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LMS Smackdown 2012: Analysis

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Takeaways from Learning Impact 2012 – Part IV

(Note: You may wish to visit the previous post in this series to get a summary of what was said by the panelists at the 2012 Learning Impact LMS Smackdown - this provides some background upon which the analysis below is based).

A. Would an LMS by any other name still smell as __________ (fill in the blank)?

When I came to IMS (over 6 years ago) I was very perturbed with the frequent use of the term LMS (Learning Management System) to describe products like Blackboard, WebCT or ANGEL in the IMS community. In my experience, these products were all Course Management Systems – they helped faculty manage courses – they did not manage learning in any way. Yet, the prevalent use of the LMS acronym in IMS caused me to eventually give in and use it as well – although I always felt the suppliers were making a mistake to let themselves be in a named category that spoke more to their deficit than their value. Naming of your category according to the value it brings is a really important (if not critical) aspect of product marketing.

Desire2Learn uses the term “Learning Platform” - and Michael Feldstein is also using that “category” name as describing the future of the LMS versus today’s enterprise systems.  Learning Platform is a nice broad term but it has a similar issue to LMS in terms of accuracy. Is what Desire2Learn sells really a learning platform? I would argue that the term “learning platform” has a very student-centric connotation – an LMS where the learner is in control. It connotes something that the learner owns and, therefore, probably pays for. Not today’s model. A very interesting and good model for the future – but not today’s model.

All-in-all I think this year’s IMS LMS smackdown confirmed that the perceived goal of this product category is to improve teaching and learning. This is the product category that has the expectation to do that. The problem is, as Curtiss Barnes from Cengage pointed out, these are big shoes to fill. Our understanding of the science behind how to improve teaching and learning is quite limited. We are just beginning to understand how the brain works. Learning is something we all do, and we all manage, but it certainly appears that no one has cracked the code on how to ensure better learning. Of course, Adrian Sannier’s (Pearson) point is that cracking that code is a very discipline specific endeavor that products like MyMathLab, working across a large number of institutions, have the best chance at solving.

On the other hand, there are strong arguments that at least a portion of being a better teacher has to do with the teacher being better organized and being a better communicator with students. The LMS appears by all accounts to be a product that if used well by the teacher improves the student’s experience via better course organization, ability to time shift, etc. And, the LMS has become the backbone for higher education online learning – which has grown at a 25% annual growth rate, touches about 25% of all students and is continuing to grow. For instant, we have been talking about “flipping the class time” for years – i.e. putting the expository learning materials online, asking the students to spend time on it outside of class, and then using the class time for more discussion, application, etc. This enables greater time on task and greater engagement with the material in a “problem-solving” mode. This is a great example of a delivery model that we know works better and where the LMS can play an important role. If I was an LMS provider I would be laser-focused on how to make “flipping the class” really. Really easy to do and effective in my product.

Every year we ask if the LMS is dead. And, every year Adrian Sannier tells us that it is – his point being that it is becoming commoditized because it is not improbing learning.  From my perspective, the LMS is definitely not a failed product category, dead, or even dying.  We don’t see higher education institutions dropping the LMS altogether. They may be replacing it with a new brand – but they are not saying, “Hey, we don’t need that LMS-thing.” U.S. K-12 is also now beginning to pick-up on LMS-like features, creating some opportunities for the LMS platforms, but also creating additional questions about where does it fit in a K-12 enterprise that has other products with greater market share, such as professional development and instructional management systems (yes, IMS’s – the instructional management system name/category actually did stick in K-12 although it’s not what the higher ed folks in the early IMS envisioned).

On the flip side of this we try to determine if another new product category is showing signs of overtaking the LMS. The answer to that question is clearly ‘no’. As an example, e-portfolios or e-portfolio-like systems remain a niche product. To break through to the mainstream they need better integration – probably with the LMS. Categories that have broken through – such as classroom capture – have made seamless integration with the LMS a key attribute. But, nothing has emerged as the replacement for the LMS.

All this to conclude that the good news for all the providers in this category (and therefore the buyers as well) is that the LMS is still growing in importance in terms of its ability to improve basic organization and communication. The importance of mobile is a great indicator of that. And, probably most important, the LMS has become the main integrating platform for the course-specific tools or content that will have, hopefully, eventually be the key to improving that learning experience. For a long time now I’ve expected to see the student systems or portals start to challenge the LMS as the primary integrating platform, but, so far they have not. This has been a big win for the LMS providers and a key reason why I think the term “enterprise” will remain important in the value proposition for the foreseeable future.

However, I agree with other pundits that the naming of the category will be important going forward. Taking on the mantle of “learning platform” is a good position – it is the high ground.  The “learning platform” would be the campus application that is probably of greatest value in terms of relevancy to the institutional mission and touching more stakeholders more often than any other system. But, being a learning platform is also difficult to deliver on. Suppliers will need to think carefully about how to position their products going forward – and what “learning” capabilities they can actually deliver on. Buyers will have to think carefully about what functionality they want, how they are going to be able to plug it in and how they are ultimately paying for it.

