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Addition by Subtraction

Despite recent mergers and acquisitions, there are more choices than ever for learning management systems. Here's how to navigate the choice list.
University Business, Aug 2007

SOMETIMES LESS IS MORE. That's the case with learning management systems. At first glance, mergers and acquisitions have led to fewer competitors in the LMS market. But a closer look reveals that established systems are now accompanied by a range of emerging LMS solutions.

Today's options include hosted applications, open source solutions, social networking platforms with LMS components, and even homegrown applications that continue to thrive in academic environments.

In fact, many colleges and universities use a mix of LMS and course management systems. Consider the situation at Massachusetts Institute of Technology. In addition working with the Sakai open source environment, "MIT actually home grows most of its academic software," notes Ash Dyer, an MIT researcher.

Each spring and fall semester, MIT rolls out a new version of its LMS platform, which includes the Stellar course management system. Overall, the system enhancements are organized into six categories: content management (such as class materials), website structure (such as customized navigation), homework (assignments and submissions), access control, interaction with students (e-mail and RSS feeds), and ease-of-use enhancements. MIT has developed an easy-to-understand grid system to help users understand how Stellar has evolved since 2005 (see

The Stellar system is "cross-referenced with databases throughout MIT's administration, so it automates a lot of tasks teachers would otherwise have to worry about, like course registrations/drops and copyright management-that's a big one," quips Dyer.

Still, MIT doesn't develop LMS systems in a vacuum. The institution also works closely with the Sakai community (, an open source organization that spans multiple colleges and universities. Much like a shared set of Lego toys, Sakai members write LMS code on their own and then share these building blocks with one another. The goal is to mix and match pieces so that universities can snap together their own LMS systems relatively easily.

Of course, not all college and universities have the time or resources to develop LMS systems on their own-nor should they. While MIT has extensive in-house expertise, most colleges and universities would be better served to license prebuilt, standards-based solutions, industry pundits assert.

"This isn't a decision you want to rush into and take lightly," says Eric Elgar, founder of, a web development and software-testing firm in East Northport, N.Y. "If your LMS system goes dark, your university goes blind."

But choose wisely. Roughly 24 percent of schools with LMS deployments wind up with buyers' remorse, according to a 2007 study by Oakland, Calif.-based research firm Bershin and Associates. In other words, one out of four colleges would likely switch LMS systems if they had the freedom, power, and budget to do so.

Contrary to some concerns about industry consolidation, there's still a healthy range of LMS options from which to choose. Some offerings come from the traditional software market. Others have emerged as hosted solutions- known as Software as a Service (SaaS). There are also open-source options and even social network technologies that are gaining some (but not all) characteristics of LMS solutions (see "Ones to Watch" on this page).

Through mergers and acquisitions, the traditional LMS software market has undergone dramatic change over the past year or so. Key developments include Pearson's pending $538 million buyout of eCollege. com, which is slated for completion in the third quarter of 2007, according to a spokeswoman for Pearson.

The deal follows Blackboard's February 2006 buyout of WebCT. Blackboard continues to promote its own Blackboard Commerce Suite, and has re-branded WebCT's products under the Blackboard Academic Suite banner.

In many industries, rapid consolidation can often reduce competition and drive product prices higher. But in the LMS space, that doesn't appear to be happening. One key reason: The pending deal doesn't involve overlapping products. Rather, the deal "is a very straightforward and complementary one," notes a recent report from The M&A Researcher ( of Richmond, Va. "This deal will be viewed as a positive development in that it will essentially guarantee a stronger and more diverse entity to compete with Blackboard."

Ed Golod, president of Revenue Accelerators, a technology consulting firm in New York, adds, "Healthy competition either stabilizes prices or drives down prices. In this case, you'll see Pearson-eCollege competing aggressively with Blackboard, and the net result could be better price negotiating power for colleges."

Still, learning management system prices can vary greatly from one software provider to another. And in many cases, LMS software vendors don't publicly announce pricing when they launch new products, because they'd prefer to negotiate prices in private with each potential customer.

As a general rule of thumb, LMS systems can cost about $224,000 for 10,000 students during a single year (or about $22 per learner). Prices can drop to about $9 per learner per year based on volume discounts, according to Brandon Hall Research (, a Sunnyvale, Calif.- based company that specializes in online learning research.

Although many colleges and universities are still adjusting to recent industry consolidation, there are hints that more mergers and acquisitions in this sector are around the corner.

