features, but that’s a little bit yesterday’s game. If you look at all

of the LMSs on the market, the features are all there. What’s important today is a company that

understands how this fits into larger business initiatives. Can they design a system where those activities

are truly intertwined?”— S C O T T S A S L O W , D I R E C T O R O F E R M , S I E B E L S Y S T E M S , S A N M A T E O , C A L I F .

MICROSOFT’S TOM MASTERS

David’s Response To Goliath

The Microsoft Factor�

22 MAY 2003 T R A I N I N G

designed to handle customer training from the start byincorporating its own basic LMS. Siebel has adapted thetechnology and strategy—as well as developing a few newproducts, including a modified LMS—to fit an ERM modelfor large organizations. In December 2001, Siebel formed aseparate ERM division around its product offering. Cur-rently, Siebel has 230 ERM customers, most of which camefrom the company’s existing client base. The division experi-enced “tremendous” growth in 2002—expanding revenues

from 2001 by nearly 250 percent, from $24 million tonearly $90 million.

Siebel also recently launched SiebelDistance Learning, a Web collabora-

tion and communication product,to fit with other training productofferings. ERM contains knowl-edge management capabilities inits base product as well, includingan employee locator that allowssearches for fellow employees

based on skills, profiles, job his-tory and even previous employers.As with many of the new entrants

into the training market, Siebel’sproduct offerings attempt to expand the

idea of what learning management should be.With the big picture in mind, Siebel, much like PeopleSoft,hopes to entice customers with its suites of products that,by connecting to other key business information systems,offers more tidy metrics for measuring training’s value tothe corporation.

But perhaps the greatest speculation regarding activity inthe e-learning market centers on the technology giantsthemselves—the purveyors of business computing hardwareand software that until recently have made e-learning devel-opment a low priority.

“IBM, Sun, Oracle, they’ve all established their own e-learning divisions or have recently purchased companies tobuild an e-learning presence,” says Tom Masters, productmanager for learning strategy, at the global life learning andreadiness department, at the biggest tech giant: Microsoft,Redmond, Wash. “We are taking a bit different approach.We’re partnering with strong vendors, and we’d rather driveour partners to the direction of a strong .NET environment.”(See, “The Microsoft Factor,” page 20).

In recent years, Microsoft has worked to develop the coretechnology behind Web services with its platform called.NET. Much like a Windows operating system for a personalcomputer, .NET is the layer upon which applications arebuilt. In theory, software written to comply with .NET stan-dards will operate harmoniously. Components will connect,and systems will talk to each other and share data.

For the LMS component, Microsoft has formed a part-nership with Bellevue, Wash.-based Click2Learn to supplycustomers with a product compatible with .NET stan-dards. Over the next 12 months, Microsoft will continueworking with Click2Learn on “recapping its system into a

set of Web services,” says Masters.IBM Learning Solutions, Cambridge, Mass., is also posi-

tioning its training wares as part of a larger enter-prisewide system. But, perhaps rekindling an oldMicrosoft rivalry, IBM supports an open, Java-based Webservices model rather than closed architecture, such as.NET. As the platform debate continues, many analystspredict that vendors will either fill a specific niche withtheir products, or will lead the market by providing plat-form and server choice.

Yet, unlike its rival, IBM offers its own branded LMS tocustomers. In January, IBM repositioned its LMS in the mar-ket as the IBM Lotus Learning Management System, drop-ping the IBM Mindspan label. More than just a namechange, IBM’s new LMS will include more powerful tools,including drag-and-drop report creation.

IBM has also created a new learning services division thatwill be vendor-neutral—becoming in essence a systems inte-grator by organizing around global services. For such con-sulting services, the company formed the Emerging BusinessOpportunity business group, which includes consultingservices, software services and outsourcing. “It’s a largemove, and it’s not focused on ‘e’ as much as it’s focused onjust plain learning,” says Driscoll.