The bottom line is that the LMS, arguably the only billion dollar market cap software industry that has ever arisen in sole service to the needs of teaching and learning, is strong and, quite frankly, the star in terms of enabling institutions to “go digital,” at least for the time being. Most estimates have the LMS market in education growing at 25% per annum - a very healthy rate.

B. To be bloated or not to be bloated? Is that the question?

Do you prefer separate fax, printer, copy machines or a multifunction device? What combinations of products make up an office software suite and which ones fall outside that category? Was it obvious in 1996 – the heyday of Yahoo, AOL, Alta Vista, etc. – that Google would come along with a product focused purely on making search easier and better and dominate the market? Why did LMS become its own category and not just get subsumed into the SIS or campus portal? Some thought it would.

The coupling and uncoupling of products – and the extent to which they make sense and make life better for the users/buyers – are critical to the development of markets. Designs require tradeoffs – there is always some penalty (usability, cost, complexity) for adding additional functionality.  When your product appeals to more kinds of users it has the potential of turning off one category of users to please another. If you turn off a large segment of users – well, you have just put yourself out of business.

The issue of what constitutes the core functionality of the ‘LMS’ category is a key question. Can this core functionality be achieved at lower cost? Is an LMS with additional features of higher value? Is the value in the bundling from one supplier or am I better off getting this functionality separately?

Google disaggregated search from the bloated search portal and changed the world. However, Google also brought an entirely new business model and a patented technology that was difficult to replicate (focused on creating economic opportunities from search).

OpenClass from Pearson definitely seems to be challenging the combo features model by offering a simpler starting point. In some sense, there is nothing new here in that major education publishers have long had simplified, hosted LMS’s for faculty to use for their courses when using digital content from the publisher, albeit not connected to the enterprise in any way (for instance, McGraw-Hill PageOut). The difference with OpenClass is that it is being sold at the institutional level, not as support for individual faculty. OpenClass also strives, I think, to take advantage of other “free” apps like Google. So, the question is can this combination provide higher value than the existing LMS providers?

One can definitely look at various moves by Blackboard including the launch of the free CourseSites and moving into open source services as trying to meet the market with a less premium, more unbundled offering. But can the challengers, namely Instructure Canvas and Pearson OpenClass, win by coming at this issue with a core set of functionality that is hosted in the cloud and easier to use? An important consideration is if the new comers have a business model that works: will providing less for perhaps a lower cost actually be less expensive to provide and therefore allow them to stay in business? Outsourcing of hosted email and app suites to Google or Microsoft is subsidized with deep pockets from other sources of revenue.

Instructure has yet a different strategy which is to say that there is nothing wrong with features per se, but that the usability of the LMS must be better. Instructure has probably benefited the most from the uptake of the IMS standards as this has supported an open standards-based plug & play strategy for tools from the get go - whereas the leading LMS’s have been retrofitting standards like LTI, Common Cartridge and LIS into their stacks. That’s the wonderful thing about open standards from the buyer’s perspective and why institutions should be requiring open standards and supporting organizations like IMS – they do make it possible for new comers more easily enter a market.

The discussion of what are the core features, of course, also relates to pricing. When any product category establishes a common denominator of features that all competitors support then commoditization potentially begins to take hold. Clearly Pearson thinks a free OpenClass alternative is a good strategy for Pearson. However, in the world of marketing, rarely, if ever, does attempting to commoditize your competitor’s product help your product succeed, unless you can bring a radically different business model.  Are publishers ready to aggressively bring or buyers ready to accept a radically different business model in higher education, such as the “pay for performance” at IMS member Western Governor's University? Maybe – it will be interesting to see – but probably not. More likely publishers will be forced into business models such as this over time (see post on where e-textbooks are going <link>).

Bottomline here is that I think Instructure has a lot of this right.  It’s about making technology easy and productive. I haven’t been following Instructure too closely and I can’t verify their claims, but, I’m impressed so far. What I’m impressed with is that they seem to be breaking through on the LMS cloud model to the enterprise. eCollege (now Pearson Learning Studio), Eduprise and a few others had pioneered the hosted LMS model prior to the turn of the century. However, the focus on that hosted sale was largely the distance learning office. Instructure appears to be truly breaking through in terms of pushing the advantages of this model in a way that the many other “hosters of the LMS” – pretty much every provider does this now – have not. The other thing that Instructure has brought to the fore is an open source model that is more tightly controlled (I guess kind of what MoodleRooms was attempting with Joule, but obviously could not exert control over the Moodle community). There appears to be value in this model as well – especially as it relates to enabling institutions to customize tools, modules, etc – something a lot of universities or even faculty seem to want to do. The question regarding Instructure is whether they have a sustainable competitive advantage? It certainly appears that this strategy can be replicated by either the proprietary systems on one side or the open source platforms (Moodle, Sakai) on the other. And, actually Blackboard can play both sides of that strategy now with their recent moves to support Moodle and Sakai.

