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Editor's Note: This excellent research by Drs Partow and Slutsky provides much needed insight into the exponential changes taking place in the broad business sector. The power of e-learning to challenge tradition business education is beginning to be fiscally significant to the bottom line of Schools of Business. This successful intrusion of non-university commercially developed business programs into industry training markets has had profound effect on the reassessment and re-organization of traditional academic business programs. And a large, new Internet based market, packaging and delivery of knowledge, provides basis for important further developments of the e-commerce sector. This research is well worth in-depth study.

Distance Learning as E-commerce

Partow Partow and Ludwig Slusky

E-Learning as a System

Distance Learning, or E-Learning as it is now frequently called, is a large emerging sector of e-commerce: $2 trillion worldwide marketplace for education and training from pre-school to retirement [Hall, 2000].

Globalization in education, information technology and communication leads educational organizations to employ e-learning as an e-commerce model. Combination of several market forces will expand further E-Learning business: demand from students, growing acceptance of educational technology as a household item, technological innovations, economic forces (as the need and frequency to upgrade business skills accelerates). Education does not have borders. One of the consequences of e-learning globalization is that it will facilitate global educational knowledge management across national and cultural boundaries. E-learning, implemented in variety of ways, has already redefined the educational landscape in many segments of education. But a successful e-learning strategy is required for an educational institution to plan, develop, and implement significant changes affecting their curriculum, administrative structure, processes and culture.

Many educational institutions get into e-learning because it is fashionable. But as we move further into a society dominated by technology and communication, both educators and students will increasingly use e-learning to minimize the costs of educational products and services (time, effort, and money).

The fundamental changes we are facing today with e-learning on the Internet follow radical changes in the online world. Concept of e-learning is no longer limited to transfer of traditional content with a new medium.

Typical e-commerce models are forming in the e-learning market. Selection of an e-commerce model for education depends on the diversity of e-learning products and services. New hybrid business models include a range of products (from the instructor-published materials to pre-built Computer-Based Training modules) and a range of services (from online interactive training to on-the-job aids and online collaboration with experts-mentors and other trainees).

The number of e-learning content (e-content) developers continues to grow. Application Service Providers (ASPs) become more diversified in encompassing greater variety of e-learning service (e-service) needs and more specialized in offering brand e-learning service products. Education Service Providers (ESPs) -- such as universities, virtual campuses, learning organizations -- are getting increasingly focused on creating customized integrated e-learning solutions ("value" modules) based on e-content (supplied by developers) and e-services (provided by ASPs). (See simplified architecture of ESP on Fig. 1) Value and supply chain management concept, e-commerce models and techniques can help ESPs to strategize e-learning business.

Both, e-learning and e-commerce are facing similar challenges: a consumer (whether a student or customer) is being served not at a central location with traditional face-to-face group communication but at individually at a remote location (often at home). The educational products are becoming a universal commodity - that is a product that is standardized and well known - for which ESPs are striving to create integrated commerce solutions and services.

Currently, the e-learning market is fragmented. It is filled mostly with small suppliers. There is no single company that dominates any one area of services [IBM, 2000]. To be successful, ESPs tend to associate themselves with a technology alliance to support the successful planning and implementation of e-content and e-services for public education and support strategic business processes. [Centra, 2000] (For example, a formal e-content alliance of SkillSoft with Oracle, KnowledgeSoft, and Saba Software. The alliance of Microsoft's eLearn with partners is another example.)

Technology alliance can be established to address specific or common problems. For example, the Internet Security Training Consortium (which SmartForce created in partnership with Check Point, Cisco, IBM, Intel, Sun, Netscape, Lotus, Network Associates, RSA Data Security, Security Synamics, HP and VeriSign) addresses the Internet security training needs for enterprises worldwide. The implementation solution of security needs is provided for multiple architectures: Internet-based, Intranet-based, stand-alone systems, and for mobile users.

Job-related training is essential to long-term success of corporations, and they are now embracing training services that were in the past considered for academicians only. E-learning offers new ways to manage learning cycles, to enhance development, logistics and distribution of educational products and services, and to link educational partners together in a seamless learning environment. Traditional universities (including those of "ivy league") are rethinking the way they do business toward greater acceptance of e-learning.

Automation of educational "transactions" on the Internet (for educational products and services) helps to cut educational costs for both the providers and recipients: $106 cost per e-learner vs. $760 per traditional instructor-led learner. [Hall, 2000].

