Posted by Before diving into the forecasts for 2023, one must examine a few trends that appeared over the summer of 2022. A couple of vendors saw a couple of these trends, but for the most part based on numerous discussions, the masses saw pieces never realizing it was all, as they say – whoever came up with that phrase, probably came up with “it is what it is”.
Anyway, a few of those trends, which is why it is best to look at the summer of 2022, will impact – continuance in 2023. It’s Quantum Leap without a remake!
Summertime Blues
Four trends showed up in the summer of 2022, one that was tied into another, in other words, they co-existed, parallel even.
- Post Pandemic Summer Vacation – Due to the downturn, granted COVID-19 is still going on, but lessened if you will, a lot of people made for the roads, air, sea, uh, local pool, whatever and got out of the office (regardless if home or some bldg near another bldg).
With folks being out of the office in droves, this in turn led to, an overall slow sales cycle for a large percentage of vendors in the learning system space. This occurrence mind you, is not new, well, let me re-state that, it isn’t a one-off. Back in the mid 2000’s and then again, around 2010-12, the summer was a dead zone for vendors. People were not buying systems in droves in the summer months – vacation, time off, always lead to this, but in the second episode, the financial crisis was in continuance and with that and summertime, the drop reappeared. Thereafter, by say mid 2014 up to 2021, it was touch and go, for most vendors not a major drop in terms of hitting sales numbers or targets (the term), and a pipe (sales pipeline) that would close at some point.
In summer 2022, though the walls came crashing down. The Pipe hit freeze. The sales targets slowed down, things were pushed off, and everyone was off to somewhere else.
When targets are missed, well, that is not good news for a vendor. Even with missed targets, too many opps in the pipeline – not closing or being held back – first under the summertime out of here, then the next foot err shoe dropped:
- Recession. It is here, at least from the standpoint of business, and yes, you can tie in inflation and so on, but I am referring to a recession within the learning system space tied back to the entity that is planning on purchasing the system.
See, when a recession hits or the presumption that a recession is nearby, companies scale back. Add to that, companies who have yet to be cash flow positive now focused on becoming cash flow positive. What started first in the tech sector, has now moved across all industries including financial, manufacturing, transportation to name just a few – and that is layoffs. Downsizing. Restructuring. Scaling back.
What does this have to do with purchasing a learning system? Or closing a deal (i.e. you are in a vendor’s pipe)? Well, if your company/business/entity/whatever is cutting back, and people are part of it, then going forth and buying that learning system isn’t a sure thing. Tightening the budget takes precedent over you having a $75,000 learning system, let alone $25,000, depending on your budget.
Speaking of which, budget items get frozen, which again, system is a budget line item, and we are restructuring, so that is put on deep freeze for now.
Two trends that impact selling, which as a result impacts people – because if a company is restructuring, and vendor isn’t meeting their sales targets (quarterly) – do it enough, and yep, downsizing comes home to the learning system vendor too. Plenty by the way, who are focused on being cash flow positive by the end of 2022.
Three trends in the summer – Summertime Getaway. Fears of a Recession. Layoffs impact budgetary acquisitions and here comes the forth
- Layoffs impact the departments. Who is the chief buyer of a learning system? Depending on where you work it will likely be L&D, Training or HR. And which of these are the first ones to be scaled back, and people laid-off? All three. Marketing typically roles in there too.
Well, if the buyer – let’s say L&D is downsized, then the buying is no longer coming from them, and from the vendor standpoint, that POC may no longer be at the company (and wouldn’t tell the vendor, for obvious reasons), now there is no sale. For the people in L&D or HR or Training, in our scenario, they may be moved into other departments or all let go. When this occurs, and it is occurring, that learning system, regardless if it is for employees or customers or whomever, goes with it.
It’s a cycle, and a trend that has already arrived, and will continue into 2023.
Four early trends – four that will continue in 2023
Summertime Getaway. Fear of Recession. Layoffs. Downsizing or restructuring of departments who purchase learning systems.
