EarmyU and the Future of E-Learning

Words: 4,900
Length: 38 minutes (based on 130 words a minute)

I’d like to first thank the Sloan Foundation for inviting me and especially Frank Mayadas, who has assisted PriceWaterhouse greatly on a project that will be part of the focus of tonight’s speech. Frank continues to play a significant role in the eArmy U and the foundation continues to be one of the key institutions in helping understand what does and does not work in an industry that has come to be known as e-learning. I’m staring at part of the industry today from my podium and it is nice to be among friends.

Frankly, it’s also nice to escape Washington at this time of year, when the weather can sometimes turn wet and cold. And escaping the endless news cycle of Washington for a couple of days will be a relief.

I am one of Washington’s newcomers, having moved from Minneapolis earlier this year. While Minneapolis is a nice, pretty and cultured city, I looked forward to the bustle and excitement of living in our nation’s capital.

As it turns out, the PriceWaterhouseCoopers office where I work has a beautiful view of the Potomac, the Iwo Jima, Arlington Cemetery, and the Pentagon. Never in my wildest imagination did I consider that one day, while looking out my window, I would catch the horrific view of what turned out to be a terrorist attack on the Pentagon. That day, just seconds before the attack, we were on the phone with Eric Geisler, a member of the eArmyU team, and Susie Johnson’s support staff. Susie is the contracting office for the Army’s online education project. Eric had to rush to get off the phone so that he could get to a surprise birthday party for Susie. And that’s the last we heard from our eArmyU client for 24 hours. Gradually, we learned that the eArmyU team was ok, but their division was decimated by the attack.

For the next few weeks, we alternated between shock and sadness, reaching out to Susie, Lee and Dian and other team members. Today, nearly 8 weeks after the attack, our partnership has become a close bond; and our mission to serve soldiers-anytime, anywhere-has taken on new meaning.

Having a bird’s eye view of the Pentagon also reminds me of the close relationship we have forged with our largest client, the US Army, the institution which has made one of the largest single investments in the brief history of e-learning. As many of you know, the Army has established a portal called eArmy U with the help of PriceWaterhouseCoopers.

Tonight, I do want to tell you a little more about eArmyU, from the strategy behind it to its status today. I truly believe it may change the landscape of e-learning. I will talk to you tonight about how we achieved most of our initial goals for the project and what we learned from the experience and you can learn from the project. We’ll discuss the industry as it stands, where it may be heading and cover, briefly, the concept of metacapitalism, of which eArmyU is Exhibit A in the education sector.

But first, let’s address the eArmyU project. Consider for a moment the Army itself. There are nearly 500,000 active soldiers in the Army, thousands of more personnel. The Army has hundreds of installations across the globe, from peacekeeping forces in Bosnia to ground forces today in central Asia.

Despite the impressive size and stature as the world’s greatest fighting force, the Army has some well known problems beyond the proverbial $100 wrenches. In the spring of 2000, the Army began studying what to do about several core personnel issues. Morale had flagged. Retention had tumbled. Recruitment had suffered. Educational opportunities remained few. As the decidedly more blue collar element of the country’s armed forces, the Army had the lowest percentage of college graduates in the services.

Meanwhile, the Army brass, namely former Defense Secretary Louis Caldera, understood we live in a digital world. The war of the future might involve not only involve the battlefield but the nation’s technological infrastructure. And even the common soldier on the ground is required to use technology constantly — it seems laptops are almost as common as guns in today’s military. He also comprehended a simple historical fact — our finest soldiers have often been highly educated, from Washington to Eisenhower to Colin Powell.

Those points are not lost on today’s recruits. They know they need a good education. They know they will not necessarily spend their entire careers in the armed forces and they need to continue to receiving education because and it is a critical differentiator as they move up the military ladder. Unfortunately, for many of them it is nearly impossible to earn their degree while they serve their country. They are deployed (PCSed) on a regular basis, making a brick-and-mortar education difficult, if not impossible. They understand that if they join the Army they will be faced with frequent transfers, making a brick-and-mortar education difficult, if not impossible.

Caldera arrived at the idea of creating an online education program which accomplish five things:

• Develop an educated, tech-savvy force

• Support the transition to a better educated fighting force in the future

• Improve the quality of life for personnel so morale would improve and increase retention. The Army’s goal was to offer online degrees, along with the tools and support services to achieve this vision.

On December 14, 2001 the Army awarded the contract to PriceWaterhouseCoopers. The price tag of $453 million, a sum which included a budget for paying soldiers’ tuition, for buying laptops, for ISP services from Fiberlink and for creation of the portal by PwC. The idea was the program would be a one-stop shop — the student gets an email account, access to the Net and her tuition paid.