E-learning deals with new type of products which signifies the next wave in this information revolution -- knowledge convergence that is "…. the convergence of communications, collaboration, and learning." [Microsoft, 2000] E-learning has encouraged the development of new models for educational products (for example, wide range of products from Course Technology supported with Web-based students' materials, tests, and a complete WebCT setup for a textbook). E-learning creates opportunities for a new type of online ESPs, new information-sharing educational databases all over the world, and it has already caused a significant cultural shift in public educational institutions. ESP vendors are also employing the e-learning model by creating software and services that allow educational institutions to move their classes entirely to the Web (e.g., virtual campuses, WebCT)

Information technology supports storing, processing, and transmitting e-content using scalable, distributed applications. The main computing devices for e-learning are Web server, Application Server, Database server, the network communications, and client computers. In addition, various external service providers offer the Internet access service (including firewalls for security), Web-hosting service (including browsers), and application software service. The client computers can range from desktop models to Pocket PCs.

Combination of e-content, e-learning technology, and the Internet infrastructure offers solutions to create integrated enterprise learning environments for custom-tailored virtual campuses (for public education or in-house corporate training) independently or in alliance with other providers. Some ESPs (MindLever, Vcampus) take this approach. At the other end, there are companies (like Saba Software, WBT Systems), which provide large-scale online "in-house" learning systems for organization.

E-learning systems can be designed as open systems or be focused on closed e-content and architecture. Some e-learning practices are used for purely e-learning models; others are used to improve efficiency of the traditional "classroom" model of teaching. With global exposure of e-learning, growing demand for its cost reduction, and an increasing need for "student personalization" in e-learning learning environment, small programs of small universities may successfully compete with large programs of large universities. At least in one area -- information knowledge base -- ESPs find it mutually beneficial to form alliances and to share educational resources where each ESP addresses training needs in specific sets of business skills (sales, project management, communications, customer care and first-line management).

There are at least three types of e-learning processes that majority of ESPs have in common: self-paced learning via online materials, learning via live interaction with instructors in a virtual classroom, or learning by collaborating with others [IBM, 2000].

E-Learning Markets

A view of e-learning simply as supply of knowledge and services over the Web (with or without payment) is incomplete without considering large e-content development efforts and the competitive advantages that result from linking educational institutions, faculty, online publishing house, independent course developers, professional trainers, corporations, etc. into a collaborative system.

Many elements of e-learning technology are being increasingly adopted from e-commerce technology and are becoming standardized. Thus considering all e-learning participants, four categories of e-learning markets have been evolving:

E2C(educator-to-consumer) - public education as we know it. Although E2C includes both individual and group learning, this chapter examines concepts and strategies mostly applied to real-time interactive individual learning. Even in the virtual group setting, the individual learning is the core activity and is the prime object of a personalized e-learning system.

E2E(educator-to-educator) - what is also known as training of educators (trainers, e-learning mentors). This form of e-learning encompasses direct training of trainers and support for the trainers who develop their own e-content.

E2B(educators-to-business) -- educational training for corporate users (job-focused training) from both inside and outside their corporate firewall, transforming a corporation into a "learning organization".

B2E(business-to-educators) - e-learning systems, standards, tools and services for educators building their own e-content.

ESP Merges and Affiliates

Education Service Providers are actively trying to expand their business through acquisitions, merges and affiliates programs.

Smaller ESPs will find it beneficial to merge or become affiliates of larger providers. This tactic pioneered by Amazon.com in e-commerce will have to be altered so an e-learning: affiliate can lease the online e-content (or e-services) from a larger provider in exchange for an access fee. This can be mutually beneficial for both an affiliate and the principle provider: an affiliate can use the e-learning products that it is lacking while the principle provider can expand the user base for its products beyond the limits of its instructional faculty capacity. With affiliate programs, large providers can release pressure of maintaining faculty-student ratio with temporary teaching faculty (to meet the demands of fluctuating students enrollment) by re-routing an overload to the affiliates. This faculty-student ratio depends on the type of students participating in the program and on the category of services provided. An affiliate can specialize in certain services, e-content (e.g., for specific set of skills) and types of students, and consequently has the ability to respond quicker to the users' requests.

Some of the larger e-content providers either specialize or establish branches for leasing e-content to affiliates (e.g., SmartForce). The focus of the e-content provider is on custom packaging and interactive delivery of the e-content while an affiliate will focus on the elements of service which are customized for its user base: colleges, corporate training centers, professional advancement students, etc.

