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Company Perspectives
Our products and services are designed to link learning strategy to business strategy and to maximize human capital investments. With a comprehensive learning solution, comprised of high-quality learning resources and flexible technology approaches, we help our customers achieve sustainable and measurable business results. These solutions are designed to support all levels of the organization and can easily be adapted to meet strategic business initiatives, on-demand information needs and individual job roles.
SkillSoft Public Limited Company lays claim to being the largest e-learning company in the world. SkillSoft serves corporate clientele, offering Internet-based educational and instructional courses. The company offers thousands of software titles that cover a variety of topics, including leadership, customer interaction, human resources, finance, and information technology. SkillSoft serves more than 2,800 customers, marketing its products and services in more than 45 countries.
Origins
SkillSoft's development into the largest e-learning company in the world involved a number of business combinations undertaken by two principal businesses, SmartForce PLC and SkillSoft Corporation. The older of the two companies was SmartForce, a company formed in Ireland in 1989 under the name CBT Group PLC. Based in Dublin, CBT Group evolved into its area of expertise, starting its business life pursuing a more broadly defined objective than developing educational tools for corporate clientele. The company was formed to serve as a holding company for investment purposes, and for the first two years of its existence it acquired stakes in a number of companies involved in various industries. A turning point in its development occurred in September 1991, when the foundation for what eventually became known as SkillSoft first took shape.
The earliest antecedents of SkillSoft's business in the 21st century originated within SmartForce, the successor to CBT Group. In September 1991, CBT Group established an Irish subsidiary named CBT Systems Limited and an English subsidiary named CBT Systems U.K. Limited to develop interactive, information-technology (It) education and training software. A presence in the United States had been established a year earlier, forming what became known as CBT Systems USA, Ltd. At the time the Irish and English subsidiaries were formed, CBT Group sold or dissolved all its interests unrelated to It education and training software. From September 1991 forward, as CBT Group developed into SmartForce and SmartForce developed into SkillSoft, all revenues and operating expenses were attributable to interactive, It education and training software.
When CBT focused its efforts on It education and training, the global market represented $11.8 billion worth of business. The volume of business would triple during the next dozen years, providing fertile conditions to support the company's development into the largest of its kind in the world. To extend its geographic reach, broaden its capabilities, and add to the 44 titles of instructional software it marketed in 1992, CBT made a series of moves during the 1990s. In 1994, the company established, via an acquisition, CBT Systems Africa (Proprietary) Ltd., forming a direct sales presence in southern Africa. In November 1995, the company acquired a developer of interactive educational software named Personal Training Systems, and in May 1996 it acquired a German educational software company, CLS Consult, and its exclusive distributor in Canada, New Technology Training Ltd. The acquisitions provided a meaningful boost to CBT Group's stature, but they paled in strategic significance to a partnership forged at the end of 1996. In December, the company concluded negotiations with Street Technologies, Inc., a developer of technology that allowed the "streaming" of multimedia and other large data files, thereby permitting real-time delivery of the files over local- and wide-area networks, corporate intranets, and the Internet. Under the terms of the agreement, both companies began working together to deploy CBT Group's software over corporate intranets and the Internet, the focus of SkillSoft's endeavors in the 21st century.
The first phase of expansion led to substantial gains in CBT Group's stature. After five years of focusing exclusively on the It spending of its corporate clientele, the company had increased the size of its library, expanding from 44 software titles to 328 software titles that offered 1,250 hours of education and training. Revenues during the period swelled from less than $10 million to $66.3 million, as CBT Group, which boasted 1,250 corporate customers by the end of 1996, enjoyed robust growth by gaining the business of corporate luminaries such as AT&T, Compaq Computer, Wells Fargo & Co., and Sprint Corp.
Supported by a solid business foundation midway through the decade, the company's pace of growth quickened during the late 1990s as it more than doubled the size of its customer base and more than quadrupled the number of products it offered. By the end of the decade, the company offered more than 1,300 software titles to more than 2,500 customers. Revenues shot upward as a result, nearly reaching $200 million in 1999. CBT Group changed its name as it exited the decade, adopting SmartForce Public Limited Company as its corporate title, which led to a re-branding of its educational and training software to "SmartCourses." Under their new name, the software titles began to address topics outside the It field for the first time, widening their scope to include subject matters such as management skills and interpersonal skills.
Industry Consolidation
SmartForce entered the 21st century having recorded energetic growth during its first decade in the e-learning sector. The jump from less than $10 million in annual sales to nearly $200 million in annual sales was particularly impressive given the highly fragmented nature of the industry. The largest 15 vendors in the It training and education market accounted for only 20 percent of worldwide sales, with no company controlling more than 3 percent of the market. Because of the growth the company achieved during the 1990s, it could entertain playing an aggressive role as the industry consolidated, something that would happen during the first years of the new century. The largest companies in the business looked to take advantage of industry conditions, seeking to acquire smaller companies in a bid to gain a dominant position in a market largely up for grabs. It became a case of either acquire or be acquired for It training and education companies, and SmartForce, enjoying a volume of nearly $200 million, stood poised to figure as one of the consolidators in an industry whose ranks promised to be thinned by mergers and acquisitions.
