Digitalthink Case Study
Digital think is a company that was founded in 2006, by Umberto Milletti and two of his friends. They observed that the changes in technology going on in the mid 90s, was changing how companies around the world were doing business. Increasingly, they saw that employees of companies around the world were using software applications to make themselves more productive. Milletti and his colleagues wanted to create their own kind of software that would help make companies more productive.
Milletti and his colleagues formed a company that provided e-training and e-learning services to companies through software applications that could be brought by companies and downloaded off of the Internet by their future employees. They called this company DigitalThink. DigitalThink targets their e-training and e-learning services to companies that have many locations around the world. These types of companies include rental car companies, airlines, hotels, retail chains, banks and many more.
Many of these companies send new employees to centralized locations to get the training they need to prepare them for their new job with the company.
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This type of training is classroom based and can take days, weeks, or months to be completed. This type of traditional training is time consuming and costly to companies that have to send thousand of new employees to centralized locations frequently throughout the year. DigitalThink’s e learning and e-training services allows companies to save time and money. New employees can train from their own computers at their own homes.
They can also learn at their own pace increasing the effectiveness of the training. The training programs teach the new employees specific skills and facts that they need to know to do the job and then places the new employees in real live situations that they will encounter on the job. These real live situations allow new employees to solve problems and situations that they will face on the job. In short, it prepares the employees for their new job. So far DigitalThink’s methods have shown to reduce training time by fifty percent and costs by almost sixty-five percent.
The central problem for DigitalThink is the size of its target market. DigitalThink targets big companies that have to send thousands of employees throughout the year to centralized locations to get training. Many of these companies have locations all over the world and include companies that are in many different industries such as car rental companies, hotel/retail chains, banks and many more. DigitalThink targets the largest companies in the world or the Global 2000 companies since according to this case these companies have the “critical mass needed to justify large training programs.
Currently, DigitalThinks customers include thrity one companies in the fortune 100 and four hundred and fifty organizations in over one hundred and fifty countries. Many of DigitalThink’s current customers are companies in the above-mentioned industries that have to use massive instructor led classes in centralized locations to train new workers. This brings us to the central problem, is DigitalThink’s target market large enough for the company to grow and expand? There are millions of companies around the world and DigitalThink wants to limit its market to only 2000 companies.
Is this really a big enough market for the company to grow and expand? Since the Global 2000 companies are DigitalThink’s target market that means that they only have a potential of 2000 clients. In reality, not all of the Global 2000 companies will want to use DigitalThink’s services. The reasons for this is include that not all Global 2000 companies send their employees to centralized locations for training, so these Global 2000 companies have no use for DigitalThink’s products.
Another reason is that right now DigitalThink seems to be the only real competitor in this market, but that doesn’t mean it will stay this way. Eventually other companies may enter the e-training market taking current and potential customers away from DigitalThink. So it would seem that DigitalThink’s market is limited. It will also be hard for DigitalThink to expand its market to smaller companies because many of these companies are privately owned and don’t send their workers to centralized locations for training mainly because they only have one location.
In the United States for example, there are a total of twenty-two million small businesses and these small businesses make up over ninety-nine percent of employers (Longley). This is a huge potential market that digital think is missing. Even though DigitalThink says large companies that depend on massive instructor led training efforts at centralized locations are the only companies that make sense for their products this may not be fully true. After all, all new employees need to be trained.
Looking at the current market for DigitalThink they seem to be in a good position. The demand and market for e-training and e-learning seems to be growing. In 2005, the global market for these services grew by a hundred percent and worldwide e learning has become a thrity-three billion-dollar market. DigitalThink has gone from a company of only three employees to a total of four hundred and the company was also recently listed as the twenty-second fastest growing technology company out of five hundred.
This is obviously a growing market with growing demand, which means DigitalThink has a huge opportunity. Also, according to the case DigitalThink is leading e learning movement and it does not mention specifically any competing firms suggesting that they have no serious competitors that are of equal size that will threaten their growth. Being a leader in a market is another opportunity for DigitalThink, since competitors will have a hard time taking potential clients away from the industry leader, DigitalThink.
One of DigitalThink’s strengths includes their ability to offer a variety of products to their customers making their products and services very flexible to the different needs of their customers. All companies have different needs when it comes to training their employees. Due to this, DigitalThink offers a variety of products to meet these different needs and they include ready made courseware, custom courses, comprehensive learning management systems that include virtual classrooms, content management and consulting services.
These different e-training product options help fit each of their customers unique needs. Another strength of DigitalThink is that their e-learning courses have proven to save companies money. As mentioned earlier the e-learning or training programs teach the new employees skills and facts that they need to know for the job and then they put the employee in real live situations so that they can develop the skills and facts they just learned.
