The Ever Changing State of the Learning Technology Industry

Posted on March 31st, 2013.

Over the last ten years the learning technology industry has undergone radical change. With a flurry of acquisitions and many new technologies now available for learning, it is increasingly difficult for a corporate training manager to develop an integrated learning platform. In this article I review the history of this space and point out some important trends.

Evolution of the Learning Management System (LMS) Market

LMS systems were originally developed as back office applications used to schedule and manage formal training. Many companies had them, and they often ran on mainframes.

In the late 1980s a few pioneering companies (Saba, Docent, and Pathlore) set out to build a new generation of systems to manage not only formal training, but also e-learning and other forms of digital content. These companies set in place an explosion of innovation to build e-learning platforms. My former employer, DigitalThink, built its own “cloud-based LMS” back in the early 2000s which let customers brand their own portal, and we found ourselves competing with dozens of vendors selling different shapes and sizes of online learning management systems.

These original e-learning platforms managed digital content, competency models, and offered customized portals to let companies brand and customize their learning experience. Initially developed as content delivery platforms, these early players (Learn.com and GeoLearning, for example) offered their platforms “on-demand,” a phrase which is now called “in the cloud.”

In the mid 2000′s a shakeout started and vendors segmented themselves into two categories: those that focused on global enterprises – (Saba, SumTotal, Plateau, PeopleSoft, Oracle, and SAP) – and vendors which focused on the mid-market (Learn.com, GeoLearning, Blackboard, Certpoint, CornerstoneOnDemand, SilkRoad, NetDimensions, and others). Our LMS market report in 2005 tracked more than 30 major vendors and each was growing. Many were underfunded, but still built great products focused on addressing this rapidly growing market.

Then came talent management.  around 2006 the talent management software market exploded and a few innovative LMS companies took the risk of adding performance management and development planning tools to their products.  Now the system became useful for HR managers, not just training organizations. Providers like CornerstoneOnDemand, Authoria (now part of PeopleClickAuthoria), SumTotal, and Saba started to promote the idea of a “talent management suite” and set off a race to build broad talent management platforms. The original LMS market was forever changed.

For nearly seven years vendors have added talent features to their learning management systems.  Cornerstone extended its product to an enterprise class talent management platform, growing to a publicly  traded company now worth more than $1.3 billion.  Saba extended its technology into social and collaboration systems and continued to grow in the high end of the market. Plateau, which built a complete talent management suite, was acquired by SuccessFactors and then SAP. Learn.com was acquired by Taleo and then Oracle. SumTotal Systems acquired GeoLearning and a variety of other talent management companies and built an entire suite, including products for payroll and workforce management.

This reset the bar. Now buyers expected their LMS to be integrated into a talent management suite, forcing other talent software providers to build or buy an LMS. SilkRoad acquired an LMS.  PeopleFluent (the combination of Authoria and PeopleClick) acquired an LMS. Kenexa acquired Outstart (a content management and LMS vendor). ADP (which acquired Workscape) launched an LMS.  During the last five years many LMS companies spent more energy looking for buyers than they did building new features. Recently one of the last vendors of this vintage, Certpoint, was acquired by Infor.

While all this was going on, the virtual classroom and collaboration software market was growing rapidly, and these vendors found out that many of their customers were using their tools for training. So Adobe, Citrix, and WebEx all added learning management features to their collaboration tools, giving buyers even more options for learning administration. Skillsoft, the largest provider of e-learning content, extended its platform with LMS features and now positions Skillport as a learning management system.

Where Are we Now:  Innovation Starts Anew

Well today the world has changed. The $1.8 billion market for core learning technologies (Read LMS 2013 for more details www.bersin.com/lms ) has continued to grow, driven largely by replacements, expansion of the market to mid-sized businesses, and growth outside of North America.

Organizations now widely use social tools, video platforms, and knowledge sharing as a major part of their training infrastructure, and they use an array of new technology to run their operations. Since many of the early vendors have consolidated and are now focused on talent management strategies, the market has created the opportunity for a new set of innovators. We call these new providers “emerging players” or “new social LMS systems.” They offer products in the cloud, so you as a training manager can sign up to use them with little more than a credit card.

