Posts

Did Instructure Refute LMS Market Slowdown? It’s a matter of semantics

, /4 Comments/by

On yesterday’s Instructure Q3 earnings call, the company’s opening statement seemed to refute the LMS market slowdown that we noted just over a year ago.

Now I would like to share details on how key areas of our business are performing. Domestic Canvas is progressing nicely, on track to deliver results in line with our outlook for the year. So while some analysts have been reporting a sharp slowdown in Higher ED LMS switches we are not seeing that trend in our domestic Canvas bookings. In fact our high ED domestic bookings are on track to be up this year over last year.

Brian Peterson at Raymond James is the other analyst besides us reporting on an LMS market slowdown, using independent data collection.

Did Instructure 1Disclosure: Instructure is a subscriber to our LMS Market Analysis service. refute our argument of “a sharp slowdown in Higher Ed LMS switches”? That’s a question that we take seriously, as it gets to our reputation and accuracy of data for market analysis. On one hand, if we have big holes in the data or even wrong data, we need to describe this openly and fix the problem. On the other hand, if our data is accurate, we need to call out why we have different interpretations.

One explanation that is becoming more clear is that we’re dealing with a matter of semantics, and Instructure’s statements include confusing terminology.

Before we go on, I should clarify that what we provide at MindWires and through this blog is LMS market analysis. We describe the relevant trends on the higher ed and K-12 markets and how to best understand what might happen in the future. We are not a financial analyst firm. My interest is in transparency and accuracy in market trends and not in stock prices.

Confusing Blog Post

Instructure changed their announcement strategy on new clients to list most of them in a blog post released just after the earnings call instead of during the call. In this blog post yesterday, Instructure did list some impressive new wins, including some that we did not yet have in our data set. We’ll highlight the domestic ones, since that is the scope of Instructure’s comments on our market slowdown reporting.

Previously, a list of customers from each quarter was highlighted on our quarterly earnings call, but moving forward, we plan to dedicate blog posts, like this, to highlight the organizations that are joining the Instructure family.

  • Princeton University, Wake Forest University, and Ferris State University were big wins that we already had.
  • Prairie View A&M, CalPoly Pomona, Eastern Gateway College, University of South Alabama, and Chapman University are wins that we found out about through the Instructure blog post. Note: Upon further research we discovered that CalPoly Pomona was not a new Canvas client – they remain a Blackboard client. Their listing in blog is based on some other system (e.g. Portfolium, MasteryConnect).
  • This is a good quarter with some solid wins, but let’s get to the confusing part.

Instructure also listed several clients that moved to Canvas years ago.

  • Skyline College in California adopted Canvas as its LMS through the Online Education Initiative (OEI) 2Disclosure, OEI is a long-time consulting client of MindWires, and I facilitated the LMS selection in 2015. back in 2016/17, and in early 2018 their academic senate even produced a report describing their cost savings by using this statewide contract.
  • Laramie County Community College adopted Canvas as its LMS in 2017.
  • University of North Texas Health Sciences Center adopted Canvas as its LMS prior to 2017.

Why would Instructure list old clients in a blog about “organizations that are joining the Instructure family”? This is particularly important when there are claims and counter-claims about market slowdowns.

I asked the company for a statement, and they clarified that this post included upsells and that they would update and clarify the language.

Depends on what the meaning of “Canvas” is

One issue I see is that the definition of Canvas is changing, and these changes confuse the story about organic growth. To understand, we should look at two changes in branding that happened this year. This summer Instructure rebranded Canvas from being the core LMS to being the Canvas Learning Platform. This bundled Catalog, Practice (acquired product), and Studio into the definition of Canvas.

The Canvas Learning Platform now includes the LMS and Practice and Studio and Catalog.

This fall, Instructure further rebranded the software products from their acquisition of Portfolium. In essence, the Portfolium Network kept is name and is offered free to all Canvas clients, but the revenue-generating portions of Portfolium are now branded as Canvas. Canvas Folio Management, Canvas Pathways, Canvas TalentMatch, Canvas Outcomes Assessment. In essence, Portfolium brand is the free stuff, Canvas brand subsumes the paid stuff.

Now go back to the earnings call. The prepared remarks are highly-edited and very deliberate in wording. I would think that the corresponding blog post was highly reviewed as well, but that is not as clear. CEO Dan Goldsmith acknowledged our (and Brian Peterson’s) LMS market slowdown analysis as LMS switches, but he answered this claim as “we are not seeing that trend in our domestic Canvas bookings“. During the Q&A portion of the earnings call, Brian Peterson asked for more details. [emphasis added]

Brian Peterson

And maybe just a follow-up on the domestic Canvas bookings. I think the comment that the higher ed bookings are on track to be up this year but that’s better than I expected. Can you confirm if that’s an organic comment or does that include Portfolium? And are there any large deals for the rest of the year that could swing that figure one way or the other? Thanks, guys.

Daniel Goldsmith

So that is 100% an organic number. You know I can’t speak to the rest of the industry but as you and others have been indicating you are seeing us sort of sharp slowdown in LMS switches. This year when we look at our domestic higher ed Canvas bookings, you know we are forecasting being up in bookings year-over-year which we’re pretty excited about.

Note that Goldsmith said organic but did not say explicitly that the bookings growth did not include Portfolium stuff. Is this due to Canvas branding now including Practice, Studio, Catalog, Folio Management, Pathways, TalentMatch, Outcomes Assessment when these were not included last year? I do not know the answer to this question but have asked Instructure for clarification.

Who else saw the slowdown? Instructure

We should be clear that Instructure’s CFO Steve Kaminsky noted the LMS market slowdown one year ago in their Q3 2018 earnings call.

So for renewals what we’ve seen specifically this year is fewer large deals in the multi-hundred thousand dollar range than we’ve seen in previous years. It’s a little still too early to talk about 2019, we’ll be doing that in a few months but we have seen that and when I referenced earlier that it didn’t look like we’re going to grow domestic Canvas by much of it all, that’s what I was really referring to, that’s the key driver there.