Some of you are probably wondering how a firm like ours, known for accounting and financial services, managed to get involved in eArmyU. PwC does not create educational content — except for our own employee training. But what we do have is a stellar systems integration staff and several e-learning experts who have studied the educational market for years. They saw what has failed and, more importantly, what might work. The idea that we proposed to the Army is the reality that exists today, just 11 months after contract award.


The Creation of eArmyU

We arrived at the concept of a portal that would feature a limited number of educational partners who agreed to transfer credits among one another and to accept a standard application form we devised, along with a registration system we installed. They had to accept withdrawals from their programs based on percentage of time elapsed, rather than dates. They had to accept some universal policies and procedures we created, some 200 in all. We continue to work with them on continuing standardization of various parts of the program.

We didn’t want to simply aggregate educational institutions offering e-learning. While that has value, it does not add value, at least not in the way we view it.

We set quality standards that an institution had to meet to become one of our partners. And we wanted to create a system where our educational partners would be judged by what came to be called “Pillars of Quality.”

This is where Frank Mayadas and the Sloan Foundation entered the picture. During the proposal phase, we created the Council for Academic Management, a group of e-learning educational thought leaders. The Council established criteria for becoming an eArmyU partner and for maintaining that partnership. The key to being part of the program is to have an established online degree program, to accept Army training courses for credit and to accept courses from other institutions participating in the program. More than 300 institutions applied, the council selected just 29 colleges and universities, many who had educated soldiers for years as part of the Servicemembers Opportunity Colleges Army Degree, or SOC, program.

After contract award, we connected more closely with Frank Mayadas and began a more serious effort to attack quality head on. Following quality standards established in concert with the Sloan Foundation, participating schools also agreed to partake in our quality initiatives. Initially our quality standards involved student course evaluations and student satisfaction surveys to measure quality. But recently we added another twist. Just two weeks ago, we launched an initiative to conduct a new initiative to conduct a thorough review of the design of academic courses. Lguide is ……

A second part of the relationship of institutions with eArmyU is the one they would have with PwC. They had to be responsive to our needs and concerns, in addition to teaching students. Our education partners, at times, view of as tough taskmasters. But we are tough for a reason. We consider our academic partnerships to be the most important aspect of the portal; and if a member is unresponsive to PwC or eArmyU students they will be shown the door.

Although our academic partnerships represent a huge effort, in a way they seemed like the easier part of the challenge of creating eArmyU. The deadlines were enormously aggressive. The Army might allow defense contractors 20 years to come up with a Missile Defense Shield, but it wanted us to have an e-learning portal up in just 30 days. And in just 180 days, they expected us to implement PeopleSoft’s student administration system within that time period, even though most colleges take two years to install and operate that complex piece of software. We used Saba for our course launching system and Blackboard for creating our virtual classroom. Again, neither could be called easy to implement.

We added another seven software systems to operate various functions on the portal and then linked it all back to the Army’s legacy systems and to our member educational institutions. While we crafted the technology platform and architecture, we handled the logistics for distribution of books and started accepting registration even before completion of the portal. We had 4,000 students signed up and taking classes by the time our backbone systems were up and running. In essence, our production and development environments ran simultaneously.

We met the remarkably tight timeframe without missing a single milestone. I guess you could say we’re proud of that achievement, and the results of eArmyU so far.

The Results

Those results have been rewarding to watch. Our team was at Fort Campbell on January 16, this year. At midnight on the 15th, soldiers lined up-in the rain-to be first in line for eArmyU. Today, just 11 months into our effort, we have nearly 11,000 students; and the Army’s shooting for 80,000 within five years. Nearly 20% of our students re-enlisted to be part of the program. Grades are pouring in and the success rates of our soldiers in online education are actually better than the rates for soldiers in brick and mortar situations.

What do schools think? Some of our education partners are happy; others are waiting for more students. We still have issues with standardizing parts of the site and we hope to add more educational partners soon.

The schools with a previous connection to Army personnel are, not surprisingly, the most popular institutions. The three top draws for students are Thomas Edison State College in New Jersey, a state away from Fort Benning, Central Texas University, near Fort Hood, and Troy State near Ft. Campbell in Kentucky. Since we’re in this case the aggregator, not the marketer for these schools, we’re pondering what we might do to help share the wealth of students. Perhaps it will come naturally. Or perhaps we’ll have to build in components to draw students to the 21 other partner institutions.

