Ambient Insight Snapshot of IT Training

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Key Findings from Ambient Insights 2006 Snapshot
of Learning Technology Trends in the US IT
Training Industry The Learning BPOs reinvent
the supply chain and accelerate the demand for
learning technology products
Virtual Instructor-led Classrooms, Virtual Labs,
Live Mentoring, and Process-Embedded Learning
Cannibalize Classroom and Self-paced eLearning
Ambient Insight LLC Sam Adkins, Chief Research
Officer www.ambientinsight.com sam_at_ambientinsight.
com
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Agenda 2006 Snapshot of Learning Technology
Trends in the US IT Training Industry
Data in this presentation is US-only

• Introductions
• Pedagogically-defined Learning Product Taxonomy
• Key Findings
• Learning Product Buying Trends
• The Impact of Learning Business Process
  Outsourcing
• IT Training Trends linked to the New Stack
• Who gets Trained?
• Who is the Buyer? And What are They Buying?

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Ambient Insight Learning Technology Product
Taxonomy 5 types of buyers, 9 product types, 5
types of users, and 4 vendor types
Note The Consumer is the ONLY segment in which
the buyer and the user are the same. In all other
segments, buyers and users are different
demographics.
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Key Findings The Old Industry is Gone
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry

• The US IT Training Industry has never recovered
  from the Perfect Storm 9/11, dot.com meltdown,
  stock market crash, recession, IT spending
  slowdown, downsizing, and outsourcing
• The old industry is gone and will never recover
• The New Stack creates a new user demographic and
  a new buyer demographic
• The Learning BPOs have reinvented the supply
  chain and are accelerating the demand for
  learning technology products
• There is a vast grey market now offering IT
  Training products and services outside the legacy
  channel system
• Virtual Instructor-led Classrooms, Real-time
  Virtual Labs, Live Mentoring, and
  Process-Embedded Learning Cannibalize Classroom
  and Self-paced eLearning

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Key Findings The New Industry is Here
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry

• Continued accelerating commoditization and
  pricing pressures on IT Training products caused
  by
• Steady decline of training budgets and training
  benefits
• Rapid decline of internal HR and Training
  departments in the US
• Steady reduction of internal IT staffs and IT
  population in US
• Migration of staffs and budgets out of legacy
  buyer organizations and into Outsourcer firms
• Corporate training operated by outsourcers is a
  profit and loss operation. Employee Performance
  is secondary to the PL
• Outsourcers aggressively moving customers away
  from high-cost, low-margin products to low-cost,
  high-margin products
• Private labeling of products and services is wide
  spread (your outsourcer uses an outsourcer who
  uses an outsourcer)
• Largest Training Services buyer is now the
  Outsourcer

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Total US Education and Training Market 2006
across Consumer, Academic, Government, and
Corporate Segments
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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Total US Education and Training Market 2006-2011
across Consumer, Academic, Government, and
Corporate Segments
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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US Learning Product Demand 2006-2011 Courseware
eLearning Products versus Non-Courseware Learning
Products
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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LMS-CMS is Commodity Market Now Low-cost
Learning Appliances and Open Source Solutions
Emerge Aimed at the Massive SMB
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry

• LMS market across all buyer segments flat with
  .31 five-year CAGR
• Revenues in steep (-20.6 five-year CAGR) decline
  in the Enterprise
• Demand high but low-cost LMS platforms, and
  learning appliances exploding onto the scene
• Hundreds of new LMS companies offering very
  low-cost alternatives
• LearnShare consortium enters the market with
  enterprise and SMB-priced products
• NetDimensions and dozens of others offering very
  low cost enterprise platforms
• Attend Software, Makau, Virtual University
  Systems, Xornet, 360training, and Dell offer very
  low-cost plug and play learning appliances on a
  NAS storage device
• Even Google wants the SMB The Google Mini Search
  Appliance now comes in two smaller sizes - a
  200,000-document search capacity Mini for 5,995
  and a 300,000-document capacity version for 8,995

Dells Learning System (DLS)
Googles Mini Search Appliances
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Who is the Buyer? 2006 to 2011 US Installed
Learning Technology Platforms Tools Market Flat
but Huge Shift in Buyer Demographics
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
By 2011 SMB Market Accounts for 55 of Corporate
Market
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Picture of Success Moodle and other Open Source
LMS Platforms Take International Education LMS
Market by Storm
Follow the money The adoption data speaks for
itself

