A Virtue of Necessity

With schools scrambling to teach children during Covid-19 lockdowns, teachers and parents discovered the value of educational technology. International companies are already finding a foothold in this rapidly growing market.

September 2021

As the full force of the second wave of coronavirus hit Germany in late 2020, regional and local authorities throughout the country had to close schools and quickly find remote-learning solutions. One supplier that was ready to meet their needs was Norway-based itslearning, whose comprehensive lesson planner helps structure curricula, streamline educational processes and manage record keeping.

Last December, Germany’s third largest regional state, Baden-Württemberg, signed a deal with itslearning’s German subsidiary to deliver a learning management system for up to 1.6 million teachers and pupils. And in January 2021, the municipal government of Berlin formally signaled its intention to work with the company. When the ink is dry on the agreement, it will mean the Norwegian company will serve 5 of Germany’s 16 regional states.

“Our platform can adapt easily to the individual curricula of Germany’s regional states, which are the basis of the curricula of many thousands of schools,” says Peter Sidro, key account manager at itslearning’s Berlin office. “Another main selling point are our professional servers, which can meet the demand for data capacity in Germany.”

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A lucrative market

Germany spends a lot on public education – approximately EUR 147.2 billion or 4.2 percent of its GDP. Since 2010, the sector has enjoyed annual gross value-added growth of around 3.6 percent, outpacing the overall economy, which grew at 3.4 percent. Worldwide, educational technology or “edtech” accounted for only 2.6 percent of total education spending in 2019, but the amounts spent on digital solutions are expected to more than double by 2024. Longer term, the edtech market could be worth up to USD 2.7 trillion.

A digital pact for schools

Austria-based Fox Education is another edtech company seizing the opportunities currently arising in Europe’s biggest learning market. Its collaboration tools SchoolFox and KidsFox for schools and kindergartens, respectively, facilitate the exchange of texts, pictures, short messages and contact details between teachers, parents and students, while also providing cloud storage, video conferencing and group chat. “German schools are prohibited from using WhatsApp but need the functions of modern communication tools,” says Fox Education CEO Stefan Siegl.

Fox Education was launched all over German-speaking Europe in 2015, with Germany becoming its main market last year. Hundreds of new contracts were signed between the company and German municipalities during 2020. “The Digital Pact for Schools, under which Germany is making more than EUR 5 billion available over a period of five years to bring schools’ infrastructure into the digital age, is a key underlying factor for the growth in demand for software solutions,” Siegl explains.

The Bottom Line

International firms have profited from the edtech boom in Germany amid coronavirus school closures. Government initiatives and a shift in public attitudes suggest the market will continue to expand in the longer term.

joint CEO of HolonIQ

What advice would you give an international edtech company seeking to enter the German market?

You will be pitching to people who demand evidence of efficiency, so the strongest sales argument is evidence of your tool’s impact and satisfaction levels. If you can show that your solution has a proven track record in other markets, you’re already ten steps ahead of your competitors. By sector, I think it’s especially worthwhile pitching solutions for workforce upskilling, as reflected by the ample funds and investment momentum we currently observe in that area.

Procurement shifts

Education is the responsibility of the 16 regional states that make up the Federal Republic of Germany. Several regional states launched pilot projects last year for centralized procurement, which means edtech suppliers could be signing blanket contracts with states’ ministries of education rather than hundreds of individual schools.

Beth M. Havinga, a digital education solutions consultant at Berlin-based Connect EdTech, is confident that “Covid-19 has been strengthening the political will for change.” And she points to another interesting trend: “The rapidly growing tutoring sector, driven by parents’ perception that public schooling alone doesn’t sufficiently prepare their children for the job market.” In 2018, German parents spent EUR 6.4 billion on learning aids and private lessons.

Digital makes learning fun

Johannes Fischer, GTAI senior manager for the digital economy, knows that Germany’s federal system can seem rather daunting to foreign companies seeking to enter the market, and offers reassurance: “There’s a lot of momentum in the German edtech market, and GTAI is well positioned to bring together novel solutions from abroad and those who make procurement decisions in Germany’s educational sector.”

The boom in digital education tools is a virtue born of necessity, Fischer adds, predicting that it will continue unabated after the pandemic. “There’s every reason to think that we will win the battle against Covid-19, but the changes in German education are here to stay. Germans are very diligent when it comes to education, and they’ve discovered that digital solutions are not just useful for better learning – they’re also a lot of fun.”

How does Germanys education system work?

Germany has a federal system in which the national government takes a backseat on educational policy in the country’s 16 regional states. This educational policy can vary considerably from place to place. School attendance is mandatory, and optional kindergarten instruction is provided for children from shortly after birth until the age of six. Elementary education runs from ages four to six or nine. This is followed by lower secondary education, designed to teach basic general knowledge, and five types of upper secondary education, which range from vocationally focused to university-track instruction.

Over one-third of Germans obtain tertiary degrees, and MINT (mathematics, informatics, natural sciences, and technology) subjects are more popular than in any other OECD country. Germany is also famous for its dual vocational education and training system, which combines theory with training embedded in a real-life work environment (see also page 39). All told, Germany spends EUR 310 billion on education, research and science – and EUR 1,182 per capita on schools, universities and other educational establishments.