There has been a slowdown in the LMS market, but there is a question of when it started and whether 2019 is different than 2018.

At the very least, Instructure is playing around with semantics and not directly answering relevant questions about its core LMS platform and the LMS market slowdown. Instructure is coming out with statements that appear to refute our analysis of an LMS market slowdown, but they have not (thus far) provided meaningful specifics backing up their claims. When they appear to show new clients in a blog post, the conflate upselling old clients with acquiring new clients (but kudos for promising to fix the post). The definition of Canvas is changing, and it is not clear how much of their platform redefinition and M&A activity gets included in their definition of Canvas bookings.

If Instructure is changing these definitions and bundling in new items into Canvas bookings, then I do not believe that Instructure has refuted our claims of an LMS market slowdown. And I believe it is misleading to describe year-over-year changes in Canvas without clarifying how the definition might have changed. It’s all well and good that Instructure is expanding its product line and generating new business, but we need to have clarity around the core LMS market trends.

If we find out that our analysis of the market slowdown is inaccurate, we will update our analysis and publicly disclose the changes.

Update 11/5: CalPoly Pomona is not a Canvas LMS client. See description above.

Disclosure: OEI is a long-time consulting client of MindWires, and I facilitated the LMS selection in 2015. Instructure is a subscriber to our LMS Market Analysis service.

About the PowerSchool Acquisition of Schoology

, /1 Comment/by

On Thursday we got word that PowerSchool has reached an agreement to acquire Schoology, potentially shaking up the K-12 LMS market. EdSurge covered the news on Thursday.

If approved, the pending acquisition would mark the latest puzzle piece that PowerSchool has purchased this decade. Founded in 1997, Powerschool was first bought by Apple in 2001, and then by Pearson in 2006. The publisher sold the PowerSchool to private equity firm Vista Equity Partners in June 2015. Onex, another private equity firm, invested in PowerSchool in 2018 and shares equal equity ownership with Vista.

Since 2015, PowerSchool has acquired eight companies. Through these deals, the company has expanded its product suite beyond its original K-12 student information system offering to assessment, enrollment, special education and talent management services. Schoology would be PowerSchool’s second purchase of a learning management system (LMS), after it acquired Haiku Learning in 2016. Haiku has since been rebranded as PowerSchool Learning.

I have covered Schoology in a series of posts at e-Literate, mostly focusing on their partial entry into the higher ed LMS market. I described the company and product in some detail in this 2016 post. In addition, Jeanette covered the recent Schoology NEXT users conference. In the EdSurge article last week, she observed:

Even in third and fourth place, Schoology holds unique bragging rights. While Instructure, the developer of Canvas, has reportedly never lost a higher ed customer, “our data showed that two K-12 districts became the only losses of customers that we are aware of in the history of Canvas, with both selecting Schoology in 2019: Tempe School District and Turner Unified School District in Kansas City,” wrote Jeanette Wiseman, a senior associate at MindWires, an education market consulting and market analysis firm, earlier this year.
From her perspective, PowerSchool’s desire to add a popular tool to complement its flagship student information system makes sense. “They’re taking what is a really successful LMS in the K-12 space, and pairing it with the tool that all teachers have to work with, the SIS. All the data that schools manage … everything flows into the SIS,” she tells EdSurge.

New K-12 LMS Market Data

The “third and fourth place” comment relates to our new K-12 LMS Market Analysis service, and the data helps explain why this acquisition makes sense.

Like our higher ed market analysis, we (through our partnership with LISTedTECH) track historical trends in the K-12 market, allowing a view of market trends. One view is looking at percentage of North American (US & Canada) new LMS implementations each year by vendor.

LMS percentage of new implementations each year in K-12 market for US & Canada, showing Canvas, Schoology, PowerSchool, and All others.

Some notes from this data: 3Disclosure: Schoology, Canvas, and D2L are subscribers to our LMS Market Analysis service.

  • Schoology and Canvas are strongest competitors for revenue-generating LMSs in K-12, generating far more new business than other proprietary systems.
  • Not directly shown in this view, but Google Classroom is playing an increasingly large portion of the “All Others” category. This is important, but that solution does not directly generate revenue, and this story is about corporate finances.
  • PowerSchool did not get big impact from the 2016 Haiku acquisition and is a secondary player at best in the LMS market. This position has limited their ability to truly provide full enterprise K-12 solutions and “unified classroom”. Schoology, however, does have real market power in K-12.
  • At the same time, business is difficult in this market, and Schoology has gone through layoffs since their late 2015 fund-raising round of $32 million. Their biggest competition in the K-12 market is Canvas and Classroom (primarily) and D2L (secondarily), and it takes capital to aggressively compete.

Does It Make Sense?

Seen in this light, the acquisition makes sense from a PowerSchool perspective. They can now try a more realistic approach to fully serve K-12 districts with their “unified classroom”. This is a data play at its heart, as described in a 2016 EdSurge article on PowerSchool.

PowerSchool has now added an array of services in the past 15 months, including a learning management system (through its purchase of Haiku Learning), special education reporting (TIENET), student enrollment (InfoSnap), formative assessments (Interactive Achievement) and a Canadian SIS (SRB Education). The company doesn’t plan to halt its shopping spree, Gulati says: “We’ll continue to remain acquisitive and continue innovating.”

By hooking up different education tools into the PowerSchool SIS, which serves more than 24.5 million students across the world, Gulati hopes to make data more accessible and actionable for teachers. He’s not alone: other companies such as Alma, based in Portland, Ore., also aim to combine SIS, LMS and other education data tools into one single package.

“What we’re trying to solve is the problem of data silos and fragmentation in K-12,” he explains. “Teachers currently have to go through several systems to use all the tools they need for instruction.”

The acquisition also makes sense from a Schoology perspective, as they now have a “potential” source of capital in a difficult market. I put potential in scare quotes because we don’t know how much Vista Equity Partners and Onex will invest in Schoology product and service development. Vista is well known for having a playbook on how they view software companies, as described in a 2018 WSJ article.

