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February 19, 2001

New Set Of ABCs For E-Learning

SmartForce moves beyond providing content to expand its reach in a fragmented market

More on E-learning:

E-Learning's Straight Shooter (1/1/01)

Cisco Tends The Tree Of E-Knowledge (1/8/01)

n the highly fragmented E-learning market, SmartForce plc stands out as one of the most dominant players. With $168 million in sales last year, the Redwood City, Calif., company recently formed high-profile partnerships with Deloitte Consulting and Yahoo's corporate portal service. SmartForce president and CEO Greg Priest spoke with InformationWeek senior editor Sandra Swanson about changes in the company's offerings.

InformationWeek: What's the nature of your partnership with Deloitte, and how will it affect your company's reach in the E-learning market?

Priest: Deloitte is creating a practice to sell E-learning into large organizations. They're using our software product as the core platform to do that, so they'll take us into accounts and we'll jointly pitch deals. [The partnership] is still in the early stages, so it probably won't have much effect on our business this year, but it's going to be important long-term. Big Five companies like Deloitte have contacts at top levels of companies, and they create relationships where companies are used to spending significant amounts of money to build programs. Plus, Big Five companies' involvement with E-learning brings credibility to the market.

InformationWeek: How have the needs of E-learning customers changed over the past year?

Priest: The biggest thing that's happened is businesses want vendors that help craft solutions to particular business needs, instead of throwing 30 courses up on the Web and saying, "Let's see if any of our people want to take them." One of our recent deals was with Ariba; it wanted to create a program focused on training channel partners--and ultimately its customers--in how to think differently about procurement in order to get the benefits of using Ariba.

InformationWeek: What's been your biggest challenge during the past year?

Priest: Last year, we completely changed our business model and product offering. A couple of years ago, we sold technology-based training classes [on CD-ROMs] to IT professionals. That was when the company was called CBT Systems. But we saw a migration to a world where people are much more focused on specific business issues. We needed to create a complete learning infrastructure that included business skill areas, E-business, and various vertical markets. We also created a platform and a set of tools that let companies integrate other content. We changed our name to SmartForce in late 1999 and launched the new product in January 2000. [We became] a complete learning infrastructure company where content is a critical component, but it's only one component.

InformationWeek: You've achieved profitability, which few E-learning companies have managed. How did you do this?

Priest: Our switch in business model was key. Last year, we grew the size of our average contract by 50%. The ability to do much more strategic deals with our customers enabled us to grow the business so much faster.

InformationWeek: How would you like to make SmartForce better?

Priest: I'd say we're in the first generation of product offerings. In the future, you're going to see a much more comprehensive body of content. You'll also see an expansion of the platform to provide more functionality. For R&D, we can invest three to four times the revenue of most other E-learning companies. So we do have resources; it's just a matter of doing it effectively.

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