• A lot of money being made around platforms that
  are free
• Vibrant cottage industry for fee-based content
  services and technical services for Moodle
• Comcourses Learning Bridge commercial product
  based on Moodle
• Moodle.com, GlobalLiteracy, TeacherHosting.com,
  rSmart, and hundreds of other service providers
  now provide fee-based products and services

Source TeacherHosting.com, 2006
Source Moodle, 2005
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2006-2011 US IT Training Trends New Learning
Technology Products Cannibalizing Both Classroom
and eLearning
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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2006-2011 US IT Training Market Growing by 2.5
Five-year CAGR
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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Real-Time Collaboration-based Learning Technology
Fastest Growing Product in IT Training Industry
Ambient Insights 2006-2011 US Market Forecast
for Real-time Collaboration-based Learning
Products and Services
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Major Catalyst for Learning Technology Adoption
is Explosive US Growth of Learning Business
Process Outsourcing
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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The New Stack Demands NextGen Learning Technology
Integrating Identity, Collaboration, and BPM
Technology
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SOA Changes Everything Conventional Application
Training Goes Away with Web Services
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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Rapid eLearning is too Slow Process-Embedded
Learning is Very Fast and Profitable
Demand for Process-embedded Learning is being
fueled by Outsourcing growth

• All Process-embedded Learning is Enterprise
  Application training
• Process-embedded Learning products decrease
  content creation and maintenance costs by as much
  as 60-80
• Decrease help desk calls by 60-75 (the average
  helpdesk call costs 125 in the US)
• Process-embedded Learning eliminates lost
  opportunity costs caused by going to a class or
  taking a elearning course
• Is there Money in it?
• Epiance had 5 million in revenue in 2003 and
  expects 40 million in revenues by the end of
  2006
• Global Knowledge On Demand revenues growing by
  40-50 a year for the last 4 years

Source Epiance, 2005
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Who Gets Trained in the Presence of Decision
Support and Task Support Embedded in Personalized
Rich Clients?
Managers Manage Measure
ITs Model
Personalized Workflows
Workers Modify
BPM Analysts Model
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Evolving Complexity of Web Services Standards
Creates Demand for New Training
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry

• New training products required for a combined
  audience of SEs, Developers, Security Managers,
  Compliance Managers, Business Process Analysts,
  and Line-of-Business Managers
• Vertical Task and Decision-Support has to be
  embedded in local BPM models

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Who Gets Trained? The Shift in Demographics is
Profound
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry

• CIOs now expected to be proficient business
  managers, compliance managers, and security
  professionals
• Business Process Analysts function as Developers,
  System Architects, Business Managers, Training
  SMEs, and Instructional Designers
• Helpdesk personnel are now providing live online
  mentoring (Dell) and in person tutoring (Best
  Buy)
• Sales Engineers expected to pass non-secure
  product certification exams
• Growing counter-culture of developers prefer to
  call themselves the community and not
  interested in titles, certification, or role
  limitations
• Everybody is an Expert Blogs now primary source
  of technical information for IT pros, developers,
  and power users

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Who Gets Trained and How They Get Trained
Linked with the Evolution of IT and New Learning
Technology
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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What are They Buying? Individual versus
Organizational IT Training Buying Behavior
Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry
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Sources and Related Research
Ambient Insight We put Research into Practice

• Ambient Insights 2006 Snapshot of Learning
  Technology Trends in the US IT Training Industry
  ( available February 15th, 2006 )
• http//www.ambientinsight.com/Reports/ReportsMain.
  aspx
• 10 reports in Ambient Insights US Real-time
  Market Forecast for Real-time Collaboration-based
  Learning Products and Services series
• Three Product Market Forecast Reports by Product
  Category
• Content Products and Events
• Content Services and Technology Services
• Installed Technology
• Six Buyer Market Forecast Reports by Buying
  Segment
• US Consumer Market
• US K12 Academic Market
• US Higher Education Academic Market
• US State and Local Government Market
• US Federal Government Market
• US Corporate Market
• Vendor Profile Report

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• Questions and Comments can be emailed to
• sam_at_ambientinsight.com

Ambient Insights 2006 Snapshot of Learning
Technology Trends in the US IT Training Industry