The Forecasts
As with any forecast, this is based on a set of longitudinal data lines – i.e. looking at 2022 over the course of these nine months, seeing if there are any trends or blips appearing that are not going away and are continuing. Perhaps it is something so small, yet, this little blip points to something bigger that is coming. Or maybe it is just a blip, like that one day you actually saw a TV show on your UHF dial – thru the static.
There are always unknown variables, that not even I can see, unless I was Nostradamus, who apparently had a strong track record of future forecasting. Talent!!
I’ve been very fortunate that since I started to do forecasts on the blog many years ago, I’ve exceeded 90% accuracy. Perhaps it is due to me praying to the Antelope God, or asking my favorite Javalina who do you like in the fourth, and a grunt tells me who to pick. Honestly, I am just looking at the trends, those blips, those little starts that say, “hey, I am here and not leaving”.
Nobody saw the impact of COVID-19, and anybody who bases their forecasts or trend lines pre-2022, needs a class in forecasting. What was then, was then. It is gone. It is not coming back. And what occurred in 20 to 22, during that time, is equally gone (for our purposes). Thus, I didn’t look at those trend lines, or go back over that, which is why my exploration of data began on Jan 2nd, 2022. Not the first, I mean, nobody is working that day.
2022. The likelihood that something happens between now and say the end of the year, that impacts our industry is a possibility, and I do not doubt that acquisitions in 2023 will continue – they will, but that isn’t much of a forecast, rather it is a reality.
Will there be a continuance of those acquiring overpaying? Probably. Many did it in 2022, but if you are a vendor hoping to get 4x or 5x your numbers, there is this thing called a lottery ticket – odds are great!!! I think the more likely numbers will be back into the real range of 2x to 3x, with a few exceeding 4x. Again, not a forecast, just observations.
Raising capital will continue unabated. Again, not a forecast, more of reality, but I do think that some investors will hold back. I already know of a content provider who has a VC reaching out to learning system vendors (who have said content provider), inquiring about said content provider. Granted this is on the line of bizarre approach, but never underestimate a good capital raise and the approach in doing so – due diligence wise or bad idea.
And I want to stress that you should never tie the idea that raising capital or getting capital means that the system or content or e-learning solution is fantastic and sales are AWESOME. Growth equity firms are looking at potential, for example. For anyone interested in understanding the capital raise game – read the post here.
Will their be downsizing by learning system vendors and other e-learning providers in 2023? Yes. Again, common – it happens every year. For example, I know of a vendor who has some big time clients, but missed repeatedly sales targets for multiple quarters. What did they do? Lay off a big percentage of their sales team. Did they tell you about it? No. Because if you knew, would you want to buy from them?
Forecast #1 – Career Development
I’ve always been worried that the performance/talent management, in this case workforce management would jump across the TM/PM specific solutions into learning systems, and in 2023, it will come true. Not every vendor – I want to stress this – will add these pieces, but many, many will. I do not expect to see this with a system that focuses heavily on customer education, which is why I believe that the separation of systems in terms of key target audiences will begin, especially those whose client base is 85% or higher (either employees, members, customers). For the combo systems – i.e. they go after employees and customers, they will add some components, okay more and more and spin it in some angle that works for them. It is a concern though for those who want a customer education system, when the feature sets start eyeing more towards employees – and career development does that.
- Skills tied to career path – It isn’t just about the job role anymore it is about the career path of that employee – whether that is pre-defined by someone (HR or L&D) or fluctuating by the employee in conjunction with their manager or their manager alone. If your system already has this, then they are moving more into the career dev angle.
- Employee Experience – A dreaded word, okay two words. If your system starts mentioning employee experience, which is wrapped around the “lifelong-learning – which every system does and is the reason people learn (now getting off my sandbox) and ties it to employee or people experience – people means employees. It’s content. It’s skills. It’s job roles. It’s career path development all tied together in a nice bow. Now does it mean success? Of course not. That is your job – or should be.
