Distance Learning Drives Sizzling Education Market

Distance Learning Drives Sizzling Education Market

By Mike Wiebner

Universities, colleges and corporations are leaping into the distance learning market to meet the soaring demand for continuing education from workers seeking to switch careers or boost their professional standing.

Throughout the halls of academia, university administrators and professors are whispering words like "competition" and "economic survival." Once stodgy institutions are now turning to technology to deliver academic and professional training to students both on and off campus.

Faster, more widespread telecommunications technology and the growing demand for access to educational resources set the stage for distance learning's fast rise. The number of accredited U.S. institutions offering distance learning programs has skyrocketed, from just 93 in 1993 to more than 700 in 1997, according to Peterson's, a Princeton, N.J.-based educational information and communications company. The growth has come largely from traditional colleges and universities.

Distance learning spending in higher education totaled $1.5 billion in 1997, up from $1.03 billion one year ago, according to South Natick, Mass.-based CCA Consulting Inc., a research firm and consultancy specializing in higher education. The overall higher-education market for information technology, including such things as computer and network hardware as well as applications software and services, stood at a whopping $5.74 billion.

Impediments to Further Integration of Technology in Higher Education
Percentage of mentions by university administrators in surveys.
	1997	1996
Lack of money	85	80
Classrooms not equipped	62	62
Faculty resistance	55	53
Student ownership low	38	38
Content not available	32	28
Administration resistance	12	9
Student resistance	2	1
Other	7	10
Source: CCA Consulting Inc.

But distance learning bears little resemblance to the correspondence courses of yesteryear. Technologies such as cable or satellite television, video and audio tapes, fax, computer modems, videoconferencing and other electronic means deliver today's educational programs, according to "Peterson's Guide to Distance Learning Programs." Though class participation via technology is the norm, students occasionally make short trips to a regional campus or satellite site.

Wired and Ready

To get ahead or even stay current in today's job market, many individuals require professional training. That has sparked a demand for courses or access to courses in places and times not typically offered by universities, explains Carole Cotton, president of CCA Consulting.

Getting instruction to students in convenient ways has enabled the growth of distance learning. The convergence of television and Web-based technologies and increased bandwidth will foster even greater student/professor interaction and participation in distance learning, according to Adam Hanin, manager, higher education, for Compaq Computer Corp., Houston.

Many state legislators are less than enthusiastic about one aspect of technology and distance learning: fewer people on the school payroll. "They're afraid of the neutron bomb effect," says Cotton. "The buildings are left standing, but the people aren't there."

During the past few years, college officials have pumped big money into their IT infrastructures, applications and distance learning capabilities to attract both the traditional, straight-out-of-high-school set and nontraditional students. They're adding bandwidth, wiring student dorm rooms to campuswide networks and buying software tools to manage information and processes. In the process, they are taking course registration, accounting and inventory management functions online.

So far, the wiring of dorm rooms has outpaced ownership of PCs for students at traditional four-year institutions. Cotton's firm, CCA Consulting, reports that in the 1996-97 academic year, 65 percent of student dorm rooms at four-year undergraduate schools had access to campuswide networks, while only 35 percent of students owned a personal computer.

As a result, many universities are requiring new students to purchase a computer, often including it as part of the total tuition package. Freshmen at such schools find computers in their dorm rooms starting day one. This presents a sizable opportunity for computer manufacturers, many of which have instituted online "computer superstores" for educational buyers.

For these computer vendors and systems integrators, however, getting college officials to sign supply, service, training and integration contracts has not been easy. Selling and servicing the higher-education market brings headaches sure to daunt even the most battle-scarred integrator. Budget-slashing politicians, rebellious faculty and students and long sales cycles are just some of the potential pitfalls that await the aspirants.

Whatever the drawbacks, software behemoths such as Microsoft, Oracle, Sybase and SAP don't enter a market to lose money. Nor do computer manufacturers Compaq, Gateway 2000 and Apple - education's beleaguered king.

Now these companies are retooling their software offerings for the specific needs of the higher- education market in areas such as accounting, human resources and administration. The smaller, niche players, which formerly had the field to themselves, are being forced to upgrade their product lines to compete.

Butting Heads in California

California was the first state to step out on the distance learning ledge. The California state university system, the nation's largest, last year proposed to partner with industry to help it create the "California Virtual University," an online educational effort to reach new students in all 50 states and across the world.

University officials selected the team of GTE Corp., Stamford, Conn.; Microsoft Corp., Redmond, Wash.; Fujitsu Network Communications Inc., Richardson, Texas; and Hughes Electronics Corp., Los Angeles, to provide the network infrastructure and sell additional computers, software and training services to universities, students in California and other states. The 23 universities in the California system would then use the networks to export their education services to students around the world.

Network Services From Outside Vendors
Chart shows the percentage of institutions purchasing various network services from outside vendors.
		1997	1996	1995
Wiring	72	74	81
Installation	60	66	54
Design	30	35	32
Network Integration	27	32	28
Planning	22	27	19
Management	15	15	10
Source: CCA Consulting Inc.

For now, the deal has been postponed. Many expect it to be revived when new system chancellor Charlie Reed takes the helm in March.

While university administrators warmed to the notion of standardizing on certain hardware and software, faculty members and students led the opposition to the deal. At stake, they claimed, was their freedom to choose the software (e.g., non-Microsoft) and hardware (e.g., their beloved Macintoshes).

"When you don't ask professors and students, they have a tendency to give you those opinions regardless," says Lee Ramsayer, vice president for higher education at Oracle Government, Education & Health in Bethesda, Md.