The goal of the Austin, Texas-based firm, which is 18 years old, is to transform business-software companies into profit machines. Behind its approach is Mr. Smith’s belief that certain aspects of the companies Vista buys are interchangeable.

“Software companies taste like chicken,” he said at a conference in New York a few years ago. “They’re selling different products, but 80% of what they do is pretty much the same.”

Derek Jones, managing director at longtime Vista investor Grosvenor Capital Management, says “their process is like a factory. A deal comes in and it gets compartmentalized, and they apply experts on each compartment. After it goes off the assembly line, the margins are higher.”

The article is largely about Vista’s founder and leader, Robert Smith. Yes, the one who said he would pay off all student debt for Morehouse College 2019 graduates.

Potential Impact on Market

Assuming that Vista follows this playbook, there will be significant changes to Schoology’s operations, and if successful the company will become more profitable. If those changes take investment, Vista has been known to put in near-term money (often debt) to get longer-term payoff. The real investment is in PowerSchool, but there are certainly signs that Schoology will be run as a separate entity, at least initially.

I can see both positive and negative effects for other LMS competitors such as Canvas and D2L (something makes me think that Google doesn’t spend too much time worrying about this type of move). On the positive side, corporate acquisitions tend to create pushback from academics, although this effect tends to be greater in higher ed than for K-12. But certainly Schoology’s competitor’s have new marketing messages to use. On the negative side, one of the top four K-12 LMS competitors is about to get a lot more financially sound and likely more aggressive. The acquisition makes sense, but that does not necessarily mean that it will succeed.

For now, the pending PowerSchool acquisition of Schoology is more evidence that corporate finances will have an outsized influence on the LMS market. This move could even accelerate other LMS companies to shore up finances. We’ll keep our watch on the market.

Update: Make sure to read this post from our partners at LISTedTECH, including a really cool graphic showing K-12 SIS & LMS shared usage data.

Reminder: If you’d like a deeper look at the data, check out our new K-12 LMS Market Analysis service.

Disclosure: Schoology, Canvas, and D2L are subscribers to our LMS Market Analysis service.

LMS Decommissions: A view of lost clients and campus closures

, /5 Comments/by

One theme of our coverage of the academic LMS market over the past 1 – 2 years, both at e-Literate and in this blog, continues to be worth watching:

there are strong arguments that company financial health in 2018 / 19 for the providers will continue to have an outsized impact on the future of LMS offerings.

Both posts linked above described the overall market slowdown – where there has been a significantly lower number of LMS switches – that we first described to our LMS market analysis subscribers just over a year ago and in the blog starting this year. Our updated data over the summer shows no signs of the slowdown ending.

Another issue to consider is not just who is winning and how often, but from the opposite side. Who is losing LMS clients? Let’s first look at the US and Canada for LMS switches since the beginning of 2017, from our report this summer. The left side shows the previous campus LMS, measured by number of institutions, and the right side shows the new LMS.

LMS migrations in North American higher education from 2017 - mid 2019, showing the previous LMS on left side and new LMS on right.

Blackboard Learn lost the largest number of campuses, followed by Pearson LearningStudio and Moodle, then by D2L Brightspace and Homegrown and Sakai.

When looking at company finances, however, it is important to expand this view. One expansion is to look at global regions beyond North America. Another expansion is to include campus closures as a source of losses in addition to switches. The following chart shows the percentage of decommissions each calendar year in North America, Europe, Latin America, and Oceania combined (but note that North American numbers are the largest portion of these numbers). Decommissions is a combination of switches and closures, and the percentage is calculated on a per-year basis.

LMS higher ed decommissions per year for combination of North America, Europe, Latin America, and Oceania.

We see that two LMS end-of-life situations created by Blackboard acquisitions (where bought their competitor and eventually cut off the product line) were huge factors through 2015. WebCT was acquired in 2006 and shut down by 2013. ANGEL was acquired in 2009 and shut down in 2016.

Blackboard Learn has consistently lost customers since mid 2000s, with roughly 27 – 36% of decommissions each year coming from this solution recently. While Blackboard is the primary beneficiary of the LMS market slowdown, and its improved performance is clearly one of the causes of that trend, when looking at the data it is clear that they are still a big source of LMS losses. Consider their recent loss of long-time clients Purdue University and Princeton University. They also are at risk from several high-enrollment systems expected to complete LMS evaluation processes this year and next.

One of the most remarkable stories in EdTech is that Instructure has not lost a single Canvas higher education client due to an LMS switch. 4In terms of primary systems available campus-wide in higher ed. They have lost two K-12 clients to Schoology. But Instructure has lost clients due to campus closures, particularly from Education Corporation of America (two systems shut down) and secondarily from DeVry University (several campuses closed), mostly in 2018.

D2L Brightspace has lost a relatively small number of clients over the years, but their LMS decommissions ramped up in 2018 and 2019, largely due to campus closures. They were particularly hard hit by the closure of Dream Center systems (Art Institutes, South University, and Argosy University, all acquired from the for-profit EDMC).

Moodle has lost a consistent number of clients over the years, particularly in North America, despite it having the largest installed base worldwide. We documented a broader look at the overall changes in Open Source systems recently.

Pearson LearningStudio, formerly known as eCollege, was popular with for-profit chains and with some nonprofit fully-online programs, but Pearson shut down that system by the end of 2017.

Sakai has slowly but steadily lost clients for years, and it continues to do so with recent decisions at the University of Rhode Island and UC Davis, and potentially with several other decisions expected within the next year.

Every LMS provider loses clients, and these losses are important to understand in terms of the organization’s financial health. If you’re interested in seeing more information on the data behind these charts, we have them available with our LMS Market Analysis service.

