Much is heard about the cultural and organisational barriers to e-learning but there are also many technological challenges, not least whether to locate the technologies that power e-learning inside or outside the company.

At first sight, the obvious choice for any large organisation with sufficient IT expertise is to host their e-learning system internally. This makes sense from the bandwidth point of view as multimedia-laden courseware requires fast, reliable network connections and is ill-suited to today's public internet. Running it internally also allows e-learning to be linked into human resources and other internal systems.

However, experts say there are also advantages in handing over some of the burden to an external provider using the fashionable application service provider (ASP) model. In an era when organisations are encouraged to outsource functions deemed non-strategic, in-house training makes an easy target.

"Long gone are the days when companies had huge internal training departments with their own materials," says Mike Theaker, head of e-learning outsourcing at IBM Global Services.

"Today, there are huge libraries of e-learning material and so outsourcing gives increased flexibility and access to a wider range of material."

Speed, flexibility and cost are the main reasons why organisations choose to outsource e-learning. Using an ASP means the e-learning system is up and running quickly, staff can start the course whenever it is most convenient, and costs are easy to control with a single monthly rental paid to the ASP.

By contrast, a company wanting to do e-learning in-house must invest in hosting infrastructure and expensive software, such as the learning management system and courseware content.

For a large company, that could mean an upfront expenditure of several million dollars, according to Simon Hayward, chief executive of Academee, a UK e-learning consultancy.

He says too many companies focus their e-learning expenditure on content and forget about the delivery challenges. "Being able to deliver e-learning is as important as being able to devise it," says Mr Hayward.

For a company whose IT department is groaning under the burden of other projects, it might make sense to hand over e-learning delivery to a specialist provider.

Another advantage of ASPs is that e-learning technologies are developing fast. A company that invests in its own e-learning platform may find itself with an outdated system even before it has gone fully operational. Using an ASP acts as a safeguard against technological obsolescence.

One convert to externally hosted e-learning is the Dutch subsidiary of Solvay, the chemicals and pharmaceuticals company. In 2000, the company turned to an ASP e-learning service to train its staff on a new document management system.

"We wanted to find an efficient way of having this large group complete the course in as short a time as possible," says Martyn Pranger, former project manager for Solvay. "We could have trained everyone in the traditional manner, but with a group this size that would have taken a very long time."

Rather than develop and run its e-learning programme internally, Solvay opted for an externally hosted service provided by Siennax, a Dutch ASP, which offers e-learning using the LearningSpace technology from Lotus, the IBM software subsidiary.

"We didn't have to worry about any of the complex technology involved," says Mr Pranger. "The only thing we had to provide was secure access from our intranet to the Siennax system via the internet." Nevertheless, there are many valid reasons for going the other way and hosting e-learning inside the corporate firewall.

For example, if the courseware uses lots of multimedia content or technologies such as video conferencing, then it might not be feasible to run such content over the public internet, whose speed, performance and reliability can leave much to be desired.

Another situation is where large companies already have a learning management system (LMS) - the software that organises the courseware and monitors the progress of each employee. In this case, continuing to use the LMS makes sense, even if responsibility for the development and delivery of the e-learning courses is contracted out.

"Even if you outsource the online material you still want to follow the progress of users and so e-learning cannot be completely stand-alone," says Mr Theaker of IBM.

Siemens, the German engineering giant, recently found itself in this position when it sought to create an e-learning course on supply chain techniques. Siemens chose to run the project internally because it already had an LMS, supplied by Centra, the US company that is now being acquired by SmartForce.

"We have used Centra to create a virtual classroom for our employees who are widely displaced throughout the organisation," Wolfram Sittig, e-learning manager at Siemens Business Services, says.

The courseware for the supply chain course was developed by i2, a leader in supply chain optimisation software. The course does not, however, mention i2's products for it has been deliberately designed to provide a general training in supply chain management (SCM) concepts.

I2 hopes to sell the course to a wide range of companies, irrespective of the industry they are in or whether they are i2 customers.

"In SCM, 80 per cent of the concepts are universal and only around 20 per cent is industry- or company-specific," says Marc Escande, i2's worldwide e-learning director.

I2 sees e-learning playing an important role in helping large organisations transform business processes by allowing many individuals to learn best practices in areas like SCM.

"With e-learning you can encapsulate the knowledge of a supply chain guru and deliver it to individuals as many times as necessary," says Mr Escande. "There is a hunger for this type of knowledge which at present is not being delivered in sufficient quantity."

While companies such as Siemens choose to license i2's courseware to run on their existing LMS, i2 is also keen to reach businesses that have little or no experience in e-learning.

For these companies, i2 offers two options: the courseware bundled with an LMS, which can then be installed inside the company's firewall; or, simplest of all, an externally hosted solution which allows any company to access the course in return for a monthly fee paid to an ASP.

This range of delivery options is likely to be an enduring feature of the market, particularly as more companies start to embrace e-learning.

"It's clear that e-learning delivery is not a market where one size fits all and the best solution depends on each company," says Mr Theaker of IBM.