Saba Acquires Centra
In the last 12 months we have seen many mergers in the learning market take place: Oracle’s acquisition of Peoplesoft, SumTotal’s acquisition of Pathlore, Saba’s acquisition of Thinq, and KnowledgePlanet’s acquisition of KnowledgeImpact.
Why these Mergers are Occurring
In general the enterprise learning and LMS markets are maturing. The LMS market has grown big enough ($450M+ in 2005) to attract major providers (Oracle, Peoplesoft, SAP, and many more). At the same time, the “e-learning” marketplace, characterized by hundreds of companies which sell tools, content, and services, has become very large (over $9 Billion according to Bersin & Associates estimates). As we have written in other columns, “E-Learning” is no longer just an exciting new idea, it is now a mainstream approach to corporate training and communications.
As e-learning matures, corporate training and HR managers are interested in more complete, integrated solutions. For example, while virtual classroom technology was exciting and novel in 2001 and 2002, today the issues organizations face are:
How do I make my e-learning technology easy to use?
How do I integrate my virtual classroom solution with all my other e-learning and LMS software?
How do I determine the best combination of these tools for blended learning in the various programs I need to build and deliver?
Our research shows that 35-40% of all corporate e-learning programs now use blended learning approaches: bringing together live, online, self-study, simulations, and a variety of approaches to solve a business or training problem. How do companies easily integrate, manage, and monitor these various pieces of an overall e-learning tapestry?
The Four Stages of E-Learning
We have identified four clear stages of maturity for the adoption of e-learning. (For more details on these stages, read our research The Four Stages of E-Learning: A Maturity Model for Online Corporate Training.)
In Stage 1 organizations typically purchase off-the-shelf content to get started. Today approximately 50-60% of large organizations have reached stage 2 and stage 3, where they are focused on the development of integrated blended learning programs and the alignment of these programs with enterprise-wide initiatives. For example, when Microsoft wants to certify its large account solution sales representatives they use a combination of simulations, instructor-led programs, self-study, and coaching by their manager.
The biggest challenges in these programs are designing the right mix, giving learners an easy-to-use environment which enables them to use the blended activities, and making it possible to measure completion and learning effectiveness across these different learning activities. Most LMS systems today still view e-learning objects as “courses” not “programs,” making this integration difficult.
Enter the Saba – Centra Vision
Saba’s vision with Centra is to solve this problem in a single, enterprise-wide solution. By closely integrating Centra’s virtual classroom, content management, and development environment with Saba, clients will have an easy-to-use, easy-to-manage environment for any form of blended learning program. We believe that the value of this solution is high: organizations can save millions of dollars on systems integration, easily deploy an easy-to-use learning environment, and obtain detailed reporting and completion information in a reliable manner.
Centra also has a variety of tools for knowledge management and access to experts online. As organizations move from Stage 3 to Stage 4 they realize that the vast array of learning assets they build needs to be managed, reused, and leveraged across “on-demand” learning needs. This new era of e-learning, which we call Learning on Demand, requires an even higher level of integration and content management. We think that Saba and Centra’s vision for this solution is right on track.
The Reality: Centra and Saba
Founded in 1995, Centra was the company that really brought virtual classroom technology to the corporate training market. Leon Navickas, the founder and CEO, was a software executive at Lotus and he keenly understands the market for collaboration and end-user enterprise software. The company grew very rapidly during the 1998-2001 timeframe and then stalled as the web conferencing software market became crowded with Webex, Microsoft, and a host of other players. In 2001 and 2002 Centra was one of the hottest e-learning companies in the market but then stalled. Centra tried to refuel its growth by moving into the market for general purpose web collaboration systems.
During the last 10 years Centra has maintained a strong set of customers and is now refocusing on its learning roots. In the last quarter the company has become profitable. Today Centra is generating $9-10M of revenue per quarter and is providing a wide variety of solutions beyond the virtual classroom including a low-end LMS, a content management system, and a knowledge management solution.
Saba, located across the country, is in a sense the enterprise management software company which matches the Centra story. Saba pioneered the enterprise Learning Management Systems market, grew rapidly in the 1998-2003 timeframe, and has just relaunched itself with a brand new human capital management solution called Saba 2005. (For more information on how learning management and performance management are converging, please read our study The Convergence between Learning and Performance Management: Has Talent Management Arrived?). Saba has been reinventing itself over the last year and is focused on providing a totally integrated learning and talent management solution for learning and HR managers.
Saba and Centra have worked together for more than five years: they claim to have more than 40 enterprise customers running a tightly integrated version of both products today.
Implications for the Corporate Training and HR Manager
As I describe above, the potential for this merger is great. By integrating Centra’s products with Saba’s, customers should be able to purchase a more seamless solution which helps them evolve their e-learning strategy from Stage 2 to Stage 3 and Stage 4. At the same time, there are risks, which as analysts we must point out:
Positive: Centra and Saba customers gain commitment and support.
Any Centra customer who already has Saba should be thrilled. The product integration should become deeper and richer quickly. Customers of Centra who may have wondered whether Centra was committed to R&D in the e-learning market should also feel better — Centra now has more R&D and financial capabilities to help the company survive and thrive among the live web collaboration giants.
Positive: New Saba clients gain greater integration.
New or prospective Saba clients now have the prospect of a more integrated live e-learning solution. Companies who recently purchased Saba or are considering Saba can consider Centra as an integrated solution — and can hold one vendor accountable for integration and support.
Execution Risk: Product strategies must be rationalized.
As with any of the software mergers we discussed above, the biggest risk is the company’s ability to quickly and effectively combine the product roadmaps into an integrated solution. The company now has two LCMS platforms and two LMS platforms (Centra has a low-end LMS). The company has two R&D teams, two ASP solutions, and two sales forces. Saba is committed to working with non-Central collaboration providers. Centra is committed to providing an open API to non-Saba LMS companies. Each of these product and market issues brings challenges – key product management decisions could easily alienate existing customers and partners.
|Business Risk: The collaboration market is crowded and changing quickly. Webex, Microsoft, Skillsoft, and Macromedia/Adobe have all thrown down the gauntlet. Each is focused heavily at delivering an integrated, high value, easy-to-use solution for enterprise live collaboration and training. While each product offering has different areas of strength and focus, buyers do not live in an “All Saba, All Centra” world. We cannot predict the impact of RSS, podcasting, Groove, and new Microsoft Vista technologies. Now that Saba-Centra is nearly a $100M company and is committed to the web collaboration market, they must stay vigilant and invest heavily to make sure that they do not miss “the next big thing.”|
Bottom Line: Signs of Good Things to Come
There are many potential positive outcomes from this merger. After discussions with the CEOs of both companies I found myself agreeing with most of the vision, plans, and customer problems they are trying to solve. We look forward to staying close to the next steps in Saba’s evolution and giving you the insights and advice you need to optimize your enterprise learning programs and investments.