Not all our partners, incidentally, have been good partners. We have pruned the list a bit, and we will add some new schools to the list. We found some partners unable or unwilling to respond to students or to our demands for information. We need our education partners to review their pricing structure, adopt common processes and technology standards, and work with us to continue to push the frontier of e-learning.

So, what can you learn from the eArmyU project?

I think the main point of the eArmy project is the concept and success of integration. A portal for a defined audience is very appealing to corporations and institutions. It’s also appealing to partners who want to participate and students who want to take classes. It organizes the learning experience, creates a sense of community for learners and allows institutions to offer a rich variety of e-learning courses from a variety of content providers.

It’s a pivotal development in the online world. It’s the first time a very large government body has thrown that much money at e-learning in one fell swoop. It’s confirmation of what all you are doing in this room today. The military plans more such efforts. So does the IRS, McDonalds’ and other corporations and institutions.

The integration model works in elearning because it has already worked in other industries. Ford and GM have huge supplier networks. Hollywood outsources everything. We add the dimension of quality control, creating a superstore of e-learning. People like Target stores because you can get lots of different items at one place and you the quality is pretty good since Target has already approved the suppliers. Those suppliers sell in other chains and some might even have their own stores.

This is metacapitalism. We pre-qualify our partners, create the systems and take it to the markets. Sounds easy enough, although the devil, of course, is in the details.

EArmyU shows that the muscle of private industry has to be behind major projects, and will be behind most online ventures that stand a chance of succeeding. Online educations is expensive, too much so for many non-profit higher learning institutions to gamble on it in a big way. In America education has always been a non-profit enterprise, but in the online world it will, by necessity, be a for-profit enterprise.

And for-profit institutions is what the market has become. Today, I see e-learning as containing three major segments: General aggregators, brand extenders, content owners and educational integrators. I say today, because the market changes so fast it could be different tomorrow.

In the first category are aggregators such as Hungry Minds, monsterlearning, Fathom and Univeritas 21. Hungry Minds started out as a promising portal offering courses and degrees through partner colleges but was sold and re-sold twice this past year. It’s still a good portal for individual and corporate users yet some of it is also pushing books and other materials produced by its owner, John Wiley Books, which publishes the Dummies’ series –i.e. E-Learning for Dummies, and other business books.

Monsterlearning just got off the ground in September, offering individuals and corporations a large selection of courses, certifications and seminars through partnerships with the University of Phoenix, Cardean Univiersity, Kaplan and others. This model could be successful, if only because Monster already has great traffic and could convert job seekers to course takers.

Fathom offers courses associated with 12 different renown institutions ranging from the British Library to founding member Columbia University. It has become very aggressive marketeer, recently buying a back page ad in the New Yorker, a spot that can cost $65,000. The company is not profitable. Universitas 21, meanwhile, announced in October it would open a subsidiary in Singapore.

The second category, which I call brand extenders, include NYU Online, Penn State World Campus and the U of Phoenix. Again, it’s hard to get a make on how well the first two are doing in part because they’re new. NYU Online is for-profit, although there hasn’t been news of a profit just yet. Phoenix is cleary the best-positioned in this category, having established a multi-campus operation and added an online component that has thousands of students. All told, the school claims a student body on and off-line of 116,800 students, making it the large college in the world. The publicly traded parent company of Phoenix, The Apollo Group, recently rated a buy by most analysts. Maybe I’ll buy a few shares.

Content owners and developers are many, and they represent another category. Schools and colleges are offering content online and Unext.com’s Cardean University promises courses to corporations, universities, associations, market affiliates and individual students. Thomson and Pearson already have content producing divisions so repurposing it for online educational courses should not be a problem. And I haven’t even mentioned the thousands of other smaller content players.

Finally, there’s edumediaries, people like PWC and click2learn.com. We’re there to create portals, standardize relationships between our partners and their clients and monitor for quality.

Each of these companies I mentioned – by no means an inclusive list -- has great potential for three reasons: They survived the dotcom burnout (or missed it), they have well-endowed sponsors and they have potentially large audiences, the emphasis on the word potential. Columbia has put up $10 million for Fathom and Thomson Learning is a $6 billion company. Deep pockets help.

It’s still too early to tell who will win in this new world of elearning. I can tell you people doing work like PwC are busy. The Navy just awarded NCS Pearson, a division of Pearson, a $75 million contract to manage the Navy College Program for Afloat College Education. NCS will do what we did for the Army by managing the entire infrastructure and bringing various educational partners to deliver courses and training, including educational companies it owns. We almost got that contract, by the way. Soooo close...

