If you’ve been following the news and analysis from Talented Learning, you know that the thriving 2016 LMS market is comprised of almost 700 vendors, whose solutions can be grouped unequally and imperfectly into corporