Dear LMS Market Analysis Subscribers,

We’re happy to provide exclusive access to our next episode of MindWires Musings, where we discuss the non-COVID news of the day or week in a more casual format. A true discussion. This access is intended for current LMS Market Analysis subscribers while we redesign our future market analysis offerings.

LMS Market Challenges (podcast)

In this episode, Phil Hill and Jeanette Wiseman build on the conversation last week about Instructure layoffs and look at the challenges that other LMS players face in this difficult market. You can access the recording here or by clicking the image below:

Transcript

Phil: Welcome to MindWires musings serving EdTech straight up, where we throw caution to the wind and have a more relaxed conversation on the non covered EdTech developments that are affecting higher ed. I’m Phil Hill. And with me is Jeanette Wiseman. Welcome, Jeanette.

Jeanette: Thanks.

Phil: Well, and how you been doing this week?

Jeanette: You know, it’s been kind of a tough week overall. I think there’s a lot of unrest in the country. But overall, I don’t know. I’m hanging in there. How are you doing? You have some good news today.

Phil: Yeah, well, it’s minor good news today, but yesterday was our anniversary. But places here in California are starting to open up. So I was able to actually go have lunch out with my wife. And today, drove by Beer 30 saw they were open. So I decided I should stop in and quote unquote, say hello.

Jeanette: For our listeners, what is Beer 30?

Phil: Well, it’s a local watering hole. Beer 30. It’s named for [00:01:00] the joke ‘What time is it? It’s Beer:30,’ but it’s also named for having 30 beers on tap. A longtime been a favorite place. Communal tables. Most of the bartenders and people who work there know us, know the dog. So it’s a very social place, too. And as we like to joke, it’s the second MindWires headquarters.

Jeanette: Yeah, it’s a lovely place, mostly outside what you can do in Santa Cruz. Did you bring something from from Beer 30?

Phil: No, actually, I didn’t. I thought I needed to up my game since you did the Tom Collins last week.

Jeanette: Oh. What are you what are you drinking?

Phil: So I’m having a Manhattan today and Templeton Rye. So I’ve got the Iowa French connection going with my drink. How about yourself personally this week?

Jeanette: It is kind of tough. I should be right now sitting in Venice drinking, so I figured I’d need him to acknowledge that. And I am drinking a Negroni, which [00:02:00] I normally love. If no one knows what that is, it’s usually equal parts gin, Campari and sweet vermouth with the orange wedge.

Phil: By the Albuquerque canals. Is that how you’re doing it?

Jeanette: Well, I did have a walk by some of those we call arroyos in Albuquerque. So yeah, I did have that experience. But I don’t think that counts.

Phil: Well, what we’d like to cover today is, you know, we’ve talked quite a bit about Instructure over the past two weeks because of the way off they’ve had and what the impact is going to be on the mass market. But we thought it’d be interesting to give some more time to other players within the LMS market. And we’ve had an unnamed client that was asking us questions about an LMS selection they’re doing. And I find it just really an interesting, not quite a case study, but it’s it’s typical and it illuminates a lot of the market.

They’re on Blackboard Learn Original. They have not migrated to Ultra that [00:03:00] even during the COVID transition, the pandemic that must not be named. They did an evaluation led by academics, said that they want to move to Canvas as their LMS. So a question came in asking about that before they finalize decisions.

But what’s interesting is, first of all, their perception of Blackboard is Learn Original, not Ultra. And they’re moving to Canvas. But it sounds like so much of why they’re moving to Canvas is Canvas of yesteryear. That doesn’t mean they shouldn’t move there, but I’m not sure how aware they are of the changes going on at Instructure. But they’re not looking at D2L. A while ago they discounted open source. So there’s just a lot of interesting characteristics, it says a lot about what’s happening in the higher end market for LMS that would be interesting for us to explore.

Jeanette: No, absolutely. I think that [00:04:00] one of the reasons why we should explore a bit, is that last week we really focused on just Canvas. But I think this is a really great use case of what this school is doing.

Phil: Let’s sort of go through with what we’ve heard or the school’s perceptions of the vendors and then explore that.

This is a longtime Blackboard customer. But they have not upgraded to Learn Ultra or the software as a service Learn SaaS. And to me, it doesn’t sound like they really understood how much they should be evaluating Ultra versus Original in the first place. A lot of times their biggest challenges are for existing customers who never either bought into Ultra or were confused about what Ultra is. And so they’ve created this situation where instead of viewing their own customers as their biggest strength or opportunity, quite often it’s actually the worst [00:05:00] situation that they’re in. Going forward, you almost feel bad for them, but I don’t think the school is alone in their perception of Blackboard.