State of Higher Ed LMS Market for US and Canada: 2019 Mid-Year Edition

, /12 Comments/by

It has been nearly a dozen years of sharing the LMS Market share graphic, commonly known as the squid diagram. This past year we at MindWires shifted our LMS Market Analysis reports from Spring / Fall to Mid-Year / End-of-Year to better allow analysis of entire years. With the release of our mid-year 2019 report this week to subscribers, it’s time for us to look at updates on the institutional LMS market for North America (US and Canada) higher education. Note that our coverage for the market analysis includes Europe, Latin America, Oceania (Australia, New Zealand, and surrounding island countries) as well as emerging coverage of the Middle East.

We present the following data “by institutions”, with market share as a percentage of the total number of institutions using each LMS as a primary system, and “by enrollments”, where we scale the institutions by its total enrollment. The latter better captures the business of the LMS market, since most licensing deals are based the number of students.

But first, let’s look at an updated LMS market share graphic for US and Canadian higher education. The original idea remains – to give a picture of the LMS market in one page, highlighting the story of the market over time. The key to the graphic is that the width of each band represents the percentage of institutions using a particular LMS as its primary system.

North American Higher Ed LMS Market share for mid 2019, based on number of institutions using each solution as primary system.

In the past five years, the LMS Market for North American higher education has become increasingly dominated by “the Big Four” (Instructure Canvas, Blackboard Learn, D2L Brightspace, Moodle) 5Disclosure: Instructure, Blackboard, D2L, Moodle, and Schoology are all subscribers to our LMS Market Analysis service. for institution-wide adoptions; the aggregate market share of year’s top four systems moving from 80% to 95% in past five years. Beyond North America, we are seeing the same trends in Europe, Latin America, and Australia / New Zealand.

Consolidation of North American Higher Ed LMS Market in Big Four of Canvas, Blackboard, D2L, and Moodle, moving from 76% combined share in 2012 to 95% today.

We recently described the overall market activity slowdown in that there are fewer LMS formal evaluations taking place since mid 2018, with data pointing to a 20 – 25% drop from a year earlier. This slowdown seems to be a type of plateau rather than a continuing trend, and we are watching to see if it is temporary or not. We have seen some increased activity this summer, but we are not ready yet to say if the trend has reversed.

In addition, last summer we shared the symbolic passing of the torch where Canvas surpassed Blackboard in US market share, which was the first time Blackboard was not the top system since the market emerged two decades ago. Despite several counter-forces (the market slowdown, University of Phoenix finishing its Learn Ultra implementation, and closure of for-profit chain and dozens of campuses using Canvas), Canvas has extended its North American lead – 28% vs. 27% based on count of institutions, and 35% vs. 31% in terms of student enrollments at those schools.

North American Higher Ed LMS market share by enrollment, with Canvas at 35%, Blackboard at 31%, Brightspace at 14%, and Moodle at 12%.

While D2L’s market share with Brightspace actually decreased slightly largely due to the closure of for-profit clients, they have picked up some impressive wins lately, including Purdue University, the University of the Sciences, University of Rhode Island, and nearly a dozen others (not all of which are publicly announced yet).

Moodle declined slightly – less than 1% in terms of institutions – over the past year. We have added Jenzabar to our main graphic, based on its somewhat persistent market share.

We have a broader set of data as part of our LMS Market Analysis service, and we will share more information on regions outside of North America this fall.

Update 8/16: Adding Disclosure – Instructure, Blackboard, D2L, Moodle, and Schoology are all subscribers to our LMS Market Analysis service.

BbWorld 2019: Multiple signs of progress but questionable results

, /by

Ignoring cause and effect, if there is one LMS company that has improved its market trends more than any other during the current market slowdown, that company is Blackboard. They are losing fewer customers, they won a big international account with dozens of schools, they finally have Learn Ultra truly in production at the course level, and their corporate financials improved significantly with the sale of the Transact business unit. As a result, this year’s BbWorld users conference had a much more positive tone than last year’s conference, both in company presentations and from customer sentiment. 6Disclosure: Blackboard is a subscriber to our LMS Market Analysis service.

The question is whether these improvements matter or not, and so far the market results are questionable. Better than before, but I do not see a turnaround yet.

Company Postion

From a corporate perspective, Blackboard emphasized its broad portfolio of teaching and learning products (Learn, Collaborate, Ally as the core) and more importantly the simplification of the company. According to executives, with the Transact sale and changes in product lines, Blackboard “has its most complex days behind it”, a point referencing the corporate financial challenges of the past year as well as the removal of non teaching and learning product lines. During an executive analyst session, CEO Bill Ballhaus was even more clear that this simplification trend shows them moving in the opposite direction of Instructure.

I found the BbWorld message quite consistent with what I described back in February at e-Literate.

Ballhaus said that Blackboard’s efforts to simplify the business were paying off and leading to greater focus on their core teaching and learning businesses. While the company was built as an enterprise software amalgamation based on 20+ corporate acquisitions, Ballhaus described how management is looking forward to becoming a Software as a Service (SaaS) business with a simpler focus. While the executives declined to comment on current M&A activity, Blackboard appears to be trying to sell its CashNet and Transact products that are part of the same business line focused on campus ID and payment processing, for up to $800 million and $720 million respectively2. Remembering that Blackboard reportedly tried but failed to sell the entire company for ~$3 billion in 2015, there is no guarantee that they will actually sell either unit or get the desired prices. [Update 3/7: Blackboard did end up selling entire Transact business unit , including CashNet, to PE firm Reverence Capital for a reported $720m.] But if they do succeed, the profits from either sale will help the company pay down and manage its debt. And it will back up the claims of focusing the company on core teaching and learning business.

Learn SaaS and Learn Ultra

From an LMS perspective, Blackboard continues to push Learn SaaS (the cloud deployment of Learn, both Original and Ultra, on AWS) and Learn Ultra (the new user experience design only available on SaaS). The company’s Learn SaaS deployment continues in its remarkably linear fashion.

Blackboard Learn SaaS deployments showing linear progression from fall 2016 to summer 2019, reaching 586 by BbWorld19.

As for Ultra news, I covered that situation before the conference:

Wait – didn’t Blackboard 1 make BbWorld18 largely about Learn Ultra and claim dozens of implementations? Yes, but they were playing word games as described last year. Learn Ultra was always planned to include changes down to the Course View, and last year we heard about institution-wide deployments of Base Navigation, with only pilots or partial implementations of the Course View. Put bluntly, I didn’t believe Blackboard’s claims in 2016 or even 2018.
But this year is different for a few reasons:
– IESB in Brazil completed its migration in March 2019.
– The University of Phoenix has completed its migration – as of April 2019 – from its Homegrown Classroom system to Learn Ultra.
– Several schools, including Northumbria University and Merrimack College, are completing their full migrations such that Learn Ultra (navigation and course view) will be the primary system as of Fall 2019.

Conversations at BbWorld confirmed my understanding with a few details added in. What I did not hear this year with any consistency is the past concern of “Ultra is just not ready yet”. Schools that want Ultra and see the value in its user design are moving that direction, although not in droves. Of the approximately 173 Learn Ultra clients as of the beginning of BbWorld19, roughly half are just using Base Navigation, one quarter are using a mix of Original View and Ultra View at the course level, and one quarter are fully moving to Learn Ultra at the course level.7Please read this post to understand terminology for Blackboard Learn. This latter number is somewhat aspirational, as several clients listed as full Ultra are starting institution-wide Ultra usage this fall or at the end of the calendar year, but the point remains that Ultra is fully in production.

BbWorld keynote presenting Learn Ultra adoption - half of 173 on Base Navigation only, quarter mixing Ultra and Original Courses, quarter on Ultra Courses.

One of those clients going full Learn Ultra is Galileo Global Education, as described in my February post:

Early in February Blackboard announced what could be their biggest LMS win since we broke the news of University of Phoenix selecting Blackboard Learn Ultra in late 2015 (a migration that is scheduled to be complete by this summer). From the press release about Galileo Global and their 100,000+ student system. [snip]

On the surface, this is a big win for Blackboard, but the story comes with a caveat regarding its relevance to the LMS market. What was not shared during our call with Blackboard executives is that they share their private equity owner (Providence) with Galileo as described in late 2017.

Galileo continues to represent a big victory for Blackboard, but I did not pick up signs at the conference that it is the beginning of a new set of new-client wins.

Blackboard Data

The biggest product development is Blackboard Data, despite a keynote announcement that felt like a timeshare pitch. We’ve got a really exciting free visit for you . . . which we’ll describe in a few minutes. No, really. Just a few more minutes. Oh, look, the keynote is almost over – Rachel, come on out and describe what they get. Looking under the hood, however, the Canonical Data Model and user interface access of the underlying Data Dictionary is significant and impressive. This data model is abstracted out of the LMS, and using Blackboard’s various SaaS products, presents a T&L suite data approach, with agnostic models for the LMS, video conferencing, student information system, and other tools. It also appears that this Canonical Data Model is designed to improve the notoriously weak signal-to-noise ratio of EdTech data analytics.

Eventually, the in-line data analytics – those presented in the LMS workflow (their word, not mine) – will also come from the Blackboard Data infrastructure. The first release of Blackboard Data stack will be Reporting, with no additional charge to customers. The Blackboard Data release to date appears to be a first step in a solid design, which is different than a productized suite. For example, the UI doesn’t connect the data dictionary to actual data extraction, leaving it as a live set of documentation. Like Instructure’s Dig initiative, this one deserves further analysis in a future post.

Does it matter?

Given these improvements, it is worth asking if there are signs that the market is buying what Blackboard is selling. At one level the answer is yes. The company’s losses are slowing and they picked up a big system in Galileo. At another level, however, it is clear that Blackboard has a long road ahead of it in a market with a long memory. Two examples help to clarify the disconnect between company / product improvements and market results.

The first example came during the executive listening session at the end of the conference, where it was obvious that Blackboard as a company really wants its customers to move to Learn SaaS and Learn Ultra of their own accord. There is no better way to further simplify the company than to move to one code base and one deployment option, in other words to start reaping more of the promised benefits of cloud computing. But they just can’t say that customers need to move. The closest the executives got at the conference was to say that they’ll know a lot more by next year on how long non-SaaS and non-Ultra will be available, but that customers will have plenty of time to migrate. They did not say that non-SaaS and non-Ultra will be available indefinitely, and this quite honestly makes sense.

The first audience question, however, led to a very long discussion about long-term self-hosted customers who just don’t have the resources to migrate. They might buy the idea of SaaS and Ultra, but that doesn’t mean they are ready to move. One challenge Blackboard faces is that with their market losses over the years, this conservative type is a greater and greater percentage of their remaining customer base. By the way, kudos to the Blackboard executive team for taking the time to discuss this problem so openly at the conference.

The second example came after the conference when yet another long-term client announced their decision to migrate away from Blackboard. Purdue University – including Purdue Global (the artist formerly known as Kaplan) and all Purdue campuses – was a key customer for Blackboard. They were a long-term WebCT client, even using WebCT Vista, and they could rightly be called a power user university. Purdue chose to move to D2L Brightspace, choosing that LMS over Blackboard Learn and Instructure Canvas. This is a big loss for Blackboard, and it comes in spite of all of the improvements listed above.

In the end, there are definitely improvements happening at Blackboard, but a lot of their big challenges remain in terms of market results.

Disclosure: Blackboard is a subscriber to our LMS Market Analysis service.

Postscript on D2L Fusion and LMS Market Slowdown

, /by

In O’Neal’s post yesterday he noted that despite D2L’s continuing improvements in its Brightspace LMS and its consistent market approach, we are just not seeing significant market changes.

Our view has not changed. D2L has some good wins lately (including several we expect to be announced in the next two months), but their overall market share is not improving in the core North American higher ed market. Phil will address this point in a separate post.

In interviews at the D2L Fusion conference, company executives essentially stated that their sales pipeline is strong, and they’re not seeing any sign of a market slowdown. These points could use clarifications for those following the LMS market.

