Analyzing the Australian EdTech Ecosystem

Analyzing the Australian EdTech Ecosystem

In this discussion from the Melbourne EdTech Summit, Colette Rogers discusses the education trends evident in Deloitte’s EdTech census from 2020 and previous years, as well as her views on the current and future state of the industry.

David Linke, Managing Director of EduGrowth, sits down with Colette Rogers, National Education Sector Lead Member at Deloitte Digital, to dive into the results of Deloitte’s EdTech census. Colette helps to analyze the data in light of previous years’ results as well as the effect that Covid-19 has had and may continue to have on the education sector for years to come.

The highlights of their discussion follow, with a full transcript at the end:

The maturing EdTech ecosystem in Australia

David Linke and Colette Rogers, in a pre-Covid interview, reference Deloitte’s EdTech census results from 2017 and 2019. The results then, and now during the pandemic, show signs of a maturing EdTech market in Australia. They break down exactly what it means for the field to be maturing:

  • The number of EdTech businesses in Australia has risen from 350 to 600 over the past three years.
  • “Scale ups” are becoming more prevalent than startups.
  • 75% of Australian EdTech businesses have both local and international customers.
  • Organizations are moving away from primarily seeking capital to now seeking customers.

Able to shift their focus away from raising capital, many EdTech firms are now working to roll out better and more attractive products to customers. With a financial cushion established, they can enter into an “ideas” phase and be more inventive.

“The thing that’s driving the adoption of education technology, is really the expectations of students of a better experience, the expectations of academics, the expectations of researchers of a better experience.”
Colette Rogers, Deloitte

EdTech bracing for global changes

Colette Rogers and Deloitte have a very positive outlook for the future growth and development of EdTech, both in Australia and abroad. The drivers for this growth include:

  • An estimated 500,000,000 more students worldwide by the year 2025.
  • A global skills gap to be addressed through educating the upcoming workforce.
  • An increasing rate of global population growth.

Colette explains that EdTech can help assuage each of these issues in turn by giving more people access to education, from more locations globally, and at a more affordable cost than ever before.

“It’s really important to think about population growth, particularly as it relates to developing countries, and the potential of EdTech to provide much greater access to education in those countries.”
Colette Rogers, Deloitte
EduGrowth Melbourne EdTech Summit - Colette Rogers speaking

EdTech during the Covid-19 pandemic

Deloitte’s EdTech 2020 census is ongoing, but Colette shares a few of the initial trends from the data coming in:

  • The three major themes in 2020 are customer acquisition, talent, and expansion.
  • Expansion is the newest trend to reach the top of the census results, and is likely a result of companies going online during the pandemic.
  • Expansion is evident both within Australia and from Australia out into the larger world.
  • Due to maturation of the industry, only 10% of companies cited funding investment as their top priority, down from 35% in 2019.

The significant changes in the results of the 2020 census reflect both the maturing EdTech ecosystem in Australia as well as the influence of the Covid-19 pandemic. Since only 16% of companies plan to focus on raising capital in 2021, the expectation is that many will be rolling out new programs and features in the coming months, signaling a potential explosion in the amount and diversity of EdTech products on the market.

“Established EdTech organizations have thrived during COVID, and have been really expanding and adding their customer base, and have actually found it easier to acquire new customers.”

Colette Rogers, Deloitte

The future of education and EdTech

The Covid-19 pandemic has caused an unparalleled upheaval in the global education space, both displacing old trends and ushering in new ones. Colette discusses some of the effects to education that may linger even after Covid has passed:

  • Many more parents are involved in their children’s learning now than before.
  • Teachers and students, both, are seeing renewed efforts to support learning and education resourcing from administrations and governments.
  • School systems are reviewing the role of technology in education and may adopt or adapt aspects of the past year’s educational process into future curriculums.

It may be impossible to predict how education will look and function after the Covid-19 pandemic has passed. But it is likely that many of the innovations this year has catalyzed will not be left to the wayside in the future. If anything, the past year has opened doors to new and different ways of relating to learning, and especially to learning with EdTech.

“It’s really changing the relationship between parents and children’s learning because it is happening in the home, and the level of support and types of support that children and parents need.”
Colette Rogers, Deloitte

Full Transcript

David Linke:

We should get the first session underway by exploring the Australian sector as a whole, with Colette Rogers, partner at Deloitte. Colette leads Deloitte’s national education practice, and has worked with universities and TAFE institutions on a range of complex programs initiatives in response to strategic change and policy reform impacting the sector. Welcome, Colette.

David Linke:

We’ll watch the video and then we’ll come back and chat after that.

