Latest in the Learning System Market

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Well, it is that time again, to see where the market is, where it is going, and what you should be watching for, that doesn’t involve Netflix recommendations to movies and shows you will never view.

Valamis Acquisition of The Working Manager

Can you say hate it? I am at a loss for words for this, okay, I’m not, but you know what I mean. Why, would a system that pushes heavily around the customer education/partner training segment, acquire a vendor who does the complete opposite? If Valamis wanted to push heavy and truly commit to the CE segment, they would have acquired a vendor who has capabilities or features or even themselves plays in the CE side.

I can’t think of a customer education buyer who thinks, “I want to have career development and org performance because my customers want to not only learn how to use our product but gain value of knowledge on their own organizational performance.”

What this does say to me, is that Valamis sees the employee – workforce development/aka talent development and thus with their “LXP” component, a TXP (talent development plus LXP) as the end game.

There isn’t anything stopping a TXP from offering or going after the customer education segment, and there are two that already do. But, those folks who buy a TXP for customer education, should recognize that the main core audience will be internal employees, not B2B or extended enterprise (your vernacular choice) here.

Valamis to me is a work-in-progress system. In another year, depending on the route they go, which clearly has changed with this recent buy (even if they say it won’t), might be a player in the TXP space (I could see that), because of what TWM brings to the table.

For the customer education segment though? I’m not seeing it.

Not anymore.

My system has LXP functionality/it’s an LMS with LXP

This messaging is hitting super stride, as though walking fast is not enough for folks. To be an LXP, you need four key features/capabilities

  • A 3rd party content/course marketplace – made up of publishers that a client can purchase to give the courses/content free to their employees. Some vendors go deep integration with GO1 or Open Sesame or just an integration with either, because they have an extensive amount of publishers.
  • Skills capabilities – Some LXPs are strong in this area, others are not.
  • UI uses Playlists/Channels – Think Netflix like apperance – they may go “Grid” but same premise
  • “Most Trending”, “Recommended”, “Popular”, “Based on your skill or interest” Playlists using machine learning (vendors refer to it as AI)

That’s it. Here though is the kicker, a chunk of the learning system vendors (mainly LMS as a whole) offered a marketplace (it wasn’t visible – although Docebo, an LMS, was the first ones to have it visible – years ago).

All Learning systems offer skill options, after all, you are trying to ascertain skill and knowledge gaps. LXPs though were the first ones to really push heavy around skills especially tied to content/courses. There were vendors many moons ago, offering a grid look, and VLPs (appearing in 2010) offered a playlist look.

That said, the LXPs really as a whole, hit it hard around the course/content publisher marketplace that is visible to clients, strong in the skills capabilities (I refer to this as skills management), playlists/channels based on topics, skills, interests, favorites and so forth, and the trending and similar playlists.

Kudos to them for that, and it has made the industry far better for it.

One would think that a vendor who says they are a combination of LMS and LXP or LMS with an LXP, would have every one of those four key components. The truth of the matter is, most do not. This shows that they themselves are not sure what really is an LXP. The two most common misses are:

  • Lack of a course/content publisher marketplace with at least 10 providers OR an aggregator such as GO1 or Open Sesame or a combo, a few independent and an aggregator
  • “Most Trending”, “Recommended”, “Popular”, “Based on your skill or interest” Playlists using machine learning (vendors refer to it as AI)

This is a trend to really watch, to see how many vendors go back to their system, and realize that their LXP is really two parts actual, and two parts gin, err, not.

Managed Services

If you are seeking one area (as a vendor or partner) that will take off over the next two years, it is managed services.

Managed services can get a bit complicated, so here are the basics.

  • The vendor handles everything for the client. You need to upload your end-users and content? The vendor does this for you. You need help managing the system? The vendor helps out. You need additional administrators, or even one and you do not want to hire them directly? The vendor has the staff/folks who can be your administrator or administrators.
  • You need to find the right 3rd party tools/platforms for the system – The vendor handles this. They will find the tools/integrations you need (based on your requirements, budget, etc.). They will take care of the validation that it works within the system, and all the leg work behind it.
  • You need 3rd party content, or course development – the vendor handles this for you. Especially the former. They will find the content (assuming it is not in their marketplace). If they do not have in-house course development, they have partners who will do this for you, and then once done (and approved) put it right into the system (uh, the learning system vendor does this)
  • You want or need help with your e-learning program, business strategy around leveraging your learnign system, creation and development of processes – the vendor is your partner on this. They have the resources to get you there, people in place, with the knowledge and expertise.

This is not a part of professional services. And while there are vendors who do some of this already, mainly the last point (to various degrees) and the custom dev (usually internally), the rest is a different ball game. Managed Services is not just for large enterprises (although right now, the vendors offering it, are tapping it in this way), it is ideal for small businesses and the mid-market. Let’s say you have an administrator going on vacation, who is going to step in? With managed services, the vendor. You do not know who to bring in to handle this or that for the system or strategy – no worries, the vendor handles that.

I would not say nor see managed services as a combo consulting firm with learning system personnel because it isn’t. Managed services take the reigns here, and the last point (on the bullet list), is actually not the key piece of it.