Jeanette: I don’t think so. I think part of it is branding. To be honest, this reminds me a little bit of . . .  I just found out a couple of days ago that an Apple TV, the new thing that there were kind of pushing this last like six months, where I would hear about these new shows that were going on and releases. I thought that that was all associated with the Apple TV device, that it wasn’t a whole new streaming service. Your comment about Blackboard Learn Blackboard Ultra. I don’t know if anybody really understood the big difference between those two platforms and what they meant to their users. You know, in this case, did they even look at Blackboard Ultra as it alternative? I don’t know if they did or not. Yeah, just a little point. Yeah.

It’s branding. I think it’s customer communication, which, let’s face it, Blackboard has really stumbled on. And the last, I was [00:06:00] going to say five years, but it’s probably been longer than that.

Phil: As I look at their branding as they introduce the initiative, going to Learn Ultra, there were various stages where their messaging used to be even worse. I mean, it took out a two thousand word blog post to even explain the different variations in the direction they were going. And then Blackboard did get the message from the market that it was confusing. But what they did is they incrementally improved their message. They came up with this 3-2-1, OK? There are three different deployment options and then there are two different user experiences. And so they’ve simplified it. But really what I found is they’ve incrementally improved their messaging as opposed to solving their messaging as far as what the product is. But you also have the fact that you have schools that have a long history with Blackboard and they tend to associate [00:07:00] any of the long term pain they’ve had with the current company. And you even get into the situations where were Blackboard has made a lot of improvement on their system’s stability, their hosting, their user interface. A lot of times they don’t get credit for even the improvements that they’ve been making.

Jeanette: No, I absolutely agree with that. I think that’s the crux of the problem, is that beyond just this one, school instructors and professors that I do know that are working on Blackboard right now, they would even want to look at anything out of Blackboard like the reputation that they have created. So I think the crux of the problem that they weren’t able to transition a lot of those clients into Blackboard Ultra. And because of that, it’s been a real stopping point for them and it’s helped Instructure and D2L.

Phil: Well, as we’ve seen Blackboard, they have picked up some new clients in southern Europe. And when I say new clients, a client who didn’t used to be on Blackboard – not [00:08:00] just retaining them or upgrading them, but actual new clients. We’ve seen a handful in southern Europe, and we’ve seen several in Latin America. But despite all of their improvements, they’re really not picking up more than just a handful of clients here or there. And so many of the transitions that we continue to see in 2020 are people leaving Blackboard. So that’s their challenge. They’re definitely making improvements, but they’ve got their own history to work over and the branding, as you mentioned.

Jeanette: But to add to that, it’s what you brought up at the beginning is that there’s this Blackboard client that is just moving to Canvas. What Instructure had done really well was build up this community and build up a place that people wanted to be. I don’t know if you remember the old car, the Saturn. It’s still a car, but Saturn kind of created this whole community around it where it was a really big deal to have the Saturn. And if you remember the commercials [00:09:00] from back then, and that’s what I feel like, Canvas has done in a certain respect. And I think that faculty talked to other faculty, they friends they’re teaching at institutions, ‘Oh, no. You’re on Blackboard still, We’re on Canvas’ not knowing that there might be some issues coming up for them, given the change

Phil: Well I have to admit we bought a late model Saturn. None of the coolness, and you got the benefit, like a BMW, that it was tremendously expensive to repair anything you did. And you had to repair it a lot. I had a late model Saturn experience.

Jeanette: So did you go to the headquarters to watch them be made because you loved your car so much?

Phil: That was a previous era of Saturn than what I participated in.

Jeanette: I see.

Phil: It’s where the General Motors and their culture came in and reasserted itself and killed the new brand.

Jeanette: I wonder if a PE was involved.

Phil: Could have been. [00:10:00]

So moving on. One thing that’s interesting is what wasn’t under serious consideration was D2L Brightspace. And to clarify, when I say a client, this was actually an OPM consulting client – we did not help them with the LMS evaluation. So there’s some of this stuff we don’t know. But it’s interesting, it doesn’t seem like they seriously considered D2L Brightspace.