E-Learning Value Exchange

With each taken course, there is value transfer from the e-learning provider to a student. The end result of this transfer included an added incentive for an e-learning user to return to the e-learning system to acquire another course or for a post-course training [Tomsen, 2000]. In case of e-learning, the product constitutes the knowledge content and e-learning as a service. The transferred value resides both in the e-content (the quality of unit of knowledge) and in e-services (the intelligence of knowledge delivery for easy adaptation by a user). More than for any other e-commerce site, the quality of e-service depends on the quality of the e-content. Among all e-commerce applications, the learning component is unique to e-learning systems. Even among commercial sites focused primarily on information retrieval and assessment (e.g., real estate online brokerage), the learning component is either negligent or absent. As of today, the actual e-content (knowledge) may or may not vary significantly from one e-learning provider to another, and it will differ even less in the future as knowledge base will become more integrated and will support collaborative e-learning. But it is the learning component and e-service that make and will continue to make the core difference among ESPs' Web sites. Even in traditional in-class learning, the same textbooks are available to all schools, but the selection (and the use value) of one or another book depends on the ability of an instructor to "service" this knowledge to his/her students. It is fair to say, that only a minority of e-learning users are coming to an e-learning site simply to obtain e-content as comprehensive as possible or as quickly as possible. The "service", i.e. learning, is the prime consideration for the e-learners. Therefore, each module of an e-content must be evaluated on how well it can be served.

Knowledge itself is a public domain, but the packaging of knowledge (the e-content) and its delivery (the service) is a proprietary product. However, to maintain and extend its user base, an ESP will have to expand the value of its free e-content in addition to the premium (paid) e-content offered on its Web site. The premium e-content ultimately determines ESP's relevance to the needs of a specific user. And ESPs will also continue to diversify both e-content and e-services.

Among other value-added advantages of the e-learning over the traditional school is that a distance is transparent for users of virtual e-learning community. Although, it is more difficult to build the essence of belonging (as it is to a "brick-and-mortar" school), it is also easier to maintain connection with former graduates as they move around the world. Therefore, it is essential for ESPs to retain current students after graduation through existing services offered by the e-learning site.

The value transfer is significant for both large learning organizations and small business [Burke, 2000]. Linking today's knowledge base with tomorrow's technology of packaging and delivery this knowledge creates numerous benefits (and ultimately, value for e-products). First, it helps to cut educational costs for both the providers and recipients from $760 per traditional instructor-led learner to $106 cost per e-learner [Hall, 2000]. It is convenient and offers self-paced learning (flexible time and location). It is also consistent, specific, and current: training e-content is delivered in consistent way, customized for a user, and updated with "new knowledge" more frequently. Finally, e-learning can be private so learner's deficiencies or lack of knowledge are not exposed to the classmates. As an added value, e-learning promotes and sharpens computer skills.

Another important aspect of e-learning value is the continuity of knowledge. Lack of relevance (pre-requisites) in user's existing knowledge base may discourage this user from learning a new topic. Therefore, specifying for each e-content component (on any level of details) the required pre-requisites and recommended "next" components will increase substantially the value of e-learning product.

E-Learning Personalization

The advent of the Internet and the related tools has caused a revolution in e-learning and makes it critical for ESPs to keep innovating with newer leading-edge Web-enabled techniques toward the goal of personalizing, maximizing performance, and simplifying administration of the e-learning process:

Personalized e-learning environment helps a user to select needed subject areas arranged by the following priorities: (1) immediately available (usually the topics that are being used in the current user's training or work), (2) available after a search request is processed (various supplemental material, references, etc.), and (3) available by notification. Personalization can be easily completed with stored search queries and shortcuts.

E-Learning planning for a user is another aspect of personalization. It is based on user's self-assessment and his determination of personal goals and time schedule for learning. To achieve that, a user needs interactive self-assessment tools (for inventory of knowledge/skills testing) and tools for active planning that automatically notifies about important events or milestones.

Perpetual e-learning for knowledge workers fits the concept of integrating work and e-learning that extends training beyond the structured framework of formal courses to the unstructured, on-request, job-related educational support. This area of e-learning will shape further the identity of the e-learning process: new medium and new e-content (vs. often used "new medium -- old content" approach). It is also one of the most promising areas to apply software intelligent agents to search comprehensive online knowledge resources that are always on hand (online white papers, discussions, books, periodicals, etc.) to find the current key ideas and facts on a topic of interest, and then to identify the needed modules of e-learning.

Open architecture and modular design of learning resources is the foundation for course customization. A course can be assembled using existing modules or modules from other third-party courseware providers. At the detailed level, modules (about 3-minutes e-learning units) offer capability to customize courses built with the existing content or with modules from other third-party courseware providers.

Finally, administration of e-learning process is focused on simplified deployment and usage of e-learning resources (curriculum, courses, users and learning plans).