Sales Pipeline vs Market Share

For its part, D2L has some recent wins in North American higher education this summer, winning new clients over Canvas and Blackboard and Moodle 8Disclosure: D2L, Instructure, Blackboard, and Moodle HQ are all subscribers to our LMS Market Analysis service. in competitive bids. These wins include the University of Rhode Island (moving from Sakai), Northeastern Technical College (moving from Moodle), and the Nebraska Methodist College of Nursing and Allied Health (moving from Jenzabar). In addition, we are aware of two large system wins (30,000+ students each) moving to D2L that we should be able to confirm within a month of two. I could see an argument of strong sales pipeline based on these wins and potential news ones this fall.

D2L is interesting, however, in that they are both winning and losing clients. Canvas in higher ed has only been winning new clients. Until the recent win with the Galileo Global Education, Blackboard had primarily been losing clients, where the primary question has been how fast these losses occur. Moodle is mostly losing schools or seeing them shift from self-hosting or mom-and-pop hosting to more professional cloud hosting. To get a sense of D2L’s market market wins and losses, consider the following two charts from our January 2019 LMS Market Analysis report show the migration of schools from one system to another during 2017-18.

LMS institutional migrations for 2017 - 18 in North America, showing the previous and current systems.
LMS institutional migrations for 2017 - 18 in Europe & Latin America & Oceania, showing the previous and current systems.

Note that D2L is the second biggest winner of new LMS implementations for both North America (primarily from Blackboard and Pearson) and the combined three international regions we currently cover (primarily from Blackboard and Moodle). But in North America, D2L also had a number of losses – takeaways where schools moved (mostly to Canvas). This year is different in that D2L has stemmed from losing clients to another system. We are finishing our mid-year report and will have more data in August to share.

D2L’s bigger “loss”, however, is the case of campus closures largely due to their wins in the for-profit sector and the Pearson LearningStudio end-of-life. The largest example is the closure of the former EDMC institutions (renamed as the Dream Center after converting to nonprofit status), a 2017 win. The net effect of both types of losses is that D2L is not gaining market share in the global LMS market based on our data, despite being the second-most-selected system for new LMS implementations. We’ll have to watch to see if their recent wins and sales pipeline changes this dynamic.

Market Slowdown

Despite D2L’s statements during Fusion interviews, we stand by our position that there is indeed a general slowdown for academic LMS market, starting last summer and continuing today. We have performed additional analysis for our premium subscribers showing that the slowdown applies beyond North America (it includes Europe, Latin America, and Oceania, with the exception of Blackboard’s recent win with Galileo), and it applies at small, medium, and large enrollment bands of institutions.

Brian Peterson from Raymond James recently downgraded Instructure’s stock based on his company’s data – independent of ours but coming to the same conclusions.

Proprietary checks indicate a meaningful deceleration in large deal activity in the North American higher-ed learning management system (LMS) market in 2018, with a double-digit decline in the number of full-year students, Peterson said in the Monday downgrade note. 

Despite this slowdown, Infrastructure’s Canvas LMS recorded an improvement in win rates in 2018, bagging the majority of large deals in the forth quarter, the analyst said. 

A resurgence in higher ed deals in 2019 seems unlikely given the modest year-on-year deceleration in the deal activity pipeline, Peterson said.

Combined, the two issues of wins offset by losses and the market slowdown clarify the challenges that D2L faces in turning its product improvements and recents wins into meaningful improvements in market share.

Disclosure: D2L, Instructure, Blackboard, and Moodle HQ are all subscribers to our LMS Market Analysis service.

InstructureCon 2019: A study in contrasts

, /3 Comments/by

This year’s InstructureCon LMS users conference was a difficult one to cover, largely due to contrasting messages that I heard – whether from interviews with company executives before the conference or from staff presentations during, whether from large established clients or from smaller or newer clients. On one hand, I was surprised the extent to which I heard about a company on edge, not understanding or knowing how to deal with recent pushback from clients and analysts. On the other hand, I heard from clients who were very happy (if not giddy) about being on Canvas and enjoying the community. 9Disclosure: Instructure is a subscriber to our LMS Market Analysis service.

Overlaying these contrasting views was the presence of investor pressure on the company, best exemplified by activist Praesidium Investment Management, whose public thesis is that Instructure stock would be more valuable if they shed their corporate learning business built around the Bridge LMS and instead focus on their strength in academic markets built around the Canvas LMS.

A lot has changed since last year’s InstructureCon. Dan Goldsmith replaced Josh Coates as CEO, with a mostly new executive team surrounding him (some of these changes pre-dated Goldsmith’s appointment). Canvas overtook Blackboard last summer as the top academic LMS in North America both in terms of institutional adoptions and number of student users, while remaining the fastest growing in much of the rest of the world – they are now more of a market leader than a scrappy upstart. Instructure outgrew the Keystone conference facilities and had to move to a traditional conference center for the first time, and they also moved the Bridge portion of the conference to a separate event in June. There had to be differences in the tone of the conference. The issue is discerning which changes and contrasting messages matter in terms of future company performance.

Product “News”

I put news in scare quotes as Instructure went out of their way to minimize expectations on product announcements and even on roadmap. The company went so far as to cram the main product keynote into the same slot shared by one of the external speakers, leading to a rushed but useful discussion and demo from SVP of Product Mitch Benson and colleagues. I personally could have used more information and less inspiration.

Benson described a redesigned Rich Content Editor (RCE) that includes drag-and-drop capabilities and more intuitive menu items, and they also shared more of their platform vision, emphasizing the importance of MasterConnect and Portfolium acquisitions. The long-delayed Quizzes.Next was briefly mentioned, with the current roadmap targeting full production (ready to become the default quizzing engine and replace the original tool) sometime next year as shown in the Canvas Community page.

As I have described before, Quizzes.Next is late. After being announced in summer 2016 with promises to be “made available to you over the course of the next several months”. It is now two years later, and the chart above shows, the product won’t be fully ready until 2020.