And even though the things they’re looking for, D2L Brightspace has made tremendous improvements, as we’ve talked about. Its usability is, we’ve seen universities that have rated it not ‘equal’ to Canvas, but as good as Canvas but in a different way. But despite all of their improvements, D2L, their biggest challenge is where they don’t even get to play in the game, that the school just doesn’t even think about it. There’s a natural thing in higher ed to choose one system versus the other. It has [00:11:00] difficulty truly looking at multiple systems, and D2L quite often is third or an afterthought and not seriously considered. That’s one thing that I still see in many schools. So it’s almost more of a marketing problem than a sales problem for them. That’s their big barrier to get over is just awareness of what they do.

Jeanette: And it’s a hard one because they’re pushing up against what is a really strong message that Canvas has been delivering for so many years. Unless you’re really watching this market, you may not understand all the dynamics that are going on that could impact this decision that is going to have lasting effects on your teaching and learning.

Phil: Now, let’s look at Moodle. This actually was mentioned to us back when we were helping them with a different problem, they had automatically rejected looking at an open source solution. So specifically, Moodle, they didn’t seriously consider [00:12:00] them as well. And in North America, I think that that’s probably more common than not. Is schools just going in saying, ‘OK, we’re not doing open source. We don’t have the resources. We don’t want to get into it.’ And yes, there are schools that still use open source and use it with service providers. But I think the open source as a model, quite often schools don’t want to go that direction anymore, where 10 years ago people would go open source for open source sake. It seems like nowadays open source has got to compete because of the quality of the product itself. And open source as a model could even be a barrier to schools who just feel like we don’t have the resources to be able to manage that properly.

Jeanette: I think when, like Sakai came out, for example, and Moodle, I think that there was such a desire to move away from Blackboard. [00:13:00] But I think this was maybe one of the sentiments was that they wanted to be able to control this learning environment that was so important for the future of what they saw as their education, that people were really going towards Sakai and Moodle. And hoping that was going to work, because they didn’t want to be caught again like an ANGEL situation where they went to this LMS, they thought it was gonna be great, and Blackboard swept it up and they bought it. And then there’s stuff with Blackboard. I think that was one of the big things that was going on with open source back then.

And when Canvas came to play, there wasn’t necessarily that need anymore. But I think right now you’re right. I don’t think that these institutions feel like they want to invest the time and salary, essentially these resources that they would have to put towards making sure they’re open source platform is up and running and working.

Phil: I think it goes beyond that. It also goes to complexity, because – not just at the support level – is the way Moodle is [00:14:00] described, that you can do almost anything with it. But so many people in the Moodle community don’t realize that’s actually a detriment to using the system.

People don’t want to have tons of options. They want to have an intuitive experience right out of the box. And in particular, they want to have it where faculty are saying, ‘oh, I can learn this. This is good. I want to use this system.’

Jeanette: Absolutely.

Phil: So  you can do a ton of things with Moodle. Still can. And the system has been improving, but they never directly addressed that intuitive use need that the market demands these days. And when I was in Barcelona last fall, looking at their Global Moot, the most disappointing aspect for me is they were still not considering heading that problem off, is the competitiveness on an intuitive design. They just want to tinker and incrementally improve it. And I would [00:15:00] hear people asking questions like ‘Help us, we want to stay on Moodle, but you’ve got to help us make it competitive with Canvas and Brightspace so that we don’t have faculty demanding that we change.’ So you had these advocates who were asking that they need more help from the core product to make it easier to use. They incrementally do, but they never truly faced the challenge of, ‘hey, let’s rethink it.’ It’s just a challenge that they have. But they’re aware of it. They just are dealing with in a way that’s not going to radically change the experience.

Jeanette: Exactly. And I don’t know if it’s going to happen anytime soon. Moodle has an opportunity in the Moodle community to create something that could be really competitive. Especially right now, I think the market’s about to shake up in a serious way. I just don’t know if they’re going to do that.

Phil: I would argue that it’s less likely that they’re going to be doing it now because [00:16:00] for two reasons, from my view. I was at the conference, you got a good view of what the roadmap is. And they answered – this is not on their roadmap, dramatically changing the intuitive design or native cloud hosting capabilities, sort of the core of where the market is going.

The second reason is Moodle is expanding worldwide with this pandemic. As the number of sites getting launched is just skyrocketing. It went from 103,000 registered sites to 158,000 registered sites. If you’re in the Moodle community or certainly core, you’re seeing your usage is going up. ‘Why should we make this radical change?’ And I think the view is almost of North America as the outlier, or market that they can just say that that market is different than everywhere else. ‘Let’s not worry about it.’ So I think their perspective is quite different from other LMS providers.

