February 2018 – LMS Implementation Timelines & Data on Canvas International Growth

Welcome to old and new subscribers alike! We’re approaching the end of February, also known as halfway between the Fall and Spring LMS Market Analysis reports.

This month we start out looking at a typical LMS selection timeline that we have shared with multiple consulting clients – we thought this might be useful for our institutional subscribers. We then look at commentary from Instructure’s earning’s call about international growth and provide data to better understand the numbers.

On to the updates.

Sample LMS Selection Timeline

One of the questions we get asked quite frequently is how long a “typical” LMS selection process takes for a college or university or even a consortium / system. While there are always unique aspects of each evaluation process, we have shared with consulting clients the following straw man timeline.

By straw man, we mean that this has been useful as a starting plan based on northern hemisphere academic calendars. Schools can then make changes to suit their individual needs without starting with a blank sheet of virtual paper.

The graphic describes a two-phase process where a school looks at the LMS market in general, mostly at 5 – 6 solutions, and then narrows down to 2 – 3 finalists for a deeper evaluation. The initial evaluation is typically driven by a Request For Information (RFI) process or some other semi-formal method. The final evaluation for the majority of schools (virtually all public institutions and many private and for-profit institutions) is based on a formal Request For Proposal (RFP) process.

Note that the first and most important task is to identify and understand the strategic objectives and decision criteria – essentially a needs assessment – before looking at the vendor field.

This process, even with its two phases, can be accomplished in ~ 9 months for most schools. Some are more focused and can do this in ~3 months, and some take much longer (we have seen up to 2 – 3 years in some cases). For those considering long processes, note that UNINETT spent 13 months (including needs assessment) for a country-wide evaluation and selection in Norway involving 17 universities.

We plan to collect and share more evaluation information for subscribers, and we hope this straw man timeline is useful.

Commentary Instructure Conference Call

Last week Instructure held its earnings conference call, releasing its Q4 and full-year financials. Since this is the one publicly-traded academic LMS company, we have much more financial data from Instructure than from others. The company reported revenue of $158.8 million, a 43% increase over 2016, with an outlook to grow revenue by ~30% in 2018. Their operating loss for 2017 was $35.5 million. For 2018 they expect non-GAAP net loss to be $32.3 million to $30.3 million while they “more or less” maintain their cash balance of approximately $41 million.

There was an interesting summary of international growth that might be worth exploring in more detail, as it gets to the increasingly global nature of the LMS market, with the same players active in multiple regions. CEO Josh Coates:

“Moving to international, in Q4 we continue to see great demand for our products and revenue for the quarter reached 16% of total revenue. We know have customers in over 65 countries and on every continent, except Antarctica. In Q4, the University of Sussex chose Canvas and Arc to replace Moodle for their 18,000 students and faculty. Canvas was selected for its easy implementation, integration and ease-of-use. This implementation will be one of our largest Moodle migrations in Europe to-date. Similar to our deal with Norway’s UNINETT in Q1, the Swedish University Computer Network or SUNET selected Canvas as a preferred supplier for their member schools. Already 12 universities in Sweden representing almost 80,000 students have signed up for Canvas.”

We thought it would be interesting to look at our higher education data (Instructure’s primary business, but they also serve K-12 and corporate) and see if the same trends are present. We now have the ability to capture quarterly historical data and are building up monthly data as well. This allows a trailing 4 quarter view of data to smooth out seasonal differences. We can also scale by enrollments, as that can provide a better proxy for revenue than just counting institutions.

As we look at the global data for Canvas new implementations (new business), it turns out that separating international into Europe and the Rest of World (at least from our data set) provides some interesting insights.

With this view, the ramp up in international higher ed growth for Canvas started in 2014, with wins outside of North America ranging from 15 – 20% per year through 2016. Then a year ago, the European business really picked up such that now non-North American wins for Canvas in higher ed are closer to 30% (again, scaled for enrollment). 

What we have not seen is a dramatic increase in Canvas wins in other regional higher ed markets – there are some notable wins in Latin America, Oceania, and Asia, but the Rest of World wins as a percentage of total has been in the 5 – 10% range for quite some time, with the peak actually occurring in 2016. As we will describe in our upcoming Latin America special report, Instructure is investing in its team in the region, but there just have not been that many higher ed wins, at least yet.

The roughly 30% of Canvas higher ed wins coming outside of North America does help explain the growth of international revenue to 16% of Instructure’s total. There are a few assumptions that help explain the difference between these two numbers:

  • The K-12 business for Canvas is much more heavily concentrated in the US than higher ed;
  • The win rate (new implementations) is a leading indicator for revenue; and
  • Revenue per student tends to be lower outside of North America (particularly for Latin America).

Instructure is not the only company doing an increasing percentage of their LMS business outside of North America. Blackboard has long served global markets, D2L has increased their presence in Europe and Latin America (with some notable wins in the latter region over the past year or two), and Moodle is the most global of all LMSs in terms of installed base.

All in all, the data does seem to jive with financial reporting from Instructure’s earnings call, and we have additional evidence of the academic LMS market becoming a more consistent global market.

Until Next Time

We hope that you found these updates useful. We’re always open to feedback, which you can send to eLitLMS@mindwires.com.

We hope you are enjoying the end of winter (or summer, for our South African, South America, and Australian subscribers).


Phil & Michael & O’Neal