On the one hand, continued industry consolidation could leave a market with fewer competitors-setting the stage for higher prices.

Blackboard is among the companies that remain in a buying mood. In a May 4 filing with the U.S. Securities and Exchange Commission, the company announced, "During the course of our history, we have acquired several businesses, and a key element of our growth strategy is to pursue additional acquisitions in the future." (A Blackboard spokeswoman declined to speculate about any potential deals.)

'As long as open source continues to gain momentum, Blackboard and eCollege can't raise  prices without dramatically improving their products.'
-Ed Golod, Revenue Accelerators

Regardless, two healthy trends remain in the LMS space: competition between existing software companies-such as Blackboard and the anticipated combination-and the traditional software industry's fear of open source and social network technology. "As long as open source continues to gain momentum, Blackboard and eCollege can't raise prices without dramatically improving their products," notes Golod.

Equally important, just as the LMS market seems to be consolidating around M&A activity, new solutions surface. Administrators at Ball State University (Ind.), for one, are particularly excited by was still in its "beta" testing stage as of June 2007.

The system allows Ball State professors to stream video that's synchronized with a PowerPoint presentation, document, or any other electronic input, notes H. O'Neal Smitherman, CIO at the university. "The entire video plus extras can be immediately streamed to the web and/or archived to a website for later viewing," Smitherman notes. "Because it is synchronized, a student can skip to any PowerPoint slide and view the synchronized video and/or classroom instruction without any waiting."

Perhaps best of all, MediaSite could set the stage for Ball State to offer any course taught on campus as a distance education course with nearly zero marginal costs, Smitherman adds.

Some schools have struggled to unlock the full power of their LMS systems. In some cases, technology-averse faculty members prefer a printed course syllabus and paper-intensive courses.

But when an LMS system clicks with a university, it can emerge as a critical backbone for student-to-student and student to professor interaction. Consider the situation at MIT. More than 4,001 websites using the Stellar course management system have been created since 2001. And during a typical semester, more than 170 professors and teaching assistants lead Stellar class websites, according to Dyer.

Colleges and universities have to weigh several factors when trying to choose between on-campus LMS systems and off -site hosted systems.

For instance, an integrated, university hosted system can provide more disk space for storing content than a third-party website is willing or able to, notes Dyer.

Also, an on-site system can utilize the greater bandwidth provided by a university LAN rather than slower, remote internet connections. On-site solutions also make authentication easier by allowing students a single sign-on to all university assets.

'If your LMS system goes dark, your university goes blind.'
-Eric Elgar,

"A university-hosted system can draw on other administrative systems, which allows the course staff to focus on content and learning rather than managing registration lists and other issues," adds Dyer. "It is also designed to assist course staff with issues unique to education, such as copyright protections for some replicated course materials or materials that will later be published."

Finally, a university-hosted content management system allows for the retention and reuse of the content with a minimum of effort. This feature is particularly important if course staff changes between semesters, or if the university has other programs that can reuse the course content.

Still, hosted systems (aka Software as a Sevice) also provide several major benefits. For starters, hosted LMS systems provide predictable monthly costs-similar to a predictable cable bill or cell phone bill.

"Since everything is subscription-based, the hosted model gives you a good feel for what your long-term LMS costs are going to be," notes Golod.

Also, the hosted model provides key benefits in terms of maintenance and management. Hosted applications like can be upgraded easily and frequently- much in the way that Google or Yahoo can upgrade their back-end systems with little or no impact on users during the upgrade process.

In addition to on-site and off -site systems, there's the increasingly popular third option: open source.

The Sakai project, for instance, is an LMS solution that continues to gain momentum at major universities. Stanford University, for one, went into full production with Sakai in mid-2007, replacing a legacy homegrown system, according to Lois Brooks, director of academic computing.

"Sakai is localized, integrated, and well tested," says Brooks. "This is a big achievement for us, fulfilling the commitment we made to ourselves, and to our collaborators at Indiana, Michigan, and MIT three years ago when we started this project."

Looking ahead, Stanford will be able to exchange Sakai software components with dozens of universities across the country that are participating in the Sakai initiative. That should pressure Blackboard and to maintain fair pricing and ongoing innovation in the LMS space.

Joseph C. Panettieri is VP of editorial content at Microcast Communications ( He has covered Silicon Valley and the business of technology since 1992.

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