E-Learning’s Fallout

We may be busy but that’s somewhat of a rarity. E-learning still hasn’t jumped out of the gate. The alleged pent-up demand just isn’t there. A recent article in the Chronicle of Higher Education pointed out just 2.5 percent of students in MBA programs are enrolled inonline or distance learning programs. Though the survey did not include the University of Phoenix and its highly successful MBA program the results look pretty bleak.

Remember, the MBA online programs are where venture capitalists dropped lots of money thinking that they had found the sweet spot in the market, the segment that would produce e-learning home run. It’s not even a single- yet.

The article discussed the collapse or repositioning of firms out of the MBA market, among them University Access, which is moving into corporate training under the new name Quisic – whatever that means. Unext, the collaboration of Chicago, the London School of Economics and Political Science, Carnegie Mellon and Columbia, has been downscaled. Pensare went out of business, as did Caliber. And while September 11th could help the industry since the thinking is employees will not want to travel as much to receive training, and therefore clamor for an online one, I have my doubts.

If anything, training courses have been slashed dramatically due to the terrorist attack and the sinking economy.

The market seems like an e-learning version of Survivor and none of us wants to get kicked off the island. But contraction will continue occurring – if major league baseball can’t survive without contracting, I doubt e-learning’s 5,000 companies will all make it.

My advice is this–the best chance for survival is to have a stake in the B-to-B marketplace. Educational exchanges will have a nice play in this market. The IRS wants a portal to provide educational opportunities, as does McDonalds. Other corporations are or will be thinking about similar efforts.

None of these institutions is likely to hire one educational concern to provide all the content for what they want. More likely, they will want an integrator to create a site for their employees, someone who can handle quality control and deliver an integrated solution. That’s of course, where we fit in.

But you can fit in, too. We’re not a threat to your business in any way. The reality is we need content providers -- reliable, flexible and responsive content providers. We need institutions willing to work with us, and companies like us, on offering up the best coursework possible and on the best practices for e-learning. We plan to borrow what others have learned and share what we gain from our projects.

The good news about educational exchange portals is that the cost to you of joining is very little. Marketing costs are minimal compared to going it alone. Many of you already have online degrees available, or at the minimum online courses. Hooking up with a few portals may require you to accept a different application form than you usually use and to be flexible in accepting coursework from some students.

The university attitude might also have to change. More than a few schools, even ones with less than stellar reputations, took a pass on eArmyU. They wouldn’t agree to accept credits from the smaller, less prestigious schools in the program. I can understand they fear the diminution of their brand, something they have pushed for decades to achieve. But hey, this is a different universe.

And you don’t necessarily have to lower standards to be a part of every portal, especially one which may contain like-minded institutions you’re familiar with and with whom transfer credits are not a big deal.

For some of you the B-to-B marketplace will never be part of your pitch. Perhaps you’re a liberal arts school that is unlikely to attract businesspeople looking for courses – that is, unless you’re willing to go for a few gimmicks, like “Beowulf For Business Owners” or something along those lines. I think the integrators aren’t going to go away. A portal should be coming soon to your neighborhood.

This begs a question for many of you. How much money do you have to blow on online learning to be a contender? The answer is I don’t know. What I do know if your probably better off combining your efforts with other institutions. That may not guarantee success, as the failure of several collaborative models have shown, but it does give you a fighting chance.

A fighting chance because e-learning is here to stay.

Reporters now cover us, analysts devote weekly reports to our industry and plenty of big names continue prowling about for opportunities. All is not negative. We’re about to become s $3 billion industry.

We’re growing despite the economy because learning is lifelong and not everyone has the time for traditional institutions.

We’re discovering corporations are demanding their workers continually reeducate themselves, or at least arrive with a decent education that can be increased over time.

We’re seeing citizens in need of more educational opportunities for workforce training, literacy and skill development.

We’re experiencing an echo boom from the baby boom threatens to overwhelm our educational establishments, now running at near capacity. California alone expects to see 700,000 new students in the next decade, a total that could fill of 20 campuses the size of UCLA.

We’re seeing more people who understand bricks and mortar won’t do to meet that demand. We can’t build our way out of the tidal wave of new students, not to mention the skyrocketing numbers of adult learners returning to college part time or full time.

You have a chance to appeal to that market. I have little doubt the ranks of e-learners is about to take a swing upward. Meanwhile, price pressures will force corporations and universities to begin offering more e-learning to increase revenues to stay alive. Add a few e-learners to your virtual campus – students perhaps culled from an integrator – aand you begin to see how even incremental growth in a student body not present on campus could contribute greatly to the bottom line.

