Falling stock prices, failed LMS implementations, poor course completion rates, slashed corporate budgets. In the face of all that, will e-learning be remembered as nothing more than a late salvo in the dot-bomb campaign?

There is no doubt that for the first time, e-learning Naysayers are outnumbering the True Believers. As a contrarian, I see this as a very bullish sign. Consider recent history through the lens of Gartner's Technology Hype Cycle, depicting how hype that outpaces technology leads to unrealistic expectations, followed by a period of ambivalence from a weary and disappointed market. Darwinian rules then force unsuccessful vendors to drop out while the strong emerge on top. Buyers and end-users become "enlightened" about which technologies are truly profitable and productive, leading to a period of stability and productivity.

In the illustration below, I take liberties with the Hype Cycle and apply it to e-learning's history -- with the obvious benefit of hindsight.

The Triggers
As corporate trainers become intrigued by Internet technologies, technology triggers hit. One such trigger occurred at the 1996 ASTD conference, where a single workshop devoted to "Intranet-based training" was mobbed by more than 500 participants. The one-hour session led directly to a series of articles, speeches, million dollar contracts and an unknown number of additional idea viruses. In 1997, Elliot Masie launched TechLearn and rightfully became the



torchbearer for the industry, while a group of ex-Oracle executives founded Saba and forcefully directed the collective dialogue around enterprise-wide learning management.

The Peak of Inflated Expectations
The height of expectation, of irrational exuberance, was clearly marked by the unprecedented success of DigitalThink's IPO and record-high stock price. The focus on "learning portals" and content aggregation was also the rage at the time, with only a few critics (most notably Gartner's Clark Aldrich and Saba's Grant Ricketts) pointing out the problems around an unproven B2C market and a lack of differentiation and barriers to entry. This was also the time when Cisco's John Chambers loudly proclaimed that e-learning would be the next killer app.

Then, 2001 brought the harsh, steep slope of unfulfilled promises. Several high-profile providers shut their doors while many more announced large-scale layoffs in the face missed revenue targets and crashing stock prices. E-learning advocates retreated to the more defensible ground of "blended learning."

Despair
This year will go down as the Trough of Despair with the announced merger of SmartForce and SkillSoft signaling both the bottom of the curve and the beginning of something better. Though perhaps a sign that even the giants are stumbling, the new company creates the first $100 million revenue vendor, with a deep pool of talented employees and a very real business model.

Enlightenment?
When will we experience enlightenment and productivity? I believe there's an inherent symmetry to the technology curve; if it took four solid years to move from the triggers to the peak, it could be 2004 or '05 before we truly reach a time of healthy, manageable growth. After all, we still need more supply-side consolidation and must ride out the impending customer confusion related to our cousin-disciplines: knowledge management (KM) and employee relationship management (ERM).

Despite the current climate, the e-learning hype cycle tells us that just as the highest highs were unsustainable, so too are the lowest lows. Recent events should only serve as reminders that we need to be smart and rational. Despite setbacks, there have been countless individuals at organizations like IBM, Cisco, GlaxoSmithKline and the U.S. military that have achieved incredible cost savings and increases in productivity through e-learning. The hype cycle enables us to put confusing quarterly and daily events into their proper perspective. I'm hopeful that in the near future, industry leaders and buyers alike will take take their focus off Wall Street and move it to well designed and appropriately targeted programs, where the productivity gains have been very real.
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Do Clark Aldrich, Jay Cross, and Stephen Downes think we've hit bottom? What do these experts and eight other Gurus think? Now Read the e-Learning Hype Cycle Debate>>