A vendor who offers managed services sells it as an add-on. A yearly additional cost. You buy the whole package. There will be vendors who do a more tailored approach – which is really going into the professional services aspect more so. Managed Services again, are not the same as professional services.

The best thing about managed services is that any vendor can do this (and if they themselves do not have the staff, they outsource it to a 3rd party that knows the industry – inside and out. And yes, I know the best one out there).

Learning Systems Hiring

One of the best industries to work in, and yet, so few know about it. It’s not like you can find these companies, let alone e-learning in general at your local college career fair or job board.

Scan Linkedin and they are all over the place, and that is part of the problem. Some vendors only have it appear as a “hiring” ring around their profile – usually a person or persons. Others, – only on their company LinkedIn page, and still others, on the LinkedIn job area. Sure, there are those who post on Indeed and other job banks, but way too many, go profile or company page.

Thus, if you are not on LinkedIn, you have no idea these jobs are available. Better yet, the vendor is assuming that the prospect is going right to their company page or know who to look for, to apply – which uh, if I have never heard of you, nor much about the industry, how will I find you?

The industry is always seeking talent, the issue – the talent can’t find them.

Thus if you are looking for a job in the learning system space, and trust me, you want to be in this industry, the place to go is LinkedIn. If you do not know where or who is hiring, well, that’s part of the problem.

Raised Capital And you thought the dot.com days were bad

As someone who offers services to PEs, and other parties, around market analysis/specific vendor(s) analysis and insight; and who has worked with some of the biggest names in the PE/investment space, I can tell you firsthand, that the learning system market and 3rd party content providers, including aggregators (platform or otherwise) is red hot. Excluding EdTech which has been hot for years, and where the most money is going, on the corporate side (which is what I am referring to in this post), is pushing the full throttle.

This will not stop. Not for the foreseeable future. When I see so and so get XM of dollars or are acquired for Y, I often wonder, does that PE really know that vendor beyond just what they see from a sales growth or client size? Do they really understand the market and all the variables that go into whether somebody buys system X versus Y?

Docebo for example, is hot, as anyone can see from their valuation and sales. But there isn’t anything unique about them. Nothing that says – they are the only ones doing this, and no one else is. Nor, that they are the best system in the industry, period.

I like the Docebo Suite as a whole (Not Shape though). They are definitely Top 10, just not top five or one.

SkillJar is another vendor that raises a lot of capital. They do not have an elite system. There isn’t anything that screams – YOWSA no one else is doing that. They are not the best system for customer education, which they push as a key audience, even though they are about 50-50 (internal vs external). Even their pricing isn’t unique.

Again, I like the system, but I always weigh that as a factor based on a client’s needs and requirements. Are they better than say, Intellum? OR Thought Industries? Both of which are heavy in the customer education market. No. Intellum and TI are better.

What plays a role in acquiring clients, that only vendors themselves are aware of? Marketing.

Salespeople at these companies know it, even various executives within these entities, and those who run Marketing, know it as well.

Think right now – name five vendors that you know quite well.

My guess is that you have seen the ones that instantly come to your mind, thru marketing. They are everywhere. They are very effective in SEO and content marketing – especially content marketing.

Talk to other vendors in the space (learning systems), and mention Docebo and marketing, and everyone will agree they do a phenomenal job at it. Cornerstone used to do a great job at it, which is why many people have heard of them, SumTotal too. Nowadays, Talent LMS is in heavy rotation.

Yet, for me, the next big three systems to rock the industry (assuming they stay on their marks and paths) – have one thing in common – below average to poor marketing. One is worse than poor, nearly nonexistent.

On the valuation side, many of the vendors in the learning system space and 3rd party content, who have raised capital from the investor(s) or been acquired by someone with deep pockets, are reaping the benefits. Overinflated valuations. This leads to vendors seeking outrageous numbers for M&A, that are not an accurate representation of their financials, especially when you look at how long they have been in business, market trends, and growth.

8x, 10x are dream numbers, unless you – as a vendor are generating at least 100M, with a high ARR, year over year. This though is what you get with overinflated valuations.

On top of all that, is that way too many consumers believe that a system or content provider that raises capital, is ergo – more successful or better. They do not understand what Series A or even Series D means. And why would they? What they see is 100M here to this vendor. 50M there to that vendor. Valuation in excess of 1B to that one. And therein, lies the ongoing challenge.

For it creates a ripple effect. Plenty of vendors have no desire or interest to seek out capital. But with the current frenzy in the learning system market (first and foremost, above others), there will always be a perception – that you – the vendor raises funds, they must be better, than someone who doesn’t.

But here is a little reminder – Grovo. 73.3M raised. High Valuation.

Today?

Gone. Acquired by Cornerstone for24M in an all-cash deal – so much for the “high valuation”.

Bottom Line

Learning Suites are on the rise – some are all included (you get all the products), others are add-ons (you pick and choose what you want to buy).

Pricing continues to be high, across the board. And deep configuration is still being limited to larger enterprises (if they want it) or very deep-pocketed mid-market players.

Skills capabilities are all the rage.

But built-in sims for business and other soft skills that are not technical?

That’s another story.

Waiting to be written.

E-Learning 24/7

3 comments

  1. More great insight with over-valuation, and good/bad investments. Thanks for creating strong awareness in with conciseness and in a clear manner.

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