Asked to define its e-learning strategy, Oracle’s Chris Pirieresponds: “aggressive,” despite many stops and starts alongthe way. For three years, Oracle has been implementingonline learning as a component of its own Oracle Univer-sity, which delivers free training on Oracle applications tomore than 20,000 partners around the world. Operating thecorporate U as a business, last year Oracle generated nearly $550 million in revenue, training 670,000 students in theclassroom and an additional 200,000 students online. Tomanage the training, Oracle created its own LMS. The in-house technology was subsequently developed into a prod-uct to take to market. In January 2002, Oracle offered thefirst installable version of its LMS, iLearning, and now has230 customers—doubling its customer base on a quarter-by-quarter basis.

Another technology giant to recently reengineer its LMS(purchased from ISOPIA) is Sun Microsystems. Last Octo-ber, Sun released its Sun Enterprise Learning Platform,which includes additional features such as the ability to runin multiple languages. Yet it is the invisible things included inthe LMS that better prepare Sun for enterprisewide comput-ing of tomorrow, says Wegner. Sun would not disclose thenumber of its customers for this story.

“Security, capable, flexible, interoperable—all of thosethings are critical,” Wegner says. “It is not just the applicationlayer, but the whole infrastructure mindset. We are interestedin software, hardware, network connections, particularprocesses as well as the entire system.”

Despite reporting a record quarterly loss of $2.28 billion inJanuary, Sun continues to work on a project known as N1,an enterprise computing concept that links server storagesystems, software and networking so its parts are centrallymanaged. Said to be a direct response from customers want-

Yet despite initial success entering the market, vendorsapproaching e-learning from an HR perspective may have atough time gaining a foothold, says Vollmer. Among thedrawbacks, she says, is that such systems usually must oper-ate inside a company’s firewall. Also, they are typically onlytouched by 15 to 20 percent of the organization’s populationand are usually expensive and difficult to use.

“PeopleSoft or SAP is not going to be innovative or movethe market,” says Vollmer. “They are watching and seeing whatthe Sabas are doing, and they’re following very carefully.”

When looking at the market, perhaps knowledge is power.Many analysts have predicted that enterprise e-learningcould actually be captured by innovative knowledge manage-ment systems expanding on an LCMS model. Advancescould arise from companies such as Documentum, the docu-ment management company that some analysts believecould soon acquire a languishing LMS vendor.

“Eventually the vision is that content will dynamicallycome to the surface to the right person at the right time—getting employees the knowledge when they need it insteadof having to go take a course,” says Vollmer. “The playersthat will probably have the most impact on the e-learningspace are not those coming fromthe HR side, with the HR vision,but really coming from the knowl-edge management or content man-agement vision.”

Vendors such as Siebel may alsohave difficulties breaking newground since the CRM market over-all has taken such a hit during thedown economy. The e-learning suites being offered are fine,says Gartner analyst James Lundy, but “categorically for mostof them, the jury is still out as far as howfocused they are going to be.”

Those likely to lead the marketare the tech giants, say analysts,particularly IBM. “Watch IBMto be the innovator and dosome really great things,” saysMETA Group’s Vollmer, whonotes the company’s work on anew platform that can handledisconnected training, automati-cally synchronizing course andstudent data when a student con-nects to the network. “IBM will bedoing a lot as far as innovation goes, butwhether they’ll be able to restore con-fidence is a bigger issue.”

Gartner’s Lundy agrees inhis assessment of the techvendors. “I think IBM, bybuying PwC Consult-ing, significantlyenhanced its services,”he says, “which were

strong to begin with on the IBM Global Services side. Theyare getting their act together on the product side, so they’relooking long term like they will be formidable.”

The argument for and against the market advantages ofthe large vendors may all come down to money. SAPspends nearly $200 million a quarter on R&D, says ThinkEquity’s Urdan, while PeopleSoft spends in the neighbor-hood of $80 million. “And then you have Saba, which isthe biggest LMS company that is out there, a public com-pany,” he says. “They spend $3 million a quarter on R&D.How long is it really going to take? That’s the race; that’sthe challenge.”