As SmartForce prepared for a period of consolidation within its industry, it strove to become a more comprehensive competitor. Led by Greg Priest, who was named president and chief executive officer in December 1998, the company increased its commitment to developing a diversified product line. Throughout the 1990s, the company's focus was to "chase It training dollars," according to Priest in a July 19, 2001 interview with Investor's Business Daily, but he began emphasizing a more diversified approach as consolidation within the industry began to take place. Priest marshaled his forces to develop Internet-based training solutions that corporate clientele could use to improve sales tactics, facilitate new product introduction, and train employees about sexual harassment policies, among a variety of other topics. "We now sell to a much wider range in the enterprise," Priest said in his interview with Investor's Business Daily.
Equipped with a more diversified product portfolio, SmartForce began searching for acquisition candidates, intent on taking the lead in an industry set to consolidate. The company made its first move in 2002, announcing in January that it had reached an agreement to acquire Lexington, Massachusetts-based Centra Software Inc., a developer of e-learning software designed to help businesses with product development, employee training, and customer sales. The agreement for the $248 million, all-stock deal promised to give SmartForce a significant boost to its stature, but within months the merger was canceled. When financial results were announced for the first quarter of 2002, the figures failed to meet the expectations of Wall Street. Analysts had expected SmartForce to post a profit of five cents per share and revenues of $66 million. SmartForce announced it expected to lose between 26 and 27 cents per share and to post revenues of around $43 million. Centra fell short of expectations as well, blaming a decrease in corporate spending for its failure to meet Wall Street guidance. "They both missed their numbers so dramatically," said an analyst quoted in the April 3, 2002 issue of the Daily Deal. "They need to get their own ships in order before they can undertake a merger like this." When the termination of the merger was announced, SmartForce's stock declined 32 percent in one day, delivering a stinging blow to a company intending to make a bold move forward. In the wake of the scuttled merger, SmartForce and Centra opted for a scaled-back version of their union, striking an agreement that called for the companies to co-market each other's products and for SmartForce to re-sell Centra's knowledge-delivery and management software.
Merger of SmartForce and SkillSoft: 2002
Priest did not wait long after the disappointment of the Centra deal to strike again. In June 2002, the company announced it had reached an agreement to acquire SkillSoft Corp., a Nashua, New Hampshire-based e-learning company. SkillSoft had been formed four years earlier by Chuck Moran, who used $20 million in venture capital to start the company. Moran took SkillSoft Public in January 2000 and raised $40 million from the initial public offering (IPO) of stock. An additional $88 million was raised in a secondary offering in July 2001, adding to the funds at Moran's disposal to build SkillSoft into a leading competitor in the e-learning sector. By the time the merger with SmartForce was announced, SkillSoft had developed a strong reputation as a developer of programs used to hone management skills, striking Priest as an ideal business combination for his company. Under the terms of the proposed merger, Priest was to become chairman and chief strategy officer of the combined company and Moran was to assume the duties of president and chief executive officer, with SmartForce shareholders slated to own 58 percent of the company and SkillSoft shareholders to own 42 percent of the stock. Technically, the transaction was structured as a merger of SkillSoft into a newly formed subsidiary of SmartForce.
The merger was completed in September 2002 in a stock deal valued at more than $500 million. With corporate headquarters in Dublin and North American headquarters in Nashua, the company stood as the largest e-learning company in the world, offering more than 5,000 courses and 2,500 digitized books in 15 languages. The company operated under the SkillSoft name following the merger, legally changing its name to SkillSoft Public Limited Company in November 2002.
Although the merger created a formidable force in the e-learning industry, it also ignited considerable controversy. In November 2002, SkillSoft announced it would delay filing its third quarter financial results and it would have to restate SmartForce's earnings for at least three years. At issue was the manner in which SmartForce recognized its revenue, specifically the booking of revenue from software re-sellers before the company received payment. The problem prompted the Securities and Exchange Commission (SEC) to launch an investigation into the matter in February 2003, beginning a period of scrutiny that would drag on for several years. The investigation cast a cloud of uncertainty over the company--the SEC's Boston office recommended civil action against the company in mid-2005, according to the July 12, 2005 edition of the Telegraph. Presuming the conclusion of the investigation did not harm SkillSoft in the long term, the company could look forward to a promising future. In a consolidating industry, SkillSoft took an early lead, establishing itself as a dominant force in the growing e-learning industry. In the years ahead, further bold moves would be required to keep the company ahead of the pack, as it endeavored to increase its share of a fragmented market.
Principal Subsidiaries
SkillSoft Corporation; SkillSoft Ireland Ltd.; SkillSoft UK Limited (U.K.); SkillSoft Asia Pacific Pty Ltd. (Australia); Books24x7.com, Inc.; SkillSoft Finance Limited (Cayman Islands); CBT Technology Limited (Ireland); SkillSoft Canada Limited; SmartForce Business Skills Ltd. (Ireland); SmartCertify Direct, Inc.; SkillSoft Deutschland GmbH (Germany); SkillSoft New Zealand Ltd.; SkillSoft France SARL; SmartForce Benelux B.V. (Netherlands); SkillSoft Asia Pacific PTE Ltd. (Singapore).
Principal Competitors
Canterbury Consulting Group, Inc.; Global Knowledge Training LLC; The Thomson Corporation.
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