The LMS Market: Hotter than Ever

In the last 60 days I’ve had the opportunity to attend five major industry events which cover corporate learning: user group meetings at Plateau, Saba, SumTotal and Taleo and the HR Technology Conference. While all this travel has taken a toll on my sleep, it did reinforce the tremendous importance of corporate learning technology.

In this blog I would like to highlight a few recent thoughts for us to consider:

  • Corporate training is a huge issue in business today:
     


    Organizations in all industries are struggling to upgrade and revamp their skills.  I spoke with learning leaders at major banks, defense contractors, trucking companies, and government agencies – all reinforced the importance of building stronger technical and operational skills in their workforce.
     


    Last week I had the opportunity to talk with several of the HR and L&D leaders at Intel, one of the most successful technology companies in the world.  They told me that 80% of their total staff is technical in nature, and more than 8,000 have advanced degrees.  Intel believes that every year’s revenues come from products invented in the last 18 months.  Talk about a rapid product cycle!



    Intel views employee development as one of the most important investments they make – and they have a broad perspective on development as a total experience for professionals:  training, job rotation, performance management, and stretch assignments.  Intel is also making major investments in internal knowledge sharing, all built around their LMS (Saba).  They understand, as do companies like Accenture, Caterpillar, Qualcomm, and many of our other clients, that skills specialization is not just a “nice thing” to have – it is a business imperative.

    I think the $850 Million LMS market will continue to grow at 10-15% as we have predicted.

  • Learning Management Systems are still difficult to manage:



    Many of the companies I talked with (including the Department of Health and Human Services, which manages more than 77,000 employees) told me about the complex, multi-year implementations they go through.   Organizations invest millions of dollars in their learning infrastructure – and they view it as an essential infrastructure.
     

     
    One of the user groups I talked with asked their customers to try to “rank” their feature needs for the future.  These companies had to make the same difficult tradeoff as their vendors:  how much should I spend on new learning features, collaboration, talent management, and integration software.What did they choose?  Almost all the customers told their vendor that they wanted more interoperability.  Why is this?  The corporate LMS lives in a complex world of content, assessments, tools, social networks, and HR systems.  Today’s LMS is a critical “system of record” which must interoperate with all these systems.  Vendors and customers must consider integration one of their most important design decisions.

  • Informal Learning is here to stay:



    I had a lot of opportunities to talk about informal learning with many organizations.  It is here, it is real, and it is confusing.  Nearly every organization is trying to find new ways to embrace collaboration, social networking, knowledge sharing, coaching, mentoring, and other forms of informal learning in their strategy.  In some cases the LMS is playing a major role – in other cases the LMS has been left behind.



    This year Saba has introduced Saba Social;  Plateau has introduced the Talent Gateway;  and other vendors (Cornerstone, Learn.com, Mzinga, and others) have jumped on the bandwagon with integrated tools to make informal learning easier.

  • Talent Management and Learning Management have converged:
     


    Almost four years ago we wrote a report on the convergence of learning and performance management systems.  Today the convergence has arrived.  While many training applications are “pure training” (customer training, for example), almost all organizations now realize that they must build a plan to integrate the management of training with the process of development planning, performance management, and succession management.



    The LMS vendors which have strong talent management offerings (and almost all do) are now finding many customers willing to consider their talent management solutions as their “one-stop” solution.Likewise companies that are doing business with Taleo and Halogen (which are newer to the LMS market) are now strongly considering their talent development offerings.  These worlds have now officially collided.


    This is not to say that all LMS’s are the same.  The “industrial strength” LMS products from the experienced LMS companies (Plateau, Saba, SumTotal, Cornerstone, Learn.com, GeoLearning, and others) go far beyond the newer products offered by talent management companies.  But all solutions are going in the same direction:  an integrated “people management” platform that integrates LMS functionality with the rest of our talent management needs.


Bottom Line:


We are very bullish on the LMS market going forward.  The changing nature of the workforce, need to develop GenX and GenY workers, and the tremendous growth in informal and social learning will drive accelerating growth in the need for LMS solutions.  If your organization has not yet implemented a learning management system, mark my words:  you will before long.

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  • Thanks Josh, this is a pretty useful article for me to get a view into the US market for LMS. I also like your view as broader than the strict LMS view.

    In your opinion, are the open-source solutions still considered as a no-market (in the same broader view of “talent management suites”)?

    Some of the Bersin & Associates website content helped me understanding the big picture as well. Thanks for the resources.

    • joshbersin

      Hi Yannick. We dont see the open-source LMS systems having any major impact on the corporate market. Corporate LMS systems really need to be industrial strength (e.g. the data is often used for compliance and government reporting) – and the cost of maintaining open source is often just not something a major business wants to incur. There are a flurry of small LMS startups using open source as the base, but the real corporate LMS market is still a vendor-driven space.

  • N Smith

    Hi Josh, I’ve only just come across your post. While OSS solutions may not be impacting the US market significantly, I have to respectfully disagree with your prediction as it applies here in Asia Pacific (and other parts of the world). As an independent LMS consultant, I’m regularly seeing OSS solutions (Moodle, in particular) win bids head-to-head against the ‘big boys’ (especially SumTotal and Saba who seem to have the biggest presence of the major players down here). Organisations such as British Petroleum, Shell Oil, Intel, Gulf Agency Corporation, most of the New Zealand government (who have *very* strong compliance, security and reporting requirements) as well as many other large firms and governments are selecting Moodle. I firmly believe this is only going to increase as Moodle adopts more corporate training functionality.

    Additionally, I also have to disagree with your comment that the cost of maintaining open source is “often just not something a major business wants to incur.” The cost of implementing, maintaining and supporting OSS is often *far* less than just the licensing costs alone of many of the major learning management systems.

    Thanks for your great contributions to the learning space!