- People Experience Platform or People Development Platform – Yes, more terms for a system in the industry. This is all around the career development plan with online learning wrapped within. You can’t have one without the other. Social rumbles here – no surprise, a tad of coaching or mentoring, cohort-based in some fashion (may appear), career goals a definite – or perhaps referenced as goals management, skill development/skill-building/employee growth – all integrate.
All of the above, is wrapped around career development, which again, if you want your learning system to be for your customers/clients, then a system that goes or defines themselves as a PXP or PDP or EE isn’t the one for you. The features and functionality will change – or should if they know what they are doing. I anticipate some systems going more with TM pieces such as a touch of applying for career opportunities (within the company, and yes, it exists today), career workflows, career mapping all tied around those pathways, regardless if it is one course/content or multiple pieces. This is not to say that if your existing system offers opportunities then it means they are all about career development – but rather, they have a component or two in place. Because career development isn’t just about your current career – it is also about your future career (preferably at the same workplace).
Forecast #2 – The LXP?
Despite what some LXP vendors are letting you believe, the “LXP” as it was designed to be, is gone. It started out with multiple items which was to distinguish it from say an LMS, however fours factors occurred which forever changed the system.
a. Assigned learning – The moment assigned learning appeared, the “learner-centric” was eliminated, and the so-called formal learning, often cited as a core function of an LMS (not true mind you), became part of the platform.
b. Not everyone had the playlists – not the recommended/trending, not the the skill or topic specific, nor interest for that matter. Playlists existed but it was clear that many LXPs were just using the term and creating the appearance that having 3rd party content – several providers, constituted an LXP (which it isn’t and not)
c. LMS vendors and learning platform vendors started to add “LXP” capabilities to their systems. Another unforeseen – which was odd, on how anyone would think this wouldn’t happen – component with some LXP vendors. These vendors – LMS, Learning Platform were all over the map on what they perceived an LXP to be – with overwhelmingly being wrong. The Playlist they figured made it an LXP. Or Learner-centric, which any system can be, even back in 2000.
d. Misunderstanding by buyers. Very common when something coined “learning experience” as though it is so new and never done before (it isn’t and has) shows up in systems that are specifically designed for whatever a “learning experience” is supposed to be. Thus any vendor can say “we have an LXP or learning experiences” and the consumer, unaware of what an LXP must have to be stated as such, accepted it. Informal learning – appeared in 2000 with LMSs. Formal ditto. But, and the stresser here – is that it is up to the client to decide how they use the system for their learners. You could always buy 3rd party off-the shelf content – going back to 2000, and many vendors had multiple providers. With the exception of skill capabilities, especially skill ratings, and tying it to content/courses – i.e. the skills to the content via playlists, were the essential differentiators. Some LXP vendors did/do a good job at this, others do not. And it follows suit. Just as with anything, it is only fresh and new for a bit, then the masses roll in.
What I see is the continuation of vendors pushing the “LXP” or “learning experience” narrative, although the key components – the core is falling by the wayside. Another aspect is the replacement – people experience – as a nice way to move aside the learning experience, which of course involves people, hence people experience. Will this stop vendors from saying they are an LXP? Absolutely not. But today, IMO, there is not something highly unique of LXP vendors that truly set themselves apart from other learning system types – the exception of course is how the vendor building the system adds or does not add to their system.
Forecast 3 – Skills, Journeys, Ratings, Assigned Focused
For example, skill ratings is common nowadays. However, how it is defined, designed and validated is different across vendors. Some are universal, others are not. The ideal is clear definition of what 1 to 5 means, with baseline descriptions so that anyone looking knows what a 1 means and a two and for forth. This though is not universal. I see 1 to 5, with a sliding scale and you get to guess what it means. Manager viewing of skill ratings will become very common in 2023, with the ability to say, okay you are a two here, but you say you are a three – and here is why you are a two.
Again, some vendors will show this via clear definitions/descriptions of minimums to show the difference. Others won’t. I anticipate the “other learners” get to rate you too showing up with systems – to try to differentiate themselves – personally it is a horrible idea. I mean how does Steve really know what your skill level is in graphics, if Steve only works with you on spreadsheets? The dog eat dog mentality, which exists in the group tells you, what you are skill wise, is not a positive mechanism. It is a negative one.
