From Cloud & SaaS to Capital & Success

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News that the Canada-based venture capitalist, Klass Capital, has invested some $3m to help further develop Docebo’s disruptive Cloud SaaS-based e-learning solutions platform, allied to news from Saba that it’s being acquired by an affiliate of Vector Capital, are just two of several recent interventions in the learning management system (LMS) market which indicate the achievement of a further milestone in the industry’s development. They also indicate a further polarization among LMS offerings on the market.
For the least two years, Docebo’s LMS has figured prominently among the world’s top ten LMSs – in the list published by the world-renowned independent analyst, Craig Weiss. The LMS is used by over 800 business-to-business (B2B) clients, in more the 30 languages and in over 80 countries worldwide. Clients include major brands such as Bloomberg Institute, Thomson Reuters, FreshBooks and Autodesk. Saba, which has a longer track record than Docebo and which has had an association with Vector Capital since 2013, claims to have some 2,200 customers across 195 countries using 37 languages.

Having been originally funded by the Italian Venture Capital firm, Principia SGR, Docebo now has backing from Klass Capital – a company which provides expansion stage capital to high growth enterprise software businesses and has developed a portfolio of 15 high growth enterprise software businesses.

Developing an LMS isn’t difficult. It can’t be – because there are currently an estimated 800 LMSs commercially available in the world, some 642 of which are examined in depth in Craig Weiss’ 2015 report. Much of the difference in these figures can be explained by the number of LMSs which are only available in certain geographies, such as China and Russia. Craig Weiss’ report in 2014 examined 582 LMSs. This is an indication of the current rate of market growth in this sector.

According to Craig Weiss, some 90 percent of features are common to some 90 percent of LMSs. When searching for the right LMS for your organization, it’s important to identify those LMSs which offer exactly the ‘extra ten percent’ of features that you want. In his view, current key issues and trends in the LMS world include:

  • Gamification – which is growing fast but many systems currently limit its use
  • Modern user interfaces – notably with the move towards greater personalisation of the learning experience
  • The ability of the vendor to provide support and service
  • Speed of innovation from the vendor
  • The vendor’s adoptability and adaptability, as well as acting upon consumer feedback

Yet this overall figure – of 642 LMSs – disguises the growing disparity in LMSs. Only a relatively small proportion of these LMSs can cope seamlessly with the learning demands of a large – often global – organization. This is the area of the LMS market where there are large numbers of learners who need access to a large number of learning materials, often in a variety of languages and tailored to fit different cultures even within the same geography.

The products from companies such as Docebo, Saba and several others, operate most effectively in this sector of the market – and, because the numbers involved are large, it’s these companies’ LMSs that attract the attention of venture capitalists. Their money is driving the further development and sophistication of the LMS – and, indeed, that of its ‘complementary cousin’: learning content management systems (LCMSs).

One of the key developments in this sector of the LMS market began some five or so years ago with the decision to put LMSs ‘in the Cloud’. Commenting mainly on the UK market in 2010 but also looking at the rest of Europe, Learning Light’s Report, ‘The UK e-learning market 2010’, said: ‘In terms of technology trends, we see considerable innovation and potential disruption to business models driven by open source technologies, mobile and smart devices, e-books, Cloud and Software as a Service (SaaS), along with the new style and demand of learners living almost all of their lives online.’ It continued: ‘The emergence of Cloud SaaS is, arguably, one of the big leaps for learning technologies. Unlike a lot of new wave learning (e.g. m-learning), it isn’t about clever technology awaiting a cost-effective application. The Cloud was simply inevitable… (The) Cloud really appears to have captured the imagination of learning technologists and e-learning specialists … with organisations as diverse as GITEX (Middle East), DCKTN (UK) and Microsoft devoting time and resources to publications and events on the subject. (The) Cloud is mainly seen in terms of data management right now but the acceptance of SaaS as a cost cutting and robust technology opens minds and reduces barriers to take-up.’

As with so many of Learning Light’s market predictions, its views on the Cloud and SaaS have proved to be extremely accurate.

LMS producers were quick to see the possibilities of this technology in 2010. Now – after a suitable time lag, because they wouldn’t want to be seen as incautious – venture capitalists have seen what has been achieved in only a few short years. As a result, they are now prepared to invest in order to speed the development and application of learning, as well as monitoring that learning, via the Cloud.

The market leading LMSs are those which cater for large numbers of users in national and international organizations and deliver that learning in diverse languages to diverse cultures. These – as Docebo and Saba have just illustrated – are the ones that are attracting the investment that will enable these Cloud SaaS-based systems to develop the leading edge gamification applications and modern user interfaces that all LMS buyers want to see – and which the major LMS buyers can afford.

 

By Bob Little

For the last 25 years, Bob Little has been writing and commentating on all aspects of corporate online learning technologies. His work is published around the world.