So, in conclusion – bloated or not bloated is not the issue – ease of use is. Going digital needs to make life easier for faculty and students – otherwise it won’t happen. If you are a supplier and are not focused on “easy” you need to reconsider.

C. Parts is parts? Revisiting the infamous “immature product in a mature market.”

Hey, if you want to or need to put oil in your car or buy an oil filter you have a lot of choices. Depending on the importance you place on such things you may want to get the premium product or not. If you don’t know much about it you may just take the advice of whomever is there at the time to advise you – the guy in the auto parts store or your mechanic.

Although there are clearly innovations occurring in the “car engine oil” segment, I’d characterize this segment as “mature,” meaning that no one is perceiving an investment in a car engine oil brand as a major growth opportunity – there may be price appreciation over time and nice returns on such an investment, but the market is not going to double in the next 5 years.

At this year’s Learning Impact I was struck by the potentially very high value of the ‘parts’ (tools, content, new features/functions) that the LMS providers are talking about. The items highlighted, such as analytics, mobile, discipline-specific high value content, even improving the user interface – do not strike me as ‘small’ tweaks of low value. They strike me as high value if done in a way that can change behavior to affect retention, graduation rate, etc. There are of course other add-ons/tools that were not discussed but generally perceived as important.  Things like classroom capture, e-portfolio, assessment tools and a wide variety of digital content alternatives (like e-Textbook - see my analysis).

I spend a lot of time in the K-12 segment and I would say similarly that the sort of innovations school districts and states are looking at around the world are not “low value.”

Also, the annual spend on printed educational materials in the U.S. alone is something like $25 billion.  I think it’s pretty clear that over the next 20 years that stuff is all going to convert to digital. Assuming that those dollars are going to be associated with better LMS’s, well, I guess I’m pretty bullish on the growth prospects. The LMS market could easily double in the next 5 years if focused on addressing customer needs as they go digital. Therefore, this is not a “mature market” by any stretch of the imagination (as somewhat famously characterized by our friend Casey Green’s seminal characterization for a few years now, for example see http://www.campuscomputing.net/new.html ).

But, a key strategy question for all the LMS providers, as well as institutions, is whether they are better off getting the “LMS provided parts” or other “3rd party parts.” For instance, attending the LI conference was a representative from an up and coming visualization software company, not primarily focused on the education segment – but they have some pretty impressive products. Is every LMS and content provider in education going to invest in building their own visualization software as the drive to better analytics continues?

Parts are not just any old parts if they bring high perceived value. If you’re a buyer do you want your high value tools, applications, content all from a single supplier or from a variety of suppliers?  If you are a supplier should you be investing in a particular tool or partnering with the market? There are a range of strategies that are possible on both sides of this equation. Certainly Blackboard and Pearson have acquired several parts providers (such as Blackboard acquiring Elluminate & Wimba).  But in doing this they usually want these parts to work with other platforms so they can be sold into institutions running those platforms. Who will emerge as the best providers of these parts?

I think the educational technology market is more like the market for high fidelity audio systems in the 1960s (another analogy I like to use is the market for electrical appliances around 1900). In the 1960’s you could buy the “all-in-one” stereo, radio, TV console system. This was a cool breakthrough at the time because it brought a sophisticated listening and viewing experience into many homes for the first time.  It wasn’t very clear how this scenario would evolve.  What ended up happening was that the various parts turned into their own segments – each becoming more and more innovative – with an evolution from analog to digital. This was made possible by the willingness of the buyers to spend for greater sophistication and the technical interoperability that enabled different types of products to plug together to form an integrated system. This home entertainment scenario is still evolving today with Apple’s now famous achievement of breaking into this market as a computer manufacturer.

So, I would characterize the educational technology market space, including LMS’s, as an immature product in an immature marketplace, just as the console systems in the 1960’s were immature, but so was the marketplace.  The buyers could not see where it was all going in terms of home entertainment. As per the discussion above, the buyers of educational technology are in a similar situation. The LMS as it exists today is just the beginning of where this is going.

One of the things that is very gratifying about the Learning Impact conference is that we had a goal of creating an experience for the attendees that would allow them to see what was happening in the market that were not easy to see elsewhere. In that spirit, I’ll summarize the bottom line here with two quotes from others attending the conference that were made privately to me:

“It’s obvious that all the LMS providers are primarily becoming integration platforms.”

“It’s obvious that the world’s of learning platforms, content, assessment and analytics are converging.”

We are at the very early stages of institutions understanding all the components (parts) they need, much less in the conversion from print to digital. There are not only opportunities for parts suppliers but also for providers with vision to change the game, much as Apple did.

Should be even better next year! See you there if not before.    

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