Dear LMS Market Analysis Subscribers,

Globally we are in a period of momentous changes for society at large and for the EdTech market. For this month I wanted to share updates on LMS vendor ownership and management, some useful Covid-19 data for US institutions moving to virtual delivery, and some thoughts on the future of the LMS market. 

Given the unprecedented nature of these times, there will be more speculation and soapboxes than is typical. 

Management and Ownership Updates: Instructure, Blackboard OpenLMS, and D2L

In an article this morning from EdSurge about impacts of Covid-19 on the investment community, there was an interesting comment from a VC.

“Matt Greenfield, managing director of Rethink Education, also says activity has been about the same so far. ‘We still have a very rich pipeline’ of incoming pitches and potential deals. ‘Coronavirus changed our travel behavior, but it’s certainly not changing our investment behavior.’”

While EdTech investment and mergers & acquisition activities are secondary right now, they are still important and will have long-term impacts on the LMS market.

Thoma Bravo’s tender offer to acquire Instructure is set to expire on March 21 (Saturday), meaning that we should find out whether Instructure will remain an independent publicly-traded company or go private under Bravo ownership.

With the market changes, I have to think that the likelihood of an acquisition going through (the holders of at least 50% of Instructure shares have to agree to the $49 / share offer) has increased significantly. For large investors, cashing out at the same price as offered is looking more appealing with the dramatic stock market drops. I’ll avoid any further speculation, but you should expect definitive updates by the end of the week.

Blackboard announced last week that it has sold its OpenLMS (the LMS formerly known as Moodlerooms) assets to London-based Learning Technologies Group (LTG), a publicly-traded conglomerate whose holdings include Rustici Software, best known for their work on xAPI standards and SCORM Cloud. Blackboard CEO Bill Ballhaus positioned the sale as increasing Blackboard’s focus.

While Blackboard stuck to its commitments to keep OpenLMS as an open source project and to support the open source community, the company was never able to invest in OpenLMS. LTG is likely to be more aggressive pushing for growth, including additional M&A activity. I expect to write a more-complete blog post soon to analyze this acquisition.

Cheryl Ainoa, COO for the past four years at D2L, is leaving the company for a new role at Walmart. This move is significant in that much of the product redesign of Brightspace and the move to a cloud-based LMS happened directly under Ainoa’s leadership. Most of the new leadership brought in under the COO remain in the company. While Ainoa is moving on to a much bigger opportunity, and while she was not the sole reason for company changes, this transition will present a challenge to D2L to see if they can keep pace with the product and service improvements they have made recently.

Data on US Moves to Virtual Delivery

One of the biggest stories in the Covid-19 outbreak is the rapid shift of traditional face-to-face courses to remote delivery, primarily through online education. Early on, this move is not the same thing as online education as we have known it – with real course design, considerations of equitable access – but rather an ‘all hands on deck’ moment. The industry will have to shift out of emergency management thinking soon, but for now there is a rapid and unplanned shift going online.

This shift will have a major impact on the LMS market and online education market, but more on that below. What I’d like to share first is some data based on the Google Sheet shared by Bryan Alexander with help from Ithaka S+R and others.

Unfortunately I believe the data will lose its usefulness beyond March, for various reasons. But for now the data show that we have not yet hit the biggest spike of usage for online courses, at least in the US.

Why is this so? Part is the timing of the f2f closures around Spring Break in much of the US, as well as the end of the term for quarter-based institutions. Furthermore, quite a few schools have extended their closures to allow time for faculty to make the transition.

In fact, we should expect total usage of learning platforms to more than double – in terms of number of institutions and student enrollment – at the beginning of next week.

Thoughts on Future of LMS Market

There are several LMS market implications of the rapid move to online delivery of f2f classes that I believe are already becoming apparent.

One is that the importance of reliable and intuitive platforms is becoming even more important than it has been in the past decade. LMS vendors are already experiencing exponential growth in platform usage and loads, and as described above, the real spike will probably occur next week (at least in the US). It is extremely difficult to manage this rapid scaling under self-hosting models, and it is fairly difficult under LMS vendor hosting facilities (managed hosting). The importance of cloud hosting – through AWS or Microsoft Azure or Google Cloud, primarily – is increasing in importance.

Likewise, in these days of forced migration to online environments for all faculty, including those who have been most resistant and without sufficient time for training, increases the demand for intuitive platforms at the expense of full sets of deep features. There is balance here, but the scales will be tipping even further towards intuitive design.

What I expect we will see in LMS market activity (remembering that this is speculative in nature):

  • In the short term (3 – 4 months), LMS market activity will slow down as institutions rightly focus on supporting their existing environments and have to delay LMS evaluations. Furthermore much of the activity will be centered on Zoom and Microsoft Teams and Blackboard Collaborate without serious consideration of strategic usage of the LMS.
  • In the medium term (4 – 24 months), LMS market activity is likely to increase, particularly in markets with higher percentages of self-hosting. This would mean that markets in Latin America and southern Europe, for example, that have been slow to move off of self-hosting models are likely to re-evaluate what is now a mission-critical platform. It will no longer be acceptable to ignore the issues of privacy, disparate impact, and structured course designs that the LMS is designed to address.
  • In the long term (24+ months), I see the LMS as moving up the food chain in importance to senior leadership of colleges and universities. The LMS market will have to adapt, but it will likely become more, not less, important.

Please remember that these observations are speculative in nature, and I plan to develop the ideas and look for evidence to back them up or adjust the outlook in future newsletters and blog posts.

In the meantime, we wish you the best as you deal with these rapid changes. 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,

The MindWires Team