Standardizing on hardware and software is often a no-brainer from management's point of view. Systems become easier to support, install and train. However, as proponents of California's Virtual University are discovering, professors and students frequently cry foul when their technological freedom of choice is in jeopardy.

"It's people saying we've always had freedom of choice with our research or our work" who have resisted, says Hanin. "But I don't think it's going to hold things back in the long run."

"The strategy of [the California Virtual University consortium] companies is to wait until this dies down, and then quietly push it through," says John Santoro, manager, education market, Apple Computer Inc. of Cupertino, Calif. "All the desktop computers sourced through the university will have to go through the consortium. Add this middleman and you won't get the lowest price, at least not with our computers."

Whatever happens, it appears unlikely that Apple will forfeit its academic stronghold anytime soon. "I don't see Apple's market dying easily," says Ramsayer. "It'll be like watching a glacier melt. Of course, I don't see that market growing either."

Challenges Ahead

Future partnerships between education and industry will not model the California megadeal, which is likely to prove more aberrant than precedent, Ramsayer said. Notwithstanding the technology choice issue, many universities remain staunchly independent and would likely resist amalgamation with other schools, no matter how benign the intent.

Lee Ramsayer, vice president for higher education at Oracle Government,Education & Health

Compaq has teamed with Stanford University to help implement its online program for both traditional and distance learning students. Lectures are videotaped, then digitized, indexed and matched to the professor's notes and a screen capture of the chalkboard.

"If I didn't understand something, I can find that point in the lecture and go over it and over it," says Hanin. "Students can spend more time actually thinking and paying attention. It really duplicates everything but the gum under the desk."

At a growing number of schools, technologies pioneered by distance learning proponents have made their way back to the old-style classroom.

Professors and researchers have long led the technology charge. Computer science programs have ensured strong in-house design and systems integration expertise, while collaborative research spanning the globe has become commonplace.

But now IT resources are being devoted to improving the student's education experience, both in and out of the classroom.

"There is a whole new market: technology-enhanced education delivery," explains Ramsayer. "How can technology be used to enhance the professor-to-student onsite experience? I think that will be the biggest market, not now, but in the very near future."

The prime directive of universities and colleges, lest anyone forget, is to teach. And contrary to some conventional wisdom,considerably more money is devoted to actually providing the education than is spent maintaining the business side of these institutions, explains Ramsayer. Because of that, these monies will be directed to those endeavors more freely, he says.

With more technical barriers dropping every day, content has taken center stage. Creating effective distance learning programs is challenging educators. "To be able to structure, digitize and offer [distance learning] content in a meaningful manner - it's definitely not a science or an art at this point," asserts Ramsayer.

Determining, and then matching, a student's learning style is critical to successful distance learning. Whether a student learns best by reading text, viewing lectures on satellite TV or actively participating in chat-room discussions with their classmates is an important matter.

Curriculum designers must take these factors into account when choosing tools such as video, audio, chat rooms and 3-D graphics to deliver their courses.

For-Profit Competition

Higher education may increasingly turn to industry to run its distance learning programs, perhaps for a share of the revenues. One need only look at the University of Phoenix, an accredited, for-profit educational institution, for a successful model that schools and their potential corporate competitors are studying closely.

In business since 1978, the Phoenix-based school offers distance learning to students in 12 states, using leased office space in those states. Its biggest innovation, however, is its online campus. Online students, who must be at least 25 years old, take courses over the Internet, downloading course materials using a customized Web browser. Students interact with professors and fellow students via e-mail, bulletin boards and chat rooms. The school offers graduate and undergraduate courses and degrees.

"They're driving efficiencies," says Ramsayer, "and making a lot of schools out there very nervous."

Says Barbara Lawrence, senior vice president, research and editorial development, for Peterson's: "There are a lot of traditional universities and institutions [that] view the University of Phoenix as scamps. But they've made serious inroads. They only serve adult students and focus on programs that are needed by a large population."

Importance to Strategic Plans
University administrators were surveyed about which technologies they feel are important to their strategic plans. Chart lists the percentage of mentions.
		1997	1996	1995	1994
Internet/WWW	92	NA	NA	NA
Client/server computing	64	73	56	55
Microsoft Windows NT	59	40	28	12
Multimedia	57	54	64	46
Distance learning	48	49	NA	NA
Network computers	47	NA	NA	NA
Unix	45	42	52	36
Document imaging/work flow	27	22	25	28
Groupware	27	27	30	NA
Apple Computer products	12	NA	NA	NA
Voice response/synthesis	12	15	14	14
Source: CCA Consulting Inc.

With corporate in-house training operations, such as the Motorola Institute and the General Motors Institute, already up, running and doing well, what's to stop IBM or some of the Big Six from following suit?

"In some disciplines the shelf life of a degree is two years," says Cotton. "People are looking for ways to keep their skill sets up."

Many large professional firms already provide accreditation courses for their employees. Other companies, particularly in the computer sciences, also are looking to gather content and provide it for a fee.

"I know the accreditation societies are preparing for when business gets into this and provide accredited courses. I know they're discussing those matters. Will you ever see an Oracle university? Maybe so," speculates Hanin.

Students will no longer be held hostage to bricks and mortar. With distance learning a viable, affordable option, more for-profit corporations are expected to emulate the University of Phoenix.

Says Ramsayer: "Why not try to pull off the cream of the crop - the high-dollar training programs? They're marketing to customers who can afford it."

Technological advances have breathed life into distance learning. Those who master the tools, and the unique concerns of higher education, stand poised to move to the head of the class - and get their slice of a growing multibillion pie.