May 2018 – A summer of bellwethers


Welcome to old and new subscribers alike. Our Spring 2018 LMS Market Dynamics report is due in early June (must beat the solstice), and soon afterward, summertime.

This month we look at the upcoming LMS vendor conferences in the US this summer and discuss what to watch. While these vendors have conferences in other regions, the US conferences tend to be the ones with the biggest news in terms of product announcements and indications of company directions.

This year it is becoming difficult to separate LMS products from company finances. Instructure is trying to balance Canvas and Bridge growth to satisfy public markets along with a new executive team. Blackboard is dealing with corporate debt challenges while needing to fully release Learn Ultra. D2L is moving strongly to the cloud with a new user experience while managing expenses. Schoology is trying to grow higher ed market under the radar. Moodle HQ took investment for the first time. There are a lot of open questions on the future of the academic LMS market, and we expect much to be revealed at the big summer (and fall) events.

On to the report and a description of the conferences, in chronological order.

Schoology NEXT: July 15 – 18 in San Diego, California

Schoology has been quietly, and slowly, gaining traction in higher education markets for the past two years. After their $34 million D round of funding and initial push to expand into higher ed, we described their product in August 2016 as “The strongest LMS you’ve never seen”. Soon afterwards, however, the company made significant changes to their higher ed team and approach. Schoology chose to fly somewhat under the radar, judiciously picking LMS selection opportunities that would not entail lengthy, expensive RFP processes. Our data has shown them picking up dozens of new higher ed clients, many of them being small to medium-sized private institutions.

Just last week Schoology hired Justin Serrano into the new role of president, working under CEO Jeremy Friedman. Justin “will oversee the strategic direction for the sales, marketing, customer success, finance and human resources teams” in the new role. He previously worked at Kaplan Test Prep, Generation Next, and Performance Matters.

Some key questions for the Schoology NEXT conference:

  • Will the creation of the president’s role lead to a more aggressive approach for Schoology in either higher ed or K-12 markets?
  • How significant will the higher ed client base be at the conference, and will the company view this as add-on market or as a real growth opportunity?

BbWorld: July 16 – 19 in Orlando, Florida

Blackboard has been in a long-term turnaround ever since the founding management team departed in 2012. During Jay Bhatt’s tenure as CEO from 2012 – 2015, Blackboard announced plans for the Learn LMS to go to the Cloud with Learn SaaS (initially based on Rackspace infrastructure but more recently on AWS) and to get a redesign of the user experience through Learn Ultra. The company could not deliver on management promises around Learn Ultra delivery, and efforts to sell the company in 2015 failed, eventually leading to another management shakeup.

Bill Ballhaus came on as CEO in early 2016 with a focus on execution and a more humble approach to market promises. The problem is that that it is now the middle of 2018, and the market is still not sure of the Learn Ultra status despite the recent successes in the SaaS option for Learn (the two are inter-related). In our minds, 2018 is make or break time for Learn Ultra – if there is not a clear message around Ultra and clear availability for institutional adoption, then it may be too late for Ultra to be a significant LMS option. We are seeing more institutions moving past any assumptions about Ultra availability. While Blackboard has had growing success with Ally and other complementary products, the core of the company relies on the LMS market, and Blackboard continues to bleed market share.

We have seen some real improvements in Blackboard’s operations, a refreshing honesty from the current management team, and some innovations in accessibility and learning analytics. But it is time to see if the core LMS will become competitive not just in retaining customers but in being able to win new customers.

Some key questions for the BbWorld conference:

  • Will Learn Ultra appear as fully ready for institutional adoption?
  • Will the recent financial challenges of the company, in terms of debt ratings and potential changes in ownership, be evident?
  • Does Blackboard view themselves as truly competitive as standalone LMS or mostly as enterprise suite of applications?

InstructureCon: July 24 – 26 in Keystone, Colorado

Instructure is the unquestioned darling of the LMS market, and we have argued that their influence is not just in win rates but in the market’s belated reaction to the Canvas LMS wins. We say ‘belated’, as the established players waited too long to take Canvas seriously and not just view them as a shiny new object. We have documented how Canvas has the highest percentage of new implementations in North America, Europe, and Oceania, although they lag D2L in Latin America for higher education wins. What is also interesting is how Instructure has successfully managed past transitions of key executives, rapid growth, and an IPO while maintaining the core company culture.

However, Instructure faces its biggest test yet due to a combination of a new executive team and investor demands for increasing focus on the corporate learning market and the Bridge LMS. The long-time head of sales, Marc Maloy, and head of marketing, Misty Frost, left Instructure in the fall. The company eventually hired a new head of marketing, Bjorn Eriksson from the world of corporate HR, in January. After a months-long search, Instructure did not directly replace Marc with a new head of sales, but instead they hired a new president, Dan Goldsmith, who also has sales leaders reporting directly to him. With this move, Mitch Macfarlane, the long-time chief operating officer and former head of client services, will be leaving the company this summer.