Colette Rogers:

In 2012, Deloitte published a report that predicted that digital disruption was going to have a significant impact on the education sector in 2015 to 2017. I think that certainly occurred in terms of education providers seeking to understand their digital strategies, putting in place their ICT infrastructure and really building in their core learning management systems and thinking about online delivery. I think what we’re seeing now is the continuous evolution of education technologies and a real maturing of the market, and you can very much see that in terms of the growth of the EdTech sector, that innovation and energy in it has really come a long way since we did the survey in 2017.

David Linke:

And this year we’ve seen a great change in our census themes, and some of the things that we’ve been building have been born out by the data and we’re seeing that the EdTech ecosystem is significantly growing. It’s maturing. We’re seeing the companies within it are maturing.

Colette Rogers:

The thing that’s driving the adoption of education technology, is really the expectations of students of a better experience, the expectations of academics, the expectations of researchers of a better experience. In terms of education providers, what we’re also seeing is a maturity in terms of their understanding of the EdTech market, and so they’re looking at their education technology system holistically.

Christine Axton:

A key insight this time around in the 2019 census, is a greater proportion of organizations with higher levels of revenue, fewer startups, more scale-ups and greater progress, so far more activity, as opposed to ideas phase or the start-up. In the early stages of the market, you typically see a lot of organizations very focused on trying to raise capital, whereas in a more mature market, you start to see other challenges coming through, and that’s definitely evidenced in this census.

David Linke:

One of the interesting themes as I’ve traveled around Australia talking to EdTech entrepreneurs, is the balance between raising capital and finding customers. And there seems to be a distinct move from finding more and more capital, and instead actually putting all of that energy into finding more customers. The idea of born global companies is a fantastic idea. If you’re a successful Australian EdTech company, you are going to be delivering products to offshore students.

David Linke:

There’s been a really interesting change in this, and what we’re seeing is that the things that are most important to EdTech companies to grow is really the talent that they can access. So there is a really nice opportunity in the innovation sector across Australia, where if you get talent developed in one sector it’s translatable, so highly skilled employees will help the EdTech sector grow.

David Linke:

The 2019 data shows a change in the way that entrepreneurs are getting their support, especially in the EdTech space. Traditionally you’ve been relying upon advisory boards or even formal boards, but they are really heavily invested people, sometimes the investors in the business themselves, which makes it hard for the entrepreneur to get independent advice that may not have implications or ramifications for them. So they’re wanting informal structures to connect with peers, to connect with colleagues on a regular basis, people who are going on the same journey as them.

David Linke:

We’ve got a slide which gives us the key findings from the 2019 data, so maybe you might want to just talk us through those key findings.

Colette Rogers:

I think a lot of the sentiments and insights still hold true, but definitely a pre-COVID video. We ran a 2017 national EdTech census, and then we ran another one in 2019. And between 2017 and 2019, we really did see a maturing of EdTech organizations in Australia. And one of the key things just on the volume metrics, is there was a near doubling of numbers of EdTech organizations. In 2017, there were 350 EdTech organizations. In 2020, we’re looking at more around the 600 number. But we also saw a greater number of organizations that we would define as scale-ups.

Colette Rogers:

We mean they’ve really moved beyond the startup stage. Their progress from just having a concept to actual delivery of one or more education services that has gotten established customer bases. And they’ve really got a regular ongoing monthly revenue stream. Second, the future of work was becoming more of a focus for some EdTech solutions. The percentage of organizations, for example, focused on corporate EdTech solutions, increased from around about 24% in 2017 to almost 40% in the ’19 survey. And also the percentage of, really interesting, organizations focused on vocational education solutions, increased from about 30% to 40%.

Colette Rogers:

We’re really seeing that focus on work-integrated learning and employability coming through in EdTech solutions. I think the third insight there, global expansion, was really top of mind. The majority of EdTech organizations, about 75% of them, had a customer base outside of Australia. And the key challenges on that final point are around the shifting to and focusing on international overseas markets, but also finding talent.

David Linke:

So we’re seeing a maturing of the market. We’re seeing essentially a doubling of the market. We’re also seeing a global focus. I was wondering if you’ve got a bit of an insight into what some of those drivers are that are driving that. Is it local demand? Is it international demand? Is it a combination of both?

Colette Rogers:

It is a combination of both. It’s important with EdTech to note that the global context is really important and also the global outlook is really positive. And the drive is twofold. They’re quite simple drivers in a way. And just to quote a couple of statistics for Deloitte Access Economics, by 2025, which isn’t too far away, there’ll be half a billion more students than there are today, and that’s globally and that’s across school and tertiary education. And then I think the other driver is addressing the skills gap.

