Ways around a slowdown

E.learning Age, Apr 2008 by Naish, Richard

Weathering any slowdown; e-learning survival strategies

First I am a great believer that we can talk our way into a recession. Economies are made up of individuals who read, watch and listen to the news. So it just takes repeated stories of an upcoming recession to get individuals to change their economic behaviour. They don't plan expensive holidays, they start saving more, they delay house purchases, they change jobs less often and they make more risk averse decisions at work which then affects other individual's economic behaviour. So it becomes a self-fulfiling prophecy and the economy tips into recession.

That said, I think the e-learning industry is privately musing over what would happen to their industry if an economic slowdown did happen. So I will try and address these musings without talking us into a recession.

Economic cycles speed up

Like the share market crashes, slowdowns seem to come around faster in the UK than they used to. The last UK slowdown was in 2001, only seven years ago. At least the one before that was a decent 10 years earlier, in 1990-92. The speed at which information travels now and the inter-connectedness of world economies means everyone around the world has a fair chance to talk the rest of the world into recession.

Impact of a slowdown

In such slowdowns, "for profit" organisations try to maintain profit levels by focussing on what they believe drives value in their organisation at the same time as cutting non-value adding expenditure. Public sector organisations, which make up 42 per cent of the UK economy (compared to 33 per cent of the US economy), are less immediately affected by slowdowns, since government borrowing and taxes can be raised, in the short-term, to maintain current spending levels. However, in a slowdown, the individuals in public sector organisations do focus even more on "best value".

ROI credibility gap

Return on Investment (ROI) analysis has made big strides in the past seven years with increasing levels of sophistication and technology-based tools to calculate the financial benefits of any spend on training. However, it has not managed to become mainstream to the extent that everyone believes that training automatically leads to greater organisational success. This credibility gap means that decisionmakers who wish to reduce expenditure in the face of a slowdown still make a bee-line for costs which they believe do not directly add value; marketing, recruitment, PR and training.

However training is now different to what it was in the last two recessions. Back in the 1990 recession there was no widespread internet access and so e-learning didn't exist. And in 2001 the industry was still very young and didn't suffer as much as the over-hyped dotcoms which had concentrated on "clicks rather than bucks". E-learning's survival was due to its cost advantage and its ability to quickly reach and train so many people. It is this cost-effectiveness that is the key to its performance in any downturn.

Will budgets be cut?

When reviewing the training budget, positive futurefocussed managers would be looking to increase the level of effective training without increasing current costs. In which case the tactic would be to change the mix of training by increasing e-learning and decreasing traditional face-to-face training programmes.

Estimates currently put this mix at about 20 per cent e-learning to 80 per cent face-to-face learning. With any downturn, this could increase to around 30 per cent e-learning. So rather than worrying about how they will weather any downturn, the e-learning industry should be looking forward to growing revenues over the next two years.

Who will the winners and losers be?

The next question is, which parts of the e-learning industry will gain from this extra budget? "Costeffective" will be everyone's watchword. So for mature users of e-learning, they will spend more on immersive learning simulations which are getting much cheaper due to the availability of simulation software engines. These simulations are highly effective at developing skills mastery and they also meet the expectations of digital natives who are keen to use the latest technology. Given a choice, digital natives would prefer an emailed PDF to page-turning e-learning. To attract and retain such employees and maintain their brand, large organisations will have to show they are making the best use of technologybased learning.

Organisations reasonably new to e-learning will see any downturn as an opportunity to use rapid e-learning development tools to roll out cost-effective learning throughout the organisation in place of traditional methods of training and information dissemination. This will introduce them to the power of e-learning in terms of cost-effectiveness and reach. Their adoption successes will lead them to implement more e-learning and encourage them to invest in ever more sophisticated e-learning.

There will also be winners for e-leaming organisations that offer productivity-enhancing tools with a built-in e-learning element. These types of tools are popular at any stage in the economic cycle, but are easy sells in any slowdown. An example is call centre software that links the often separate pieces of software that run call-routing, rostering, skills assessment and e-learning for call centre staff. More on this next month.