At the same time, coincidentally or not, we had several people at universities reporting on new customer service challenges, and the update to the Canvas platform, Quizzes.Next, is a year late in moving to production. In an interview with CEO Josh Coates, he assured us that the “vast majority of company resources” are allocated to the academic markets and that this is their foundational business. Good answers but reasons for careful observation.

Some key questions for the InstructureCon conference:

  • Is the company becoming distracted and losing its focus for academic markets, or is this a bump in the road and challenging transition that the company will navigate?
  • Will Canvas Quizzes.Next finally be in production and ready for broad adoption?
  • How will the Canvas / Bridge divide appear in terms of product development and innovation?
  • How will the company culture change with the significant changes in executive team since last year?

D2L Fusion: July 25 – 27 in Houston, Texas

D2L has firmly established itself as second-place in new higher ed LMS adoptions globally, even leading in Latin America, while making some impressive product design changes in terms of cloud hosting and usability. In other words, they are addressing the right issues raised by Canvas’ success, and D2L is reaping at least some of the rewards. At the same time the company has shown signs of financial stress despite their large 2012 and 2013 venture capital funding rounds, with layoffs and reduced spending. This presents an interesting situation – successful company with market momentum, but also one with signs of corporate stress. It is possible to have both, however, and there is an argument that the stress is leading to more modest but well-designed product changes than would have happened with previous levels of spending. And reduced spending on marketing could lead to a better focus on current customers.

This year we have been informed by the company that D2L Fusion will have a different look-and-feel, going back to its roots as more of an actual users’ conference rather than company showcase. We’ll see how this shakes out, but this move sounds like a big departure from the past decade’s worth of events where marketing-heavy product announcements ruled the day. If the conference goes off well, this move might even influence other LMS vendors to scale back the marketing focus of their events.

Some key questions for the D2L Fusion conference:

  • Should the recent pull back in spending on marketing and even Fusion spending affect current customers and prospects, and if so, in a positive and negative manner?
  • How are customers and prospects reacting to the streamlined user experience improvements?
  • Can the company improve its customer service and product commitments in similar manner as it has done with overall product design?

MoodleMoot US: October 29 – 30 in Denver, Colorado

So this one isn’t in the summer. We get it. But interestingly, it’s also not in conjunction with BbWorld through their Moodlerooms group as it was in 2017.

We have documented at e-Literate why Moodle matters as the most-used LMS system globally but also how Moodle’s market adoptions have changed dramatically and why there is cause for concern. Last fall Moodle Pty (also known as Moodle HQ) brought in $6 million of angel investment, and this is a first for the company (and yes, Moodle Pty is a company). This is not a grant; it is an investment. However well-aligned and patient those investors may be, they still will eventually need to see a return on their $6 million. When investors do not see the return they expected, they eventually begin to put pressure on the company management to take steps that improve the finances. We don’t know enough about the terms of this particular investment relationship to know what kind of leverage Leclercq has to push for changes in Moodle Pty if they are not happy with its performance, but the fact of the matter is that Moodle Pty now has financial performance targets to meet.

The obvious issue is to understand whether the investment will impact the market prospects for Moodle or even the revenue models that previously have relied primarily on the Moodle Partner tithing.

Some key questions for the MoodleMoot US conference:

  • Will the $6 million of new investment into Moodle HQ be apparent in either the marketing nature of the event or in product innovation?
  • What will be the mood of the Moodle community, given the market share losses and Moodle HQ dismissal of these concerns?
  • What is the impact of Moodlerooms not participating in this event as a sponsor despite it being the largest Moodle Partner?
Sneak Peaks At New Report Data

In a few weeks we will release our Spring 2018 report with all-new data. In advance of the report and associated blog posts, we wanted to share two sneak peaks with some preliminary data views. For North America, LMS market share as institutional primary systems we see the top three systems (Blackboard, Moodle, and Canvas) at 28%, 25%, and 24%. 

In another interesting view, we see that managed or cloud hosting for higher ed LMS, even outside of North America, is rapidly becoming the norm. In this view we have combined the hosting options for new implementations in Europe, Latin America, and Oceania combined, and the acceleration is dramatic. The acceptance of cloud hosting, in particular, for global markets will continue to have a major impact on product adoptions and client expectations.

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.

Expect two updates in June – the new report and the monthly newsletter.

Cheers,

Phil & Michael & O’Neal