Colette Rogers:

So if I talk about the Australian context, full shortages will be 25% higher than they are today, and that’s if we continue on our current path. To address the skills gap, we really need to continue to engage in learning and acquire new skills. So increased demands locally and globally, and EdTech offers a solution to this demand. It’s an important context for Australia, an important context globally, but it’s also really important to think about population growth, particularly as it relates to developing countries and the potential of EdTech to provide much greater access to education in those countries.

David Linke:

The Australian EdTech ecosystem is connecting into those mega global trends, so we are definitely seeing a movement globally into this idea that workforce and education have really connected in this future of work in the workforce space. We’re also seeing a desire to transform within institutions as well. That’s certainly happening globally, and Australian institutions are at the forefront of some of that. We have incredible long decades and long reputation for distance education and online learning, so being able to convert that into a digital space is a natural progression and so forth.

David Linke:

I want to spend the next few minutes talking about what we are seeing from a COVID perspective in the latest data that we’ve collected and then maybe some of the things that you’re starting to see in the 2020 data.

Colette Rogers:

We’ve run the EdTech census 2020 just over the past few months during COVID. Early findings show that the big theme coming through for 2020, not surprisingly, is expansion. The top three focus areas for EdTech organizations were finding more customers, not dissimilar from what we’ve seen previously, and the other was talent. For almost half of the organization survey, they’re looking to hire five or more people. But I think the third focus area comes through. It’s new and it’s really focused on expansion and it’s expansion in Australia and also outside Australia.

Colette Rogers:

Interestingly, there was less of a focus from EdTech organizations in terms of seeking funding, only 10%. And again, that goes to the maturity of the market, only 10% highlighted funding investment as the biggest challenge, and only 15 or 16% said they were focusing on raising capital in our next 12 months, which is a really big drop, it was more like 35% in the 2019 census.

Colette Rogers:

Just on that last one to be specific, 16% of EdTech organizations said they were focusing on raising capital in the last 12 months, so in the period including COVID, and that’s down from 33% in the 2019 census. So that’s quite a significant drop in terms of organizations focusing on raising capital during the COVID period.

David Linke:

It would be interesting to test whether or not that’s a perception that’s going to be too hard, or whether it’s a desire to get on with doing business.

Colette Rogers:

My hunch overall is that  But potentially it’s been tougher to get new startups up and running during this period. That might just be a COVID-19 blip, or there might be something more fundamental at play in terms of a two-speed economy starting to emerge when it comes to Australian EdTech orgs.

David Linke:

I think we might end up with a two-speed economy, but let’s not preempt that just at the moment. I wanted to spend a little bit of time thinking about: what do we think some of the bigger steps might be in this post-COVID world? What do you think institutions will land in terms of their digital transformation or adopting new technology platforms? What do you think their experience may have been from the last six or nine months online and maybe who knows how long that goes?

Colette Rogers:

I’m trying not to use the word accelerant in the context of COVID, because it’s a little bit overused at the moment, but I think it’s pretty obvious that COVID-19 has acted as an accelerant to drive innovation. In higher education we’ve seen universities and private providers, the rapid transition to the use of digital technologies, and really prioritizing investment around that. Not just for digital learning, although I think that has been the focus. But also really investing in EdTech solutions that provide better support to students across the end-to-end life cycle, so across the student experience, and then also schools have obviously been playing a pretty holistic and rapid transition to remote learning.

Colette Rogers:

We’ve seen lots of improvements along the way. All of this will be subject to more formal evaluation as it should be, but I think the changes have and actually will be pretty profound. I think particularly when we’re talking about schools, it’s really changing the relationship between parents and children’s learning because it is happening in the home, and the level of support and types of support that children and parents need. I think it’s changing the types of support the teachers and trainers and academics need in terms of how to deliver learning. I think it’s also changing the way that school systems are starting to review the role of education technology.

Colette Rogers:

I’m not saying that it’s the end of the physical campus, but I think it does mean that many students and teachers or academics who’ve been engaged in it have been taken away, who haven’t before and they might not be going back. I think across the learning continuum, a high-blend of quality learning analytics will be increasingly important. These were all things that were here before, but for higher education, a big future focus may be on hybrid solutions that better support work-integrated learning, and employability, and better connectivity with employers. I think in schools the future focus will be on equipping the teacher profession with the capabilities needed to effectively deliver remote learning.

David Linke:

Thank you so very much for the insight from the data that we’ve been working on collaboratively over the last few years. It’s a really important point that I acknowledge and thank you and Deloitte’s partnership as a strategic partner of EduGrowth.