This update captures some of the contrasting messages. Besides executives being on edge, there is also some confusing messaging around Quizzes.Next. When I asked during interviews about this tool’s progress, I got a concerning answer talking about Instructure not ever promising to offer feature parity with the previous quizzing engine. Whatever the case of previous promises, I know that there are a minimum set of features that Instructure must deliver for true replacement of the old quizzing tool. Informal conversations with clients at lunch and outside of sessions seemed to confirm that this replacement is indeed in the future and not here today.

On the positive side, however, I think the current chart and roadmap appear to be realistic, and what seems to be most important about Quizzes.Next is not at the feature level. The bigger news is the re-architecture into a more scalable and more accessible toolset – mostly happening behind the scenes. Instructure is investing in Canvas, and much of that investment is along these lines of modernizing and making systems more accessible, supporting assistive technologies through out.

Below are some of the key product updates to Canvas coming out this year.

Canvas product updates planned for this fall - several around New Quizzes (aka Quizzes.Next) and the beginnings of Assignment tool changes.

Data, Data, Data

The most significant product news continues to be the evolving description of their Data, Analytics and “Dig” plans (scare quotes here and below as Instructure folks keep saying the name will change but no replacement name has been shared yet).

Data, Analytics and "Dig" header

Instructure started re-investing in data & analytics work over two years ago after initial phase of work in the 2013 – 15 time frame. The primary result from the earlier efforts was Canvas Data – the ability for schools to access data from the LMS and do their own data analysis work – along with several visualizations that were lightly used by faculty. During this year’s InstructureCon there were several schools (e.g. UC Berkeley, Stanford, and Seminole State College) presenting their own analysis tools and results – mostly basic analysis of grades and participation measured by discussion posts, assignments, and page views. While these stories largely were not sexy or truly innovative, per se, it is interesting to see real schools consuming data and figuring out how to improve their student success initiatives.

The biggest product showing for the whole conference was the new Analytics tool in Beta (schedule for full release by the end of the year).

View of Canvas Analytics in beta, showing faculty view of a course with drill down into one assignment.

The focus of this tool is to improve faculty visibility of student performance within courses, with ability to compare results (e.g. section to section, or even section to student) or to drill down into specific assignments or students, as shown in this video.

Live demo during InstructureCon 2019 of Analytics faculty view

Beyond the Analytics tool, “Dig” is touted as a set of AI and machine-learning tools (or products to be sold separate? the details are not clear) with the goals of:

  • Help faculty and staff gain deeper insights into student success
  • Help institutions support best practices in usage and course design
  • Help students stay focused and succeed

The only tangible example of Dig mentioned at the conference was a nudge system to be released later this year where the machine learning is to build a profile of each student using their historical course data – not just the current course. The idea is to better understand individual student habits to let the system know whether, when, and how to send a nudge about a late / missing assignment or poor course performance. I’ll have more to share on this subject in a separate post.

Contrasts

The reason that the issue of contrasting messages matters is that it takes thick skin to stick to a strategy while also understanding pushback coming from analysts or customers. I have talked to several schools who are frustrated that it does not appear that Instructure executives fully hear what they are saying about delayed or missing functionality, or are concerned about company direction in data & analytics or consistent customer service. And when I or Jeanette asked questions in interviews, we got some answers that were almost dismissive of the unique challenges around educational data usage, or sounded like mischaracterizations of customer sentiment. That matters, especially in a company like Instructure, as I described two years ago:

While Canvas is a market-changing platform, that is not really Instructure’s primary strength. Instructure as a company is the real strength.

But Instructure’s competitors should not pop the champagne yet. Even for the frustrated clients, I am not aware of any who are thinking about leaving Canvas, and the company’s win rate for new LMS implementations has not dropped. The current re-architecture of Canvas to improve scalability and embed accessibility support throughout is making Canvas a better platform. And I heard many examples backing up Goldsmith’s claims that investment in the Canvas product is increasing.

There’s a lot to watch here. Instructure is the market leader in the academic LMS space and continues to perform well. It will take some time to see if the contrasting messages I heard will adversely impact the company’s future or if their company culture will continue to prove their biggest advantage.

Disclosure: Instructure is a subscriber to our LMS Market Analysis service.

Schoology NEXT 2019: Increased focus on K-12 LMS Market

/1 Comment/by

The following is a guest post by Jeanette Wiseman, consultant at MindWires and long-time observer of EdTech markets.

In August MindWires plans to release, along with our partners at LISTedTECH, what we believe is the most comprehensive set of data on the usage of Learning Management Systems (LMS) and Student Information Systems (SIS) in North America K-12 school districts. At this writing, the data set includes the largest 3,000+ school districts.

While Instructure and Moodle serve the Higher Ed and Corporate learning spaces as well as K-12, in 2018 executives at Schoology decided to move the company away from actively selling and developing for Higher Ed and focus any new efforts on the K-12 market. This renewed K-12 focus by Schoology was quite apparent at their user conference, NEXT, which took place last week in Boca Raton, FL.

Unlike a Higher Ed LMS user conference where the majority of the attendees are the administrators of the technology – the IT or the academic technology staff focused on the enterprise level issues or opportunities facing their school – Schoology NEXT is attended mainly by teachers, instructional coaches, and instructional designers. You find yourself sitting next to an 11th-grade economics teacher or a middle school band director, many of whom attend the conference do so to fulfill professional development requirements. This situation sets a very different tone for the conference where the attendees are driven not necessarily by a new feature set or code base, but much more by how their teaching and learning goals are supported by technology. 10Of course teaching and learning goals are an important part of Higher Ed conferences, but for NEXT these were the primary goals, and the conference tone is quite different.As a former classroom teacher and a parent of three school-aged girls, it was inspiring to me to see the animated discussions and excitement around student-focused opportunities and challenges using technology from the practitioners themselves.