And new forces are driving innovation. Moodle, an open source LMS which was developed for university education, is now widely available from many vendors. And massive online open courses (MOOC’s) available from organizations like Cousera and EdX are building their own form of learning platform as well. MOOC learning platforms are really very similar to corporate LMS systems, just more focused on consumer usability, e-commerce, and features to proctor exams and enable tutors to interact with students.

The Learning Technology Market Maintains its Importance

Through this last ten years of change, our research shows that the corporate learning management system continues to be a business-critical technology platform. Most organizations offer training and today nearly 2/3 of it is driven through digital content, mobile devices, video, and other new media sources (Source: Corporate Learning Factbook 2013).

This means that today’s modern learning technology platform should manage formal courses, all forms of digital content, e-commerce, social features, employee profiles, competency-based learning, assessment, and often integrate with talent management. So it’s not a simple piece of software.

While the market has matured in many ways (Oracle, SAP, ADP, IBM, and many other major payroll providers have jumped into this market) it continues to evolve. Problems like knowledge management, internal social networking tools, user-developed content sharing, mobile learning and knowledge tools, and expertise management continue to be new areas for innovation.

Many clients tell us that their current learning technology infrastructure is still messy. Organizations typically have an LMS somewhere in the back office hidden behind a corporate portal. But many still have multiple independent systems (one for sales, one for corporate, and a series of local training platforms for different business groups). One of our large clients has seven different learning platforms and is finding it very difficult to figure out much money they are even spending on training.  Without a strong corporate training group (or well established rules to govern corporate training), it’s very common for local groups to develop and launch their own training programs.

BigData and Analytics Drives Consolidation

Today companies want to apply BigData analytics techniques to their training. Why is our leadership pipeline weak?  What causes the big variations we have in sales performance? How can we improve new hire onboarding and productivity?  Training plays a part in answering these questions, and the data about training and knowledge management should be consolidated so we can analyze it effectively.

Increasingly, companies do need an integrated and modern learning technology architecture.  It is nice to have a single global LMS, but frankly it’s a somewhat elusive problem.  As soon as you standardize on the LMS you find a lot of “edge cases” where people want to do some form of training which seems “non-standard” and can’t be tracked completely.  So these LMS systems should be highly configurable and many are customized in some way.

Where the Market is Going

The following chart shows our four-stage maturity model for corporate training. As you can see, the evolution of the learning technology market parallels the evolution of L&D itself. Training departments start at a tactical level and evolve over time to end-to-end capability development. So the learning technology market has both supported and evolved along with the L&D function itself.

learningMM

Fig 1: Bersin by Deloitte High-Impact Learning Organization Maturity Model®

This fascinating market simply will not sit still. Now that the ERP and payroll providers largely provide learning systems, emerging providers and niche players are emerging. In our latest LMS market research (www.bersin.com/lms) we actually found more than 200 companies. These emerging players serve specialized needs (i.e. retail, small business, call centers, healthcare, etc), may focus on social features, and are very easy to use and configure.

More and more of the standard learning platforms support mobile learning as well. SAP, which acquired Plateau and Jambok as part of its SuccessFactors acquisition, now claims that its mobile solutions are the first new versions they ship. SumTotal is moving in the same direction.

The value of an integrated learning platform is increasingly high. Young employees expect their corporate systems to be as easy to use as Facebook or LinkedIn. And we, as HR and L&D leaders, want them to use these systems. The war for skills is growing and we want employees to share their knowledge and participate easily in the social learning experience.

If you haven’t looked at your corporate learning technology for a few years now might be the time. While no company likes to spend money on these tools, they actually represent a very important platform to capture, manage, and improve your own intellectual property. And as training leaders know well, the ability to train, support, and engage employees in continuous development is a true competitive advantage.


This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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Josh Bersin is Principal and Founder of Bersin by Deloitte, a leading research and advisory services firm in enterprise learning and talent management.

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