I feel a need to chime in. I think the whole e-learning space has gone through an evolution in the last 4-5 years, and we've created a four-stage taxonomy to describe it (www.bersin.com/stages).

In stage 1 (Getting Started) organizations adopt e-learning to save money. And yes, e-learning does reduce the cost per delivery of instructional hour. But we now have data to prove that in reality e-learning does not save money, it increase reach and range. Costs which were variable (instructors) become fixed (LMS and infrastructure), allowing greater reach - but total costs dont go down. Most organizations spend a year or two in this phase and they often start with catalog programs.

In stage 2 (Expansion) organizations expand, they build lots of custom programs (beyond the typical catalog content) and start implementing blended programs. They realize they need an LMS, so they bite the bullet and implement something. Yes, the LMS market is evolving and LMS systems do not do everything, but they do manage learning programs well. Here they find that the demand for online content far outweighs capacity and organizations start to realize that much of what they build is not being consumed.

This leads to stage 3: (Integrate and Align). In this stage the organization now realizes they have so much content available that it has grown out of hand, and they spend time on competency-based learning, more focused job-related content, integration with the performance management process, and perhaps the implementation of an enterprise-wide LMS. This is the toughest stage, and I think most mature organizations are here today. At this stage organizations realize that their e-learning programs are more than programs, they are "content" which can be reused and repurposed for many uses. They also realize that the traditional concept of an online course must be complemented by communities of practice, coaching, and other forms of online support.

We call Stage 4 Learning on Demand. This is the stage which vendors like to write about but few organizations have yet reached. At this stage companies have to build or buy a true content management system and they develop standards for content development. These standards enable searchable learning and the deployment of small pieces of content, rather than complete courses. The problem most organizations have today is that they are locked in stage 2 or 3 and find that it will take 2-3 years to "unlock" their content to get to stage 4. Nevertheless I believe this is inevitable, and we talk with many organizations working hard right now to implement an on-demand learning model.

Throughout these stages, vendors tend to try to fit their products and solutions. Some vendors try to stay true to the market they serve, others try to create visions of reaching across all four stages. For each stage there are challenges and opportunities, and frankly I have not found any organization that can jump from Stage 1 to Stage 4 in less than 3-4 years. I recommend anyone trying to understand all these trends to read our report, it is designed simply to help people understand this complex space and form a basis for making decisions.