Customer Loyalty

Like for any e-commerce, as the number of e-learning ESPs continues to grow and various virtual campuses expand mutual recognition and substitution of offered course, e-learning ESPs will experience growing problem of the "dilution of loyalty." [Tomsen, 2000] Retaining e-learning students may be increasingly difficult: they are not deterred from switching of ESPs by the distance, personal commitments, peer associations, fraternities, etc.. ESPs need to find new ways for personalization of products and services and create new forms of life-long virtual fraternities. Among all factors that will distinguish ESPs on the Web, credibilityand recognition will remain high in priorities. ESPs will need to create its identity either through association with a well-recognized "brick-and-mortar" school or through its own (again, credible and well recognized) brand of products and services. Similar to what is typical for large e-commerce sites, ESPs will need to analyze the behavior (learning) patterns, preferences, expectations, and evaluations of their customer base (students). The threshold of students' dissatisfaction with e-content or e-services will be much thinner than it is in traditional universities and will have much greater effect on the enrollment. ESPs must be prepared to collect and publish online course usage and rating information for its e-content and e-services. That can also be done by an independent agency. For example, SkillSoft promotes technical specifications for tracking course usage and scoring information [SkillSoft, 2000].

E-Learning Obstacles

Accreditation, money, people, educational products, security of educational transactions (exams, homework assignments), and, to a lesser extend, technology are all the main obstacles to the successful implementation of e-learning:

• Accreditation and related legal issues still remain unclear for many educational institutions. Legal issues regarding intellectual property rights is often a barrier for educators who want to market their proprietary educational online products (e.g., online lectures) independently, not through such powerhouses as Course Technology.
• New educational products for e-learning are rapidly become available, although they are much more complex and costlier than similar products for traditional, classroom learning. They must be designed not as online supplement for traditionally taught courses but as a complete course itself for a virtual class on the Internet cyberspace. As a result, such e-learning product is in fact a database that aggregates a primary text, online exercises, online exams, etc. to be used with a standard Web-based Educational Application system. For example, Course Technology offers some of its educational products together with software to generate a course-specific WebCT course.
• Security of educational transactions (i.e., validity of uncontrolled, online examinations) is probably the biggest worry for universities considering implementation of e-learning.
• Students' concern with technology aspects of e-learning may negatively impact the delivery of training in a timely, convenient, effective, and economical manner. It is important that this concern is dealt with and is reduced through a user-friendly e-learning system design.

Human factor mostly determines the acceptance of new education technology for teaching. As many university administrators can notice, recognition of faculty that participates in e-learning often means more than money.

The majority of ESPs are targeting local or regional markets.

Going global -- only a few large ESPs have been able to do so - means to deal with cultural and languages barriers; so the educational products (and procedures) need to be adjusted to the local conditions.

Interoperability of Web-based e-learning products is at the core of user customization.

In addition to open architecture and module design, the developers of these products will have to define and meet other requirements, such as:

• Minimum hardware requirements for client stations (CPU, operating system, clock speed, operating system, multimedia hardware and software components, and network configuration)
• Interchange of courseware modules including text, graphics, motion (frame-based), audio, and logic.
• Requirements for the creation, distribution, and use of digital video in Computer-Based Training (CBT) courseware.

Interoperability of audio and video courseware from different providers on different audio and video cards

REFERENCES

Burke, B. (2000, October). "How Small Business can benefit from e-learning", e-Learning magazine, Website (http://www.e-learningmag.com/index.htm, viewed December 15, 2000).

Centra (2000). Website (http://www.centra.com/, viewed December 15, 2000).

Hall, B. (2000, March). "How to embark on your e-learning adventure," e-Learning magazine, Website (http://www.e-learningmag.com/index.htm, viewed December 15, 2000)

IBM (2000]. IBM Mindspan Solutions, IBM, Website ( http://www-3.ibm.com/software/mindspan/distlrng.nsf/home/overview?OpenDocument, viewed December 15, 2000).

Microsoft (2000). Microsoft White Paper (2000), Using Microsoft Technology to Build a Learning Organization, Microsoft Press.

SkillSoft (2000). SkillSoft, Web site (www.skillsoft.com, viewed December 15, 2000).

Tomsen, M. I. (2000). Killer Content: Strategies for Web Content and E-Commerce, Addison-Wesley, ISBN 0-201-65786-4.

About the Authors

Parviz Partow(M.B.A., Ph.D., University of Texas at Austin) is a professor of Information Systems at California State University, Los Angeles. Dr. Partow is the author of several refereed papers that have appeared in journals such as Naval Research Logistics Quarterly, Computers and Operations Research, and Software Engineering. Dr. Partow's current areas of research include knowledge management, distance learning, and electronic commerce systems. Contact at California State University, 5151 State University Drive, Los Angeles, CA 90032, email: ppartow@calstatela.edu

Ludwig Slusky, Ph.D. is a professor of Information Systems at California State University, Los Angeles. He is also an e-learning provider practitioner in administering international distance learning program over the Internet for Russia. Dr. Slusky is the author of a book on cases for database design and the author of various papers published by Software Engineering, Information and Software Technology, Data Management, Idea Group Publishing and others. Dr. Slusky's interests are in databases, e-development, e-commerce and international distance learning. Contact at California State University, 5151 State University Drive, Los Angeles, CA 90032, email: lslusky@calstatela.edu