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| | PRINT | | Still No Leader in the LMS Market |
Oakland, February 2006 – "The Learning Management Systems (LMS) market is growing very significantly. In 2005 we believe it grew at 26%, and it's close to a 500 million dollar market for software and services", analyst Josh Bersin said, presenting his new market research "Learning Management Systems 2006". The potential market he enumerated was over 3 billon dollar.
A lot of consolidation mixed up the LMS market in 2005: Oracle acquired Peoplesoft, SumTotal took over Pathlore, and Saba acquired Thinq and Centra. But despite these consolidations, the market expanded, and according to Josh Bersin, most of the vendors focused upon in his new report who did not make any acquisitions grew very significantly.
"Although there is still some market share consolidation, the market as a whole is growing. We do not have one single leader in the LMS market. There are very significantly different segments: mid-market systems are quite different from enterprise systems, which are quite different from global enterprise systems. And the suppliers and the implementation strategies vary a lot."
Trend towards enterprise-wide, centralized systems
Bersin is predicting major growth and tremendous changes in the LMS market. First of all, because organisations now have realized that LMS are not only good for managing training but also for corporate wide applications. "30 to 40 % of large organisations are really in the process of consolidating and implementing their LMS as an enterprise application."
While many organisations are still back at the first and second stages, looking for an LMS to help them facilitate eLearning or simply manage the complex process of training administration, the more mature application market is moving towards a whole new trend:
"LMS platforms that are very widely deployed now are really forming the basis of a whole new category of applications in the area of talent management. We call them integrated HRD applications because so much of the data and information in the LMS is corporate wide and has information about skills competencies, learning, and certifications. It's a perfect platform to build for a talent management succession planning system. This will significantly change this market."
Another big theme Bersin sees for 2006 is competency-based learning. "Interestingly enough this is an area we were not very high on a couple of years ago. But it's suddenly becoming very big because there are economic trends driving this development."
Therefore centralisation of systems is needed and desired. "There is a really significant trend towards centralisation of systems. When they reach the third platform, companies realize that they do want their LMS to be consolidated." But it's very hard to do. Bersin’s survey shows, that approximately 41 percent of companies are trying to do some sort of consolidation, but usually that requires replacement, significant amounts of data transfer, and lots and lots of requirement gathering.
"That's something that’s going to go on for quite some time. And in many cases it will never happen because there are always companies and organisations that need different systems for customer training and different systems for various geographies. It's based on the organisation’s governance, and that sometimes makes it very difficult to centralize a LMS platform.
Trend towards on-demand systems
Another interesting finding of the report is that hosted, outsourced, or on-demand systems are rapidly gaining ground. 37% of LMSs are hosted by LMS vendors or third parties. Bersin: "The 'on-demand' LMS has become a reality. Most of the mid-market players provide these kinds of solutions and are very well established, successfu, and growing very quickly."
It is the mid-market where Bersin sees the biggest potential. "The largest part of the whole addressable market is in this segment, which is companies below 10,000 employees. There is a set of suppliers that has done an excellent job in serving that market. We believe that the market can go down to companies with as few as 1,000 employees. Even they need some form of training or LMS."
The report is based on surveys distributed to more than 2,000 training and HR managers all over the world and in organisations of different sizes, on detailed vendor briefings with a least 25 LMS suppliers, and on in-depth personal interviews with 150 companies. All were queried about their implementation experiences, their vendor experiences, their upgrade and their consolidation strategies.
The report, which can be purchased for US$ 1295, can aid in the development of business, case, and LMS strategies. It will help decision makers to understand vendor offerings, to plan implementation strategy, to avoid pitfall in operations, and to benchmark implementation.
Key findings in short:
• The LMS market grew by 26% in 2005 despite mergers among some of the larger providers.
• More and more organizations view LMS systems as corporate-wide systems, yet consolidation remains very difficult.
• 37% of LMSs are hosted by LMS vendors or third parties.
• Annual operating budgets range from $511,000 for organizations with 100,000 or more employees to $190,000 for organizations with 10,000 to 19,999 employees to $95,000 for organizations with 1,000 to 4,999 employees. Larger implementations are far more efficient to operate and manage.
• The biggest challenges in LMS implementation continue to be system customization, content integration, and integration with HR and other corporate systems.
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