While LMS product quality may be similar today betweenthe pure-plays and the powerhouses, it’s not expected to lastmuch longer. Innovation will soon separate the winnersfrom the losers.

“The value of the large vendors getting involved is that weare really at the start,” says Oracle’s Pirie. “It’s going torequire ongoing investment and innovation to make onlinelearning more powerful.”

Yet, the larger LMS players are not training companies, sayanalysts. And the rise of the larger vendors does not rid busi-

ness of the need for training experts. Successful enter-prisewide implementation will depend on more than theapplication suite itself. Moving to an enterprise designinvolves business process reengineering that still requirestraining experts to customize the technology and implementit to a particular business.

For now, all products being equal, a large vendor’sbiggest advantage may be its ability to fight a price war. Inthe end, true innovation will only occur when the economykicks into gear once again. E-learning will be around in thefuture, say experts, but who will lead or remain standing isto be determined.

“A lot of companies are in holding patterns,” says Urdan.“Of course there are a few deals being made, and there

are a few customers willing to go ahead. For themost part, the real opportunity here is still

waiting in the wings. I really do believe thefunctionality and the application of enter-

prisewide e-learning itself is one thatwill be widespread, and long-term it

can be valuable to a company. It’sjust who is going to deliver it that is,to me, still in question.”

JOEL SCHETTLER is a senior editor ofTraining. edit@trainingmag.com

T R A I N I N G MAY 2003 25

ing to deal with fewer vendors, the N1 label will be placed onsoftware that acts as a control panel for the different com-puting resources, including training.

Winners And LosersSo what really matters as vendors look to take enterprisewidee-learning to the next level? Will the innovation come fromwithin, or will learning management be annexed into a cor-porate suite of applications from a neighboring industry?

Part of the current enterprise discussion amounts to noth-ing more than marketing, suggests META Group’s Vollmer.Once technology ripens and standards become established,most LMS applications will be scalable with larger enterprisesoftware, she says. The differentiation between larger ven-dors and LMS pure-plays will be in the amount of customersupport a vendor can provide.

But some pure-play vendors may have a difficult timeexpanding their market footprint as the discussion shiftstoward more than learning metrics. “The people who havethe really great functionality for doing learning manage-ment systems run into such questions as, ‘Can trainingplans or profiles of my employees be understood by theapplications that help my managers conduct career plan-ning, for example?’” says Oracle’s Pirie. “It’s a natural evolu-tion from our perspective.”

Vendors such as PeopleSoft and SAP approach the e-learningmarket with a belief that HR should track competencies andrecords of their learners’ progress to further link an HR systemto compensation, says META Group’s Vollmer.“Their positionis that they are leaving money on the table, and that peopleshould be spending money on their HR systems and modulesas an extension of their system,” she says.“Instead, they feel theyare losing money to the Sabas and the Docents of the world.”

24 MAY 2003 T R A I N I N G

t

We asked executives at many e-learningvendors to share their thoughts regardinge-learning as they relate to enterprisewidecomputing and the future of the industry.Are software suites the next big thing?What does it mean for the pure-play ven-dor? Here are excerpts from their responses.

“Our focus is to build scalable, sustain-able solutions—the key word beingsolutions. Anyone can build a product andmarket it. However, if the product is notbased on achieving a solution, it simplywon’t survive … The desired productmoving forward will be a human capitalmanagement suite. We look forward tothe future where the ultimate goal wouldbe a suite of software products thataddressed the reduction of cycle time,optimization of assets, reduction of costsand an increase in customer satisfaction.”

—Joe Ellis, president and CEO,TEDS,Atkins,Va.