It gives them hands on experience, so that when they start the job they already know what to do. Not to mention the fact that these courses can be delivered to the learner through a CD rom, the companies intranet or through a web browser on the Internet allowing the learner or new employee to train from his or her own home at his or her own pace making the learn experience more effective or efficient.
Circuit City has used DigitalThink to train over 40,000 of its employees and this has saved them over hundred million dollars, while improving customer satisfaction and sales. It is obvious that one of DigitalThink’s strengths is to come up with an effective e-training tool that allows companies to avoid sending employees to centralized locations for training while adding to the effectiveness of the training. This ability is one of DigitalThink’s most important strengths. Some of DigtialThink’s threats include increasing competition.
Right now it doesn’t seem like there is another company in the e-learning industry that is as big as DigitalThink, but as the market grows and expands that could change. If firms start going after the same market as DigtialThink with the same products how does DigitalThink differentiate itself, so that they don’t lose market share? Can they differentiate themselves? Another threat is that the e-learning market will not keep growing at a hundred percent a year when it slows how will DigitalThink keep growing its revenues?
Once DigitalThink provide its e-learning services to all the companies that want it and the growth of the market slows so will DigitalThink’s growth and if competitors do enter the market, which they will since the market is growing so quickly at the moment, they may even steal clients away from DigitalThink shrinking the companies revenue overall. DigitalThink’s biggest strength is providing large companies with e-learning tools that not only save the companies money, but are also more efficient and effective than classroom learning since the learner can learn from the comfort of their own home at their own pace.
The problem with their strength is that their product only seems to make sense to large companies with many locations like rental car firms, hotel chains, airlines and retailors and this is their biggest weakness. The main goal of DigtialThink’s e-learning services is to save companies’ money by saving them from having to send thousands of employees to centralized locations every couple of months. This means that DigitalThink only reaches the largest companies in the world missing out on many small businesses that only have a few localized locations and don’t need to send their workers for training.
This is a huge market they are missing out on because small businesses make up millions of companies around the world and large corporations only make up a few thousand. Based on the above analysis there are a couple of alternative strategies for DigitalThink. One alternative is to change the companies target market to include not only large Global 2000 companies, but also target small businesses. As mentioned earlier over ninety-nine percent of all employers in the United States are small businesses.
There are almost twenty-three million small businesses in the United States alone; they also create seventy-five percent of new jobs in the United States economy. It is obvious that small businesses represent a huge market. Even though DigitalThink’s main goal is to save companies money by saving companies the trouble of having to send their employees to centralized locations, DigitalThink still specializes in creating training software. Sales at a locally owned convenience store are the same as sales at large convenience store like CVS.
The locally owned convenience store may only have one location, but they still need to train new employees and if they had an e-learning program that their new employees could download to train with, it would save the local convenience store time and money too. Instead, have an already trained employee stop doing his or her job to teach a new employee how to do everything, the new employee could come into work already trained by taking the online course provide by DigitalThink. DigitalThink can bring benefits to small companies as well as large and this expands the market that they provide their services too.
The pros of this are obviously a bigger market to sell products to, which means more revenue and profit potential. The cons with this alternative are that DigitalThink provides ready-made courseware, however, smaller businesses may need e-learning programs that DigitalThink just does not have, in short they may need custom software to fit their specific needs. It would not make sense for Digital think to make a whole new training program to fit the needs of a small business that only trains on person a year.
Another alternative is DigitalThink can expand its target market by offering e-learning for certifications. After all many companies want to hire employees that have certain certifications. By providing e-learning for certifications DigitalThink is still doing what it does best and that is training new workers and at the same time they are also expanding their target market because many times people go out on their own first to get certified in something then look for a job. For example, if a person wants to become certified as a real-estate sales agent they have to take classes and pass a test.
DigitalThink could provide these classes online and help person prepare for the test for a fee. The pro with this alternative is again it expands the potential market that DigitalThink has, which will help the company to grow its revenues and profits. However, many certifications require students to get hands on experience with the classroom learning, not to mention that each state in the United States has its own qualifications and regulations for certifications and the same is true for different countries.
For example, to become certified as a polite a person has to have a certain amount of flight experience. Not to mention that many certifications require students to pass a written test that DigitalThink most likely could not administer on its own leaving customers on their own to find a place to take the written test. Another alternative strategy that DigitalThink can take to solve the problem of its small target market is it can use its e-learning to help prepare students for standardize test. People take standardized test in high school and college.