Educational Software Business Plan

Third Degree I.D. is competing for e-learning instructional design business in the corporate, educational, healthcare and government sectors. Its emphasis will be on corporate and educational markets, as these sectors are likely to experience the greatest growth.

Third Degree I.D. projects it will do $360,000 worth of business in Year 1, which represents a development objective of at least three  7- to 12-course series (i.e. a professional certificate or masters degree). Of the $360,000, the partnership estimates that 50% will come from higher-ed clients, 40% from corporate clients, and 10% from K-12 clients.

According to the Booz Allen Hamilton white paper, Re-Learning E-Learning,[1] the compound annual growth rate for the three sectors is: higher ed = 25%, corporate=30%, and K-12=30%. These assumptions were used to estimate new-development revenue for each of the three sectors.

In addition, the partnership anticipates generating revenue through reuse and relicensure at a rate of 25% of cumulative revenue, from year to year.

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[1] Lee, Reggie with Sumita Bhattacharya, Tina Nelson, and Martin Kihn. “Re-Learning e-Learning” (Booz Allen Hamilton, 2002) <http://extfile.bah.com/livelink/livelink/108290/?func=doc.Fetch&nodeid=108290>.

4.1 Market Segmentation

The e-learning market continues to expand.  According to ThinkEquity Partners and Eduventures, the global training and education market is a $2 trillion industry, with the United States accounting for 37.5% of the market.[1]  The greatest demand for e-learning in the U.S. comes from the corporate sector, which according to Brandon-Hall realizes a “30 to 60 percent” savings over traditional classroom instruction.[2] Thus, businesses and corporations have invested—and continue to invest—in infrastructure that will require a steady supply of content.

Higher education and K-12 are substantial markets, as well—a combined industry representing over 100 billion dollars.[3] With the largest class of high school students in U.S. history graduating in 2009 and a brick-and-mortar system that cannot expand quickly enough to accommodate them, e-learning is becoming a necessity for institutions as much as it is becoming an expectation among students who are increasingly computer savvy.[4] Colleges and universities are also turning to e-learning as a way to increase their reach—to offer branded educational opportunities to students outside of their traditional geographical boundaries.

 While the move to e-learning in the healthcare and government sectors remains slower than in the corporate and educational sectors, these industries are showing a strong interest nevertheless. According to Jones Knowledge, Inc. and CourseShare.com, the healthcare industry shows an 80% interest (with a 30% commitment) level while government shows 50% interest (with 39% commitment).[5]

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[1] ThinkEquity Partners, Eduventures (quoted in “The Learning Markets: E-Learning” by eMarketer, Inc., 2003) <http://www.emarketer.com>.

[2] Adkins, Sam. “2002-2010 U.S. e-Learning Industry” (Brandon-Hall Marketing Series, 2002) <http://www.brandonhall.com>.

[3] Brandon-Hall (quoted in “The Learning Markets: E-Learning” by eMarketer, Inc., 2003) <http://www.emarketer.com>.

[4] Howell, Scott, Peter Williams, and Nathan Lindsay. “Thirty-two Trends Affecting Distance Education: An Informed Foundation for Strategic Planning.”  The Online Journal of Distance Learning Administration (6.3) 2003 <http://www.westga.edu/~distance/ojdla/fall63/howell63.html>.

[5] Jones Knowledge, Inc. and CourseShare.com (quoted in “The Learning Markets: E-Learning” by eMarketer, Inc., 2003) <http://www.emarketer.com>. The ratio of interest to commitment is 75% to 64% in education and 80% to 60% in among corporations.

4.2 Target Market Segment Strategy

Third Degree I.D. is focusing on the corporate and educational markets because they represent the e-learning growth sectors. The partnership is well positioned to tap these markets locally and regionally. Savannah and the Lowcountry is experiencing genuine growth in high-tech businesses and is home to over 20 colleges, universities, technical institutes, and educational centers in higher education alone.

4.3 Service Business Analysis

The educational services industry is comprised of a large number of existing businesses competing in several segments. Historically, K-12, colleges/universities and corporate training providers utilized a traditional instructor-led approach for the delivery of short- and long-term courses. Over the last few years, e-learning has developed into a mature alternative to instructor-led course delivery, as it provides substantial cost savings in both development and delivery of the content and allows service providers to increase their geographical market.

4.3.1 Competition and Buying Patterns

Until recently, the competition in e-learning has been among large, proprietary course management or learning management system (CMS/LMS) vendors and IT-infrastructure companies. However, as less expensive systems and free, easy-to-install open-source systems emerge, the focus and interest is moving (appropriately) from delivery systems to the actual content delivered.

Third Degree I.D. is committed to leveraging the trend toward less expensive and open-source systems by emphasizing user-centered instructional design and by designing object-oriented content that facilitates easy installation and migration into almost any system. The company is dedicated to developing content that meets or exceeds interoperability (SCORM, OKI) and compliance standards (W3 Accessibility, ADA), so that clients can make better decisions about how to serve their content to virtually anyone.

However, the company has extensive experience with the most popular, proprietary CMS/LMS systems, and recognizes a continued investment by its clients in those systems. Thus, it also focuses on design and development for those systems (Blackboard, WebCT), while also maintaining interoperability and compliance standards that allow for easy migration of content (from system to system).