Jeanette: I mean, it makes sense, [00:17:00] I think, from a from a corporate, or from a business side. I do think, though, it does give opportunity for Canvas and for D2L and for some of the other players that we talked about last week, Aula, to kind of go in and swoop in and get that global market, since they have products that are easier to use, quite frankly.

Phil: And that gets to, there’s still a lot of secondary you could call them secondary players. Aula is secondary because they’re a new player and they take a different approach, and we mentioned that last week. But you have secondary players – and Sakai is at this stage very much a secondary player. And the question to them is how long they hang on with a smaller and smaller community of universities still using it.

And you have the NEO from Cypher Learning, which is got some systems in the Philippines in some K-12 systems. But we’re about to get a demo soon, so we’ll [00:18:00] learn more about them – if they’re changing their strategy. And then who else do you have? Itslearning out of Scandanavia, which really lost quite a bit of their market to Canvas, but they’re still around. But you have these secondary players. But will any of them have a material impact on the market over the next few years? That’s the real question. I’m not sure what the answer is, but I think that’s a big thing to watch for as well. Will any of those players or somebody brand new come in and shake up the market? Because we’re getting to a point where the market with the Big Four of Moodle, Blackboard, D2L, and Intructure Canvas, they’ve been the big four for several years. This market has not changed significantly in terms of who the primary players are for at least six or seven years.

Jeanette: The one thing I want to note, especially the schools that are still on Blackboard, that there is opportunity [00:19:00] for it to change, and to change much more quickly than it used to in the past. That the transition in the old days from especially on-prem from one LMS to the other, was so, so, so painful that it was almost not worth it. And now it’s not that hard. Canvas has made it a lot easier to switch from a Blackboard, it’s not as painful as it used to be. For Canvas if they start kind of going downhill with all the layoffs and people aren’t seeing the support, or if the price increases become too much for schools and they can switch, it could be that that’s where these other players start kind of coming up, because they’re gonna make it easier to switch over.

Phil: Them or, as we said, D2L.

Jeanette: I mean, D2L, of course.

Phil: When schools are aware of them.

But it’s also worth mentioning one thing about D2L = they’re hiring right now. You have Instructure doing a major layoff. You’ve got Blackboard that’s had just an ongoing [00:20:00] series of layoffs. Both of those are now private equity owned. Moodle, I think is sort of neutral in their hiring, not a huge amount of change. But certainly, of the major providers, it’s interesting that D2L is hiring fairly aggressively, and their main competitors are going the opposite direction. How long can they keep that up, and can they get over the awareness challenge that they have?

This is a tough market because I’m just thinking, as we’re looking at the prospects for all of them, we’re describing the barriers they face for each case – for every one, including the market leader. And this is happening at a time when the LMS is becoming more and more important. It’s an interesting market. It’s becoming important. You definitely have better products than you had 10 years ago. But at the same time, you’re dealing with layoffs. You’re dealing with challenges of awareness. You’re dealing with challenges of [00:21:00] people moving away, or being hesitant with, the open source model. This is just a market that’s has no real market momentum for exciting new change.

And anytime you have a gap like that, it’s an opportunity – based on what we know now – the opportunity to fill that gap is either from D2L getting over the awareness challenge and getting people to seriously consider them, or it’s somebody like an Aula who comes in as a new provider and starts taking the momentum. Which of those two are going to happen, if either, is a lot of the question I think we’ll look at over the next year or two.

Jeanette: And I have a prediction there.

Phil: Go, go. OK.

Jeanette: Well, no, I’m not going to predict which company, but I have a prediction that I think that a lot of this is going to depend on how much more invested faculty and even [00:22:00] students are in the selection of the LMS. And I think because of COVID, people are much more invested in what this platform is, and what it can do. And I think that’s going to be a major component in these selections.

Phil: Well, that’s definitely what we’ll keep watching. So I was hoping for you to make some more concrete predictions, but I do think that that’s a very important point.

Jeanette: I’m not I’m not done with the Negroni. And we’re about to, I can tell we’re wrapping it up. So, maybe one of these we’ll do shots, but until that happens, I think I’m good.

Phil: Well, it’s great talking to you. And it’s good to spend a lot of time talking about other players in the market. And we will talk to you all later.

We wish you the best as you deal with planning for Fall 2020 and beyond. Stay well and please don’t hesitate to reach out if you have questions or comments. We’d love to hear from you directly.

Sincerely,

Phil on behalf of The MindWires Team