Skill pathways, I prefer the term journeys will continue to grow in 2023 – choose a path, similar to chose an adventure books back in the day. Again, some vendors will really take it to the next level, others will putter around using the paths term – curriculum or learning paths as the core term. Hence the value of journeys – they seem more opportunity, exploration for the learner than a path, which says – you do this and that.
Assigned learning will continue to drive in the industry – from a consumer standpoint. I wish this was not the case. I wish learner-centric which everyone claims to want for their learners takes greater hold, but I also wish every country would hit their Paris Accord numbers by 2030. Assigned has gone far beyond compliance, it is now pushing heavy into job role courses/content, and thus will push with career development.
Forecast 4 – Deskless workers
Systems as a whole, are targeting the office workforce, yet, there is clearly a demand for the deskless worker. I know of two systems, that are designing capabilities around the deskless worker, which roll out in 2023, and I anticipate a continuing trend in this fashion. Thus, expect to see “deskless worker” a term to mean frontline worker to the be new “buzz term”.
Forecast 5 – SFV
SFV stands for short format videos. This means a micro video no more than 90 seconds in length, ideally 30 seconds which focuses on one key takeaway. That’s it. One takeaway or point. They should be engaging, but what I expect is a lot a person talking into their cam or smartphone – the more likely option – and publishing. My preference is engaging and compelling content – which will do far more good, than someone doing a VO (voice-over) or talking into the smartphone. This is not the same as micro-learning. You may have 20 or more SFVs covering on topic for example, especially the 30 second time frame.
Forecast 6 – Cohort-Based Learning
I’ve written quite a bit on CBV – read here, if you are unfamiliar. Already, as I thought would occur, vendors started to say their system has cohort-based features, even though, it is a nice stretch for many.
Forecast 7 – Learning Ops System/Learning Ops components in a Learning System
This is not the first time the learning operations system has rolled in, piecemeal has been attempted with a few vendors to mixed results, each time, not enough for a mass growth. Yet, here we go again, these systems should be about learning operations including vendor management, workflow management, some project management, scheduling – but not the same as a training mgt system, and overall operations of your L&D area – they focus on L&D. My gut says that vendors who bring in LO feature sets – will take a piece here and there, and go “whalla – learning operations!”. I’ve already seen several vendors with the project management and workflow – defined as flow of work for learning make an appearance. They target large to very large enterprises.
Forecast 7 – Price Increases
You would think due to the four early trends, we would see price decreases across the board in the industry for 2023, but I am not seeing that. Well some vendors go low? Sure, they always do, but the market as a whole will continue to upswing. The smart vendors will be the ones who recognize the following forecast.
Forecast 8 – Different Price Models Depending on Target
This means that systems who target customer education/clients/partner training should have a different price model and billing, compared to the employee focused system. Today, it is rare, but does exist. Overwhelmingly, the vendor uses the same price model and billing (upfront) for both segments if they are targeting them. This I believe is a major mistake.
Forecast 9 – All Inclusive
This is something that goes like a yo-yo. And I totally get the idea that of “we do not need it now, so why should we buy it?”. But here is the thing – Just because it is included in the system, you do not have to use it. If the system comes with an authoring tool, and you do not need one, you do not have to use it. However, let’s say you move to another company, and your replacement wants to use a built-in authoring tool? Or let’s say your system comes with a mentoring component. You do not see a need for it now, but in six months? People tend to think of the present, ignoring the future – the possibilities. Nobody foresaw the skill ratings with stated definitions, but the moment they rolled out, a lot of people want the skill ratings. If the system has a skills module and it is included as part of the system at no additional charge, take it. You are not forced to use it. As a vendor – everything should be included is a route to go, especially if your competitor goes module/add-on as a preference. Let’s remember 2023 will be fiscal constraint for many businesses as least thru the end of Q2 2023.
Bottom Line
The forecasts are in. The trends are noted.
I will say no more.
Until the next post.
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