The LMS market glacier is melting

The world of edtech is strange and full of apparent contradictions. Venture capital investment has exploded since 2010, hitting an all-time high of $3.1 billion in 2015, with private equity and strategic acquisitions pushing this number even higher.

Dozens of startups, if not more, vie for the attention of presidents and provosts. If you look at adoption rates by schools, just one category continues to consume the majority of edtech attention and budgets in higher education: the much-maligned learning management system (LMS). But the glacier may be melting.

It would be easy to look at the market trends today for higher ed and think that nothing much has changed over the last decade. Despite the success of more recent entrants like Instructure and Schoology, Blackboard has, by far, the greatest market share, with companies like D2L, Sakai and open-source alternatives like Moodle far behind. The LMS oligopoly is nothing if not resilient, historically leaving little space for competition.

But this view by itself would be misleading. Higher education moves at glacial speeds, and judging the market based on the surface issues misses some important recent dynamics.

It’s true that Blackboard still has greater market share than any other technology player in higher education. But Instructure’s Canvas LMS won almost 80 percent of new higher education implementations this year — a shift that may reflect the growing influence of faculty, rather than institutional, priorities in LMS purchasing. Consider this: While the LMS reached a saturation point among colleges and universities around 2003, it is only in the past 3-4 years that the vast majority of courses or faculty members routinely used an LMS.

The challenges to higher education’s tech-enabled transformation are multifaceted.

The established legacy providers (e.g. Blackboard and D2L) are, in turn, investing millions of dollars in re-architecting their platforms to reside in the cloud and enable a new approach to the user experience. And while platform switching was historically driven by forced migrations (Blackboard buying competitors and terminating product lines), today’s selections are most often rooted in involuntary reasons, such as moving to the cloud or improving the end users’ experience.

Perhaps most significantly, most schools are no longer looking for just one system to manage the virtual classroom. We are now seeing entire institutions, such as Southern New Hampshire University and University of Maryland University College, designing new architectures where the LMS is but one core component. This move is enabling broader adoption of pedagogical approaches, such as competency-based education and personalized learning.

Once we get broader adoption of new pedagogies and new student support models, such as institution-wide or discipline-specific adoption, we may see longer-lasting trends and business models for the technologies outside the LMS. Technologies that generate analytics-driven feedback for faculty, provide targeted coaching or advising support for students or enable new learning modalities, such as flipped and blended classrooms, may very well be the beneficiaries of redirected spending and mind share.

Of course, the challenges to higher education’s tech-enabled transformation are multifaceted. Initiative fatigue abounds. Venture-backed apps and solutions are, all too often, reflective of dystopian fantasies about higher education’s mass disruption more so than the real-world needs of faculty — and students.

But chief among challenges for early-stage edtech companies and investors is the stronghold of a $2-3 billion LMS oligopoly that has, for more than a decade, indelibly shaped campus-wide technology infrastructure — and, in turn, limited the penetration of new layers of technology that extend or operate in parallel to the LMS.

Contrary to the popular narrative, edtech is having an impact on how colleges and universities operate, but higher ed has to change in its own ways. It is a public good that by necessity should not quickly follow each new tech solution proposed.

Deep changes are happening, and often these changes are driven by higher ed institutions themselves, with technology in a supporting role. Understanding the higher education market often requires one to ignore the time scale and see the changes as slower-moving but longer-lasting than those in consumer markets.

The glacier is not only melting, but reshaping itself. For those investors and vendors that want to have a lasting impact, patience is required to understand the opportunity and lessons of LMS market changes.