Corporate e-learning in Japan: a new multibillion-yen business

Japan, Inc., Feb, 2005 by Jeff Schnack

IT-enabled corporate training made a splashy entrance into the Japanese market in the late 1990s, heralding a new era of vast reductions in corporate training costs and increased accessibility for geographically diverse employee groups. But since then, the early excitement about the potential for this "e-learning" has largely passed. Some large company end-users have been dismayed to find that they overpaid for unwieldy custom systems that have never been effectively leveraged and that currently lie largely unused on their servers. But recently, a new group of providers has refined their offerings, emphasizing value-added learning development services and more flexible, ASP-based content offerings. When combined with improvements in broadband infrastructure, these services may well spark those revolutionary changes in the way that learning is integrated at the corporate level to significantly improve the diffusion of corporate knowledge, increase job productivity, and secure some of those cost savings in the process.

[ILLUSTRATION OMITTED]

Broadly defined as the use of any electronic or digital media in educational or job-training programs, e-learning in its simplest form includes the use of packaged CD-ROM's and DVD's for language and even hobby study. However, in its most recent incarnations e-learning vendors have developed sophisticated WBT (web-based training) contents, LMS (learning management systems) architecture, and even highly interactive "blended" solutions that mix the best of remote learning with more traditional tutoring or even team simulation exercises.

This evolution in product and service offerings has driven rapid industry growth over the past few years. Yano Research Institute estimates that the corporate Japan e-learning market reached 1,350 billion yen in 2004, representing a 41.7 percent rise from 2003. While this represented a slowdown over the 100 percent plus annual growth the industry had enjoyed in prior years, it still indicates an industry with great future potential. For instance, a study by Goo Research indicates that as of 2004, only 30 percent of Japanese were aware of or had been exposed to e-learning. And the government-funded "e-Learning Business White Paper 2004-2005" indicates that while 61.2 percent of companies with over 5,000 employees surveyed had already implemented some type of e-learning program, that number dropped to 31.8 percent for smaller companies. Combined, this shows that a vast majority of industry potential remains untapped.

So what has held e-learning back? Some basic frameworks are now in place. In order to make various e-learning content more broadly accessible (and thereby drive down the price for users), both METI and the e-Learning Consortium (eLC), a Japan industry group with over 100 corporate members, have been instrumental in bringing international SCORM content specifications to Japan. The eLC began a SCORM certification service this past autumn, and already over twenty of the major LMS systems have received certification through this service. This guarantees that content will run problem-free on these systems, making it easier for end-users to pick and choose among the best content providers, no matter the LMS installed at their corporations. METI and the eLC also cooperate to sponsor the largest annual industry event in Japan, e-Learning World, in order to facilitate the exchange of best practices and promote the rapid adoption of new e-Learning products and services (the next e-Learning World event will be held July 20-22 at Tokyo's Big Sight).

[ILLUSTRATION OMITTED]

But to understand better the forces affecting where a new industry like e-learning has been, and where it might be going in Japan, a good place to start is usually the responsible government ministry in Kasumigaseki.

Shinji Kusunoki is an assistant planning chief for the Information Service Industry Division of the Commerce & Industry Policy Bureau at the Ministry of Economy, Trade, and Industry (METI), the government agency that funds the annual e-Learning White Paper cited earlier. When asked why Japan's e-learning market may seem small relative to the country's population and position as a worldwide technology leader, he replies, "every country has its own particular set of conditions that affect the diffusion of this technology. There has been good adoption in the yobiko [prep schools] and juku [cram schools], and in corporate Japan e-learning has been established as a strong supplementary training tool. I don't think it will grow at an explosive rate, as it has in Korea--Japan does not have that concentrated type of effort toward this single goal. But I am confident that it will be adapted in a special Japanese way." Although recognizing that the explosive early growth of the e-learning industry in Japan has slowed, Kusunoki sees great potential in e-learning for Japanese companies to build on existing concepts and adapt these through their traditional process of suriawase (or integration) for their own use.