“It is an open secret that, from a prod-uct feature and functionality perspective,collectively the major ERP/enterprisesoft ware entrants are significantlybehind in their offerings relative to theexisting leaders in the learning technol-ogy industry, and have consistently dis-appointed the market. Few, if any, buyershave ever seen a truly comprehensiveplatform from any of these vendors—

not even fully formed LMS, LCMS or VCproducts—although many are makingthose claims. In fact, most in the industrywould agree that the messages seem tobe far ahead of actual capabilities, a traitthat has been evident for years.

“ERP systems generally are known fortheir transaction orientation. The funda-mental requirement for such a system isthe sanctity, consistency and uniformity ofsuch data. It is the same for all viewers.You are usually not encouraged, for exam-ple, to change a line item in the generalledger. The primary ERP paradigm is tomap and fit with business processes, andthe data, once created, is static. In enter-prise human capital development andknowledge management, it is exactly theopposite. We typically do not map to abusiness process—we cut across businessprocesses. A course or learning objectshould be made up of dynamic, changingdata—it is not static by nature.

“In the past 12 months alone, we canlist dozens of global 2,000 customers whohad an existing SAP or PeopleSoft imple-mentation, but passed on the incumbentvendor’s learning offerings. These are bigmature players, and for a sea-liner tochange course takes time and sometimeseven time is not enough.

“At the same time we know that learn-ing platform players have significant chal-lenges, and we cannot afford to slow down

the momentum we have built. Our cus-tomer knowledge, experience and smallsize give us more than a fair chance to fight,and even thrive, as the market matures.”

—Kevin Oakes, CEO, Click2Learn,Bellevue,Wash.

“We don’t believe the entrance of ERPvendors into the learning space willchange the landscape in the near term.Thebarrier to entry in the enterprise learningmanagement market is time, not money.Put simply, it takes years to develop anLMS infrastructure that is robust enough tomeet the full array of needs for largeorganizations. The LMSs currently avail-able from the larger ERP players rarelymake it to the ‘best-in-final’ category oflarge enterprise deals, and the existingLMS companies who have tried to developsuites have yet to achieve credible successat the enterprise level.The ERP vendors willlikely succeed in creating credible ‘leastcommon denominator’ LMSs, which willput extreme pressure on LMS vendors thatare not functionally and technically supe-rior in the enterprise space.”

—Paul Sparta, chairman and CEO,Plateau Systems, Arlington,Va.

“If properly integrated with otherapplications, e-learning can make for avaluable contribution to an overall suite,and frankly the economic climate does not

have a lot to do with the ultimate successor failure of such solution strategies. Muchmore depends on whether e-learning ispart of an overall and coordinated vision,or is merely ‘bolted on;’ and indeed it evendepends on what one means by the con-cept of ‘e-learning’ in that context.

“If one simply means the portrayaland delivery of educational contentthrough the Web, simply attaching it to anERP or CRM application is not likely to addmuch value; and even if one expands thedefinition to include basic LMS functional-ity, merely connecting the ‘e-learning’ tothe broader application will not signifi-cantly enhance real value for the user.

“Basic e-learning or LMS ‘pure-play’vendors are therefore dangerouslyexposed—when you are selling only partof the overall strategic solution,you are vul-nerable to become irrelevant or marginal-ized. Enterprisewide, ‘other category’ ven-dors are also at risk; though their size andmarket shares would seem to provide themwith great opportunity as organizationsmature towards expanded applications,their lack of a broader human capital visionthat was designed into their products fromthe get-go undercuts not only their short-term credibility, but also their longer-term,natural fit with the new multi-process,cross-enterprise way of working.”

—Brook Manville, CLO,Saba,Vienna,Va.

David’s Response To Goliath

The Microsoft Factor

�

“A lot of companies are in holding patterns. Of course there are a few

deals being made, and there are a few customers willing to go ahead. For

the most part, the real opportunity here is still waiting in the wings.”— T R A C E U R D A N , S E N I O R A N A L Y S T , T H I N K E Q U I T Y ,

S A N F R A N C I S C O