Marking the 10th year from when Schoology launched as a company, the conference had a lighthearted and fun kickoff, poking fun on how most people mispronounce the company name (I am personally guilty of this) with some interesting cameos. 11And let’s give Charlie Sheen credit for best pronunciation.

The first day’s keynote speaker, Eric Qualman, was a seamless addition with his talk on inspiration within digital leadership.  Overall, the NEXT conference showed Schoology, with its narrower focus, reaching directly to its core audience in a way that a company that has a broader user demographic could not do.

An interesting example of this focus is in the development of the gradebook as well as Schoology’s Assessment Management Platform (AMP), both of which were highlighted in the second day’s keynote. Over a year ago Schoology started to rebuild the mastery component of their gradebook to include features that are often requested in a K-12 environment, but ones that a typical higher ed or corporate client would be unlikely to use. While most LMS’s will have a mastery component to their gradebook, Schoology has taken it a step further by creating functionality that better matches the hierarchies being used in K-12 classrooms. This is done by allowing teachers to view and group students at different levels in the standards hierarchy. Teachers can also manually enter or override mastery data just like they would in a traditional gradebook, based upon observations that might be happening in the classroom outside of the LMS. For instance, an elementary teacher might not be creating all homework assignments inside of Schoology, but when they observe a student demonstrating something in the classroom, they can record the observation in a way that is aligned to mastery or standards. Another significant addition to the gradebook is a streamlined and customizable Choice Activities. Again, other LMS’s have choice activity features, but Schoology has improved on it to make it something that is easier for the K-12 teacher to implement. It was explained to me this way:

Past Schoology/Other LMS:

  • A teacher decides to give students a choice. She then creates multiple types of assignments, such as a test/quiz, home assignment, etc. She then individually assigns different assignments to each student.
  • As students complete them, the teacher needs to go into each activity separately and grade them.
  • When the teacher looks at her gradebook, there are grade columns for every activity. However, for many students, the teacher is staring at blank cells since the students did not choose that activity.
  • When they synchronize with the SIS, the same experience occurs and in some systems causes people to think that they may have “missing” work, since not every SIS supports individually assigned assignments and not every student has a grade for every item (since it didn’t apply to every teacher).

Schoology’s Improvements to Choice Activities:

  • A teacher decides to give students a choice. She then creates a Choice Activity, and adds multiple types of assignments, such as a test/quiz, home assignment, activities from apps, etc.
  • As students complete them, an aggregated view for the class appears within the Choice Activity alerting the teacher, in aggregate, who has completed the task and who hasn’t. If the teacher wants to review work for a particular type of item, she can click on the student’s name, and it will display the appropriate item depending on what the student chose.
  • In her gradebook, there is now a single column that represents “Assignment 1,” and now a teacher can quickly see who still needs to submit their work.
  • When synced with the SIS, the previous problems described above are eliminated.

These changes may seem nuanced and small to an outside observer. However, having a gradebook that is designed to work in the K-12 classroom for the already over-worked teacher can mean the difference between an LMS being actively used across the district and one that’s not.

Schoology has decided to “double-down” on their investments in their Assessment Management Platform (AMP), focusing on insights on student progress that both teachers and administrators are requesting. As an employee in product development explained, “By removing the silos between learning management and assessment, Schoology gives clients a comprehensive view of student performance and instructor effectiveness. Unlike tools built for higher ed or corporate learning, Schoology’s assessment reports have a focus on standards along with traditional, numeric grades.” This aligns to the path most districts are taking – moving towards a model that integrates traditional grading with standard grading to track student progress and improve student performance.

What the data shows is that, as in Higher Ed, there is a Big Four set of LMS solutions; but in K-12 market the four are Canvas, Google Classroom, Moodle, and Schoology (see following chart from May).

Looking at the data, it is hard to discount Google Classroom’s presence in this market with their free web-based tools, allowing schools to dip their toe in the EdTech pool. If you attend a general K-12 conference such as ISTE, Google Classroom seems to have rockstar status with long lines of excited educators lining up to see demos, but does this interest translate into a concern for fee-based systems from the LMS companies in this space? Not necessarily in the view of Schoology’s CEO Jeremy Friedman (and we heard the same sentiment from Instructure).  They both see Google Classroom as being a gateway to using technology in the classroom and find that users quickly outgrow the limited features Google offers and eventually end up looking something more robust.  To that end, Friedman looks at Google Classroom as a marketing tool for Schoology and is committed to supporting Google users within the Schoology platform. While this viewpoint makes sense, I suspect there is an additional element of hoping, or willing it to be true, and not as a clear-cut conclusion.

Several users at NEXT that I met echoed this line of thinking. Tara Amsterdam, Instructional Coach at Delaware’s Colonial School District, stated: “The difference between Google Classroom and Schoology is the end-user and how instructional design varies between the two products. Google Classroom is designed to be more of a content management systems where the teacher is the end-user. Teachers are able to distribute content to students with Google Classroom. While Schoology also offers educators the ability to distribute digital content, Schoology’s built-in features go way beyond just passing out digital items to students. Schoology is a true Learning Management System designed for the students to be the end-user.”

Despite the K-12 focus and product improvements, Schoology is still fourth in North American implementations in terms of enrollment. Canvas has a lead this market, gaining much of its market share starting in 2015. And while Instructure’s scope includes the Higher Ed and Corporate spaces (apparently as primary markets), there is still a firm commitment from them to serve the K-12 community. This is the real competition and challenge for Schoology. Significantly, however, our data showed that two K-12 districts became the only losses of customers that we are aware of in the history of Canvas, with both selecting Schoology in 2019: Tempe School District and Turner Unified School District in Kansas City.

Schoology’s strength a few years ago was its Facebook-like interface which allowed for easy start-up for the typical classroom teacher or instructor using an LMS for the first time. Today, that strength seems to be broader based on its deep focus on the K-12 market – knowing the customer inside and out in order to build the LMS that teachers, students, and their parents are looking for.

The K-12 LMS Market is an interesting space, with Schoology and Canvas being the primary competitors for fee-based products.