17/08/2011 - 10:10

Moodle, ReadOn make waves in education market

17/08/2011 - 10:10

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HANDS up if you can name the Perth software company whose product is installed at 54,000 sites globally and has an estimated 44.6 million users?

The answer is Moodle, which has developed an online course management system used in 209 countries and translated into nearly 90 languages.

In Australia, Moodle is used at 45 per cent of universities and hundreds of schools and Tafe colleges.

The company also has numerous corporate clients, including Google, Shell, BP, Honeywell, Cisco and even the British Monarchy, which uses Moodle for training its household staff.

Former Curtin University staffer Martin Dougiamas, who admits he was “quite shocked” by its uptake, developed the software.

One of the curious aspects of Moodle is that nobody knows for sure how widely it is used.

That’s because of its unusual business model – it is open-source software, which means it is free to download. 

“It must stay free, that’s a large part of our success,” said Mr Dougiamas, who developed the software a decade ago to help educators create courses in an interactive and collaborative manner.

The product started to gain market traction in 2005, and the total number of registered and verified Moodle sites grew rapidly to a peak of more than 54,000 last year.

The biggest users include Open University in the UK, which has about 300,000 active students on its installation.

Beyond this group is an unknown number of users who have downloaded and implemented Moodle without bothering to register.

The business opportunities for Mr Dougiamas’ company, Moodle Pty Ltd, arise when users seek help implementing the software, and in areas like customising, integrating, training, certification, hosting and so on.

“There is a lot of change management. Users can spend up to two years changing their systems and procedures,” Mr Dougiamas said.

“That creates a lot of work, and the revenue from that dwarfs the cost of the software.”

However, Moodle doesn’t provide this support directly; that’s where its partner network comes in.

There are 53 accredited Moodle partners worldwide, some with up to 100 staff, providing services to Moodle users. In return, Mr Dougiamas’ parent company promotes them and, crucially, gets 10 per cent of their revenue as a royalty.

The official Moodle partners include Perth-based Pukunui Technology, and Adelaide-based e-learning technology specialist NetSpot, whose clients include the University of Western Australia, Monash, Flinders, La Trobe and other universities.

UWA announced in April that it would migrate 1,500 units from the competing Blackboard software to Moodle 2.0.

Moodle’s business model involves a mix of free and paid services.

For instance, the company employs about 20 developers in Perth, has a development team in the Czech Republic, and has contractors in Spain, Belgium, the US and New Zealand.

In addition there are many people in the Moodle ‘community’ who contribute to the product’s development for free.

“We get a lot of contributions, there is a huge community around it,” Mr Dougiamas said.

“I’d say there are about 200 developers who have a serious input.”

Moodle users can also obtain a lot of free support from members of the Moodle community, which is a diverse group of educators, students, developers, and administrators with an interest in supporting the software.

The size of the Moodle community is illustrated by the popularity of its conferences.

Last month, for instance, 520 people attended ‘Moodlemoot AU 2011’, a Moodle users’ conference in Sydney.

Challenges

Like many businesses in Perth, Moodle faces two major challenges presently.

“We have no connection to the mining industry yet we have to pay the higher costs that seem to flow from its growth,” Mr Dougiamas said.

“And it’s hard to find developers locally.”

Mr Dougiamas continues to seek local recruits but has also built up his international network.

That is likely to continue, with Mr Dougiamas evaluating an expansion of his European development office.

“My head has been overseas from the start,” he said.

Another challenge unique to Moodle is protecting its trademark, specifically, ensuring that only its accredited partners use the Moodle trademark to advertise their services.

“That can only be used with permission; that’s the main leverage we have,” Mr Dougiamas said.

“It’s very hard to enforce that, even though we have someone nearly full time on trademark enforcement. I think our business model is sound, we just need more people.”

The constant development and updating of Moodle’s software is key to its ability to compete.

A focus at the moment is developing mobile applications for iPhones and Android phones. Mr Dougiamas has also seen the software applied in new ways.

“In the US, it’s very popular in fire stations,’’ he said.

In that industry, firefighters use it to complete training modules while they are on duty.

Moodle is also customising its software to make it easier to use in primary schools. The funding for this development work comes primarily from the company’s own cash flow.

“I’m the kind of person who would always save up for things, I don’t like getting into debt,” Mr Dougiamas said.

Players

Another Perth success story in the education sector is ReadOn Software.

Jane and Phil Mangano started developing ReadOn Software nearly a decade ago to help their daughter deal with dyslexia.

It was a combination of the couple’s own skills – Mrs Mangano works in special education and her husband is an IT consultant – and was developed simply because they could not find any suitable products in the market at that time. 

After success with their daughter, Mrs Mangano started using the product to help other students improve their reading skills, and it has kept on growing ever since.

A key aspect of their success has been getting third-party endorsements and official accreditation, including Curriculum Online certification in the UK and Reading First school funding approval in the US.

They have also used industry awards programs to lift their credibility and awareness of their business.

Locally, this has included winning a WA Information Technology & Telecommunications Award in 2005, followed by an iAward in Sydney in 2006.

Mrs Mangano said getting exposure on a prime-time current affairs television program also provided a handy boost for the business.

The Manganos’ commercial strategy has involved appointing distributors in key markets, including the UK and the US.

They also moved into Singapore, after winning an Asia Pacific ICT award (APICTA) in 2007, which enabled them to get in front of the local dyslexia association.

“We’d been trying to get our foot in their door for quite some time,” Mrs Mangano said. 

“Winning awards has given us a lot of credibility.”

After several years of rapid expansion, the business has experienced a slow-down in sales growth over the past two years.

The Manganos have used this time to develop the next generation of their product, for the mainstream education market.

“We’re using the functionality in an ebook application. For us that’s a huge step,” Mrs Mangano said.

She said the business had taken a cautious growth path, resisting overtures from service providers and investors who approached them.

While the distributors are still selling their product, the Manganos have taken on extra work to bolster their income.

Mrs Mangano seems relaxed about that outcome – she might have foregone growth opportunities, but she has also avoided some of the business risks.

“Had we taken on investors, we might not have a business,” she said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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