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

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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) 1Disclosure: 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

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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. 2Disclosure: 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.3Please 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

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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 4Disclosure: 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.

D2L Fusion: Continuing product approach and market differentiation

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The following is a guest post by O’Neal Spicer, consultant at MindWires and long-time observer of EdTech markets.

D2L held its Fusion users conference in Kissimmee, FL the week before last. Of the roughly 1,000 attendees, the majority were from the United States and Canada, but there is a growing number coming from Europe, Latin America, and Australia, reflecting D2L’s increased international presence.

This year’s conference was in many ways a continuation and elaboration of many of the themes we noted last year. D2L 5Disclosure: D2L is a subscriber to our LMS Market Analysis service. appears to have found a consistency in its approach to and messaging around product development; consistency in its one platform approach to the K12, higher ed, and corporate learning markets; and consistency in how the company contrasts itself with the competition – primarily Instructure.

Product

Over the last several years D2L has revamped its product team and their approach to product development for its Brightspace LMS platform. There is a greater focus on including users in the product development process than what we had seen in prior years. There has also been a recognition that incremental product improvements make a big difference for customers and can be more impactful than large-scale new feature development. At this year’s Fusion, the emphasis seemed more on the user role in product development, as seen in the product spotlight, where the company highlighted the Product Idea Exchange (PIE).

PIE is where users can share their pain points and ideas for product improvements directly with D2L’s product team. There were several break-out conference sessions based on the exchange, where customers worked with one another to share common needs and to brainstorm possible solutions, which are then shared and discussed with the larger group. I later found out that these were no-go sessions for analysts (my mistake), so I cannot share specific details except to note the general interest from both users and D2L staff in the process and its outputs. Some of the product improvements announced this year appear to have been directly influenced by similar sessions last year. One representative from a university in Brazil described how pleased she was to see her handiwork from a year ago incorporated in a revamped workflow.

Specific product highlights showcased during the product keynote focused mostly on incremental improvements that had already been released. One area that got a lot of attention was improved tools for grading and assessment – better organization of items in need of grading (Quick Eval, shown below) and in-line feedback (Annotations) were two specific highlights. There was also mention of a new content experience around rubrics and assignments that leverages templates, a simplified quiz engine that uses progressive disclosure to preserve robust functionality for the 10% that need it but keep things easy to use for the 90%, and an updated Pulse mobile app that makes a complete student learning experience possible on a phone.

Market Differentiation (especially from Instructure)

There were several strategic views shared during the conference that are clearly in contrast with Instructure and the Canvas LMS. For one, it was noteworthy that the live product demos shifted seamlessly between K12, higher ed, and corporate learning use cases. This combination shows D2L’s view that there is one broad learning market that can be served with one platform, which is in contrast with Instructure and their segmentation of academic (Canvas) and corporate learning (Bridge) markets served by different core platforms. 6It should be noted that over the past six months Instructure has introduced different platform offerings (e.g. Portfolium) that make their market segmentation more of a spectrum than a binary, although the core platforms are different.

Breakout sessions at the conference included a mix of K12, higher ed, and corporate presenters, and at least some sessions had a mix of attendees as well. For example, Accenture uses Brightspace for a leadership development program, and there were several learning design questions posed by academic attendees who were interested in hearing about different ways to use the platform.

D2L believes its less segmented approach and reliance on a common platform can in some cases lead to an easier sales pitch. One example is a university looking to teach students and conduct professional development for employees. With D2L, there is one platform with combined data sets. With Instructure, it is potentially two platforms, two sets of data, and multiple integrations. D2L also believes that its approach allows shared internal resources working on the same platform, avoiding separate developments on separate systems.

A further area of differentiation is that D2L’s leadership team was fairly explicit that they do not think of themselves, nor do they want to be thought of, as a software company. They prefer to think of, and position, D2L as a learning company and a partner in learning (an approach and even phrasing that they share with Blackboard).  Partially by design, and partially by coincidence, this self-image and projection is in direct contrast to Instructure who entered the market explicitly as a software company, as described in an interview with then CEO Josh Coates in early 2018.

But we are a software company. Customers should expect us to create new independent software products every 12 – 18 months. Some existing customers will use, some won’t. That’s the strategy – create new business by building great new software.

We should note that we have talked to several university clients of D2L, particularly outside of North America, where the market differentiation message is confirmed. At Fusion, we spoke with people from three universities in the Netherlands and one in Denmark. For all of them, D2L’s interest in getting to know the university and understand their needs during the evaluation process was a big part of the decision to go with D2L. Of course, the platform had to be competitive as well. We also spoke with people from a university in Brazil and a university in Colombia who are both relatively new D2L customers. They reiterated the general themes raised by their European colleagues and also found the versatility of the Brightspace platform met their needs better than competitive platforms.

The Challenge

Part of the consistency that we noted last year includes market performance.

D2L appears to have largely revamped its approach to product development that is more responsive to customer needs, and is putting resources into building partnerships. Yet they have not made the market gains envisioned after winning the Blackboard patent wars and then raising two large rounds of financing. We still see a two-horse race for new implementations (LMS product switches) in higher education, largely shared between Canvas and D2L, but the second horse that is looking better than it used to still needs to make further adjustments and run faster

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.

We do not believe that the academic LMS is a commodity, although it can seem that way in feature-driven evaluation processes. At a strategic level, the competitors are quite different, and D2L showed at Fusion further evidence of their approach and market differentiation.

Disclosure: D2L is a subscriber to our LMS Market Analysis service.