That’s not to say classroom education is going away – it will remain the preferred choice of learning, as it has since Plato and Socrates held dialogues with students in ancient Greece. (Think for a minute about this scenario --a modern-day Plato with a Palm Pilot answering student inquiries on that tiny screen – maybe that’s our future!) Still, for those of you totally sold on e-learning the news is a human in the process matters. Few people learn without the intervention at some point of a teacher. You have to have human contact, online communities and real-world contacts to make it work.

The End

Now I would like to offer a brief glimpse of the future, as I see it, and then take questions. If anyone is taking notes, please stop now. I fear a year from now someone will come up to me and say “that prediction you made last year turned out to be totally off-base.” But allow me the privilege of providing some insight gleaned from our eArmyU adventure and from what we’re seeing in the market.

First, metacapitalism’s role will continue in higher education. I assume we’re not going to be the only integrator, although it would be a more perfect world if we were the only one. The field is bringing some order to the chaos along with some standards of operation. Government and corporations want someone at the table with a complete package. We offer it, along with the variety of many content partners. Some integrators will try to sell everything – backend operations, portal development and content. I don’t buy the idea the same company offers the best-in-class in each of those disciplines. Companies like us will. We’ll use the best technology and chose the best content partners because that’s our job.



Second, e-learning will quickly become entirely a for-profit enterprise – if it hasn’t already. Look at how many non-profit schools like NYU and Columbia have devoted money to for–profit endeavors. Higher ed simply isn’t fast enough to respond to the market demands. An eArmyU project would have been impossible to pull off as quickly if we worked within higher ed. It moves slow, the e-commerce markets work at the speed of sound, or so it seems. Some non-profits can continue in the content area but otherwise the market will be for-profit.



Third, e-learning has been tremendously oversold to investors. We became part of the tech hype cycle. We were last year’s favorite flavor. It couldn’t last. Most of us in this room knew demand was growing at a nice pace, but not dramatically. The old build-it-and-they-will-come, first-to-market lead position and all the other theories of the new economy were bunk, or partly bunk. Now we’re in a “get real” period. We have to learn to sell this type of learning better if we’re all going to make it. Don’t expect the market to save us, to keep pumping cash into a losing proposition that counts few students and no profits.



Fourth, the individual learner market isn’t nearly as large as we hope. IT people get this, and they like e-learning. But it simply hasn’t caught on on the scale we expected. Sure, a cadre of well-motivated learners will come to love and enjoy taking classes online. But I think this group is small. Phoenix and some others will do well in this market, for sure. I think the number of winners will not be a high one for now. Perhaps as people hear more about e-learning, they may learn to love it but that time is a few years off.



Fifth, since individual learners aren’t the ticket, what is? Corporations and institutions. Why? Because they have a carrot and stick approach to learning. At eArmyU if an officer graduates she has a better chance of moving up the ranks. She knows a key to her career will be getting that diploma so, love or dislike online courses, she has a reason to stay focused on finishing college. The same goes for professionals who seek certification or continuing ed credits in their careers. One reason e-learning works so well with this population is they can do the work anytime. The other reason it works is they have to take the course to advance. These are captive learners who are required, in essence, to finish courses to advance their careers.



Sixth, I wonder about the pricing mechanism of e-learning. Should classes be cheaper than for students in the classroom? My belief is to make e-learning work a price differential, if it isn’t part of the equation for some of you now, may have to be introduced. I’ll pay $8 to see a movie in a theater but I wouldn’t pay that much to rent a video of the same movie. I might pay $10,000 in tuition for on-campus courses but I’m not sure I can justify the same amount for an online course, to be honest. Tiered pricing is on the way.



Seventh, e-learning will not attract a global audience. Like that old Hemingway line from the Sun Also Rises, wouldn’t it be pretty if that were so. It ain’t so. EarmyU shows us the schools with the highest enrollment are near bases. Soldiers have heard of the school, perhaps even take a course or two there, so they’ll enroll in that school online. When I do some consulting with the University of Massachusetts, I told them there marketing efforts should be concentrated on in-state students. That advice still rings true.

Finally, my prediction is most of you in this room will be employed next year. Yes, some numbers are bleak. Yes, many firms have failed. Yes, the demand isn’t all it’s cracked up to be. However, I’m confident e-learning has a future, a great future at that, as myself and my colleagues learned during the luanch of eArmyU.

And now, let’s hear some questions...