Analysis of the LMS space

If you are new to the e-learning industry and/or LMS space for that matter, you may be unaware that the LMS market including all the sub-sets of said market is highly fragmented.

As a result, it creates a perception that in just a few years, the vendors will hit saturation and then a drop will occur.  The other perceived notion is that in its current state, there are a huge chunk of vendors making peanuts, while others are generating huge amounts of revenue. 

And I’ll toss in another piece of the whole “perceptive” angle, the idea that there isn’t an LMS or its sub-sets that can exactly what the consumer wants or needs (this of which is a key question, that often is ignored).

Reality

The numbers – Note this is for total sales (and not net income)

• My research has found that on the whole, the average amount of total sales for 2015, was between 2M (USD) to 10M (USD) in the industry.  Yes, there were plenty that went higher, and plenty that went lower, but on average are the numbers.  
• There are only a handful of vendors that went beyond 100M (USD) in total sales
• The vendor who generated the highest amount of total sales was Blackboard, I’d argue that most of it came via education, only because corporate is still IMO a work in progress

Close Ratio – The amount of time it takes to sign a customer to a contract

• On average it is four to six months.  Again, lots of exceptions here, but we are talking on average.  Using a longitudinal study (looking over a period of time, in my case the last four years), has found the four to six month range to be consistent.
• On average for a trade show the time frame is 12 to 18 months. Once again, there are vendors who close quick.
• There continues to be a lot of false leads.  A false lead is a potential customer who talks to the vendor at a trade show/event, drops a card and/or scanned or asks to be contacted in some manner.  It sadly is the nature of the business when you attend a trade show.  I know of one vendor who had over 330 leads at one show. 

They closed two deals.  Well over 99% of the follow-up calls turned out to be false leads.  The false lead along with close time are the primary reasons why vendors will either skip all trade shows or select a couple.

Saturation

We are not even close to saturation as a whole in the LMS industry. I see more vendors coming in then leaving and this has been an on-going trend over the past several years. Toss in vendors who are on the peripheral and the numbers go even higher. 

For example, a recent surge has been gamification vendors.  Not LMS or sub-set for that matter, but a platform that is 100% gamification.  A couple of years back, we all remember the upsurge of social only platforms.  Not so much anymore.  It’s gamification driven platforms. 

What is the big stunner is I have seen only two whose product was unique in bits and pieces. The rest are either dull or the same ol same.  And where have I noted the same ol same argument before?  Yep, social.

Market share

As a vendor you can have a large market share, if you remove the whole I want every vertical attitude.  Or the “Enterprise only” attitude.

You want over-saturation?  Just focus on “enterprise only”.   There you will find over-saturation.  It has gotten to the point that some very well known vendors have in just the past year, expanded into the SMB market, including a rush in small business (around 500 though), which they used to ignore.

Desire more over-saturation? Verticals such as healthcare is a biggie. Manufacturing has always been on the verge of over-saturation.  Yet, the kicker is that there are too many vendors who just zing all over the place.  “Every vertical is perfect for our solution.”  No, they are not.

What is the funny about healthcare for example, is that there is one vendor who has a very high market share, that has barely fluctuated in the past years. 

Why have they had big time success versus others?  Trust me it is not because the system is “awesome”.  It is because they focus only on that vertical.  

Duds on arrival

I will tell you up-front that I have seen some really, really awful systems out there. Ones whose UI design would be ideal for 1995 and that is not a joke.  And yet, they have customers.

  I’ve even seen solutions who will note some big name customers and I think to myself, “Yowsa, someone clearly had no idea on what they were doing, when they bought this dinosaur.”  Here is the twist. There are many customers who like the old jalopy design and antiquated feature sets.

This of course, leads into the customer assumption that there is not a system out there that meets 100% of our needs.

Meet my needs

I have seen some folks who in fact cannot find a system that meets 100% of their needs, only because what they are following some change management directive or business process designed by individuals not taking into account the e-learning program or the feature is found in an HRIS platform which as you know is not the same as an LMS.

In the first two points, the customer is unwilling to budge on that feature. A result that often shows up in the “I’m not paying for customization” issue.

Yes, there are vendors who won’t even take your money to customize, because the “only one customer is asking for it” and “isn’t worth it to us” philosophy comes into play.

That philosophy is the wrong philosophy of course, because vendors love to tell me, that if their client base on the whole wants something, they will do it.  Which as you are all too familiar is a load of donkey ______.  (fill in the blank).

As I always say, your current clients selected you for lots of reasons.  Your job is to get new clients.  Which in turn, I have heard vendors tell me that when folks reach out to them, they never inquire about ABC feature.

Well, for freak’s sake, if I don’t know what it is or are unaware that it exists, why would I ask? 

For example, are you aware that Amazon’s eBook format is different than the universal .epub?   What, you are not?  That is not possible, because I mean every vendor in the industry knows that (j/k, you can probably count on two hands, the number that do).

Okay, I can see where some people will go that is an extreme example.  How about this one?

An LRS.  First and foremost is not the same as an LMS.  And secondly, can you tell me what it exactly does and explain what are activity statements?  (I know the answer, but I can tell you that many folks don’t.)

What?  You can’t? Okay, this is nonsense. I mean based on the vendor philosophy you should.  That’s it, I’m notifying the “How can you not know this” group and telling them they have a new member.

Bottom Line

There is a lot of misinformation out there in the industry.  Perhaps too much.

Finding out the real facts, the real insight is hard.

Too much of this or that appears in far too many places than ever before.

And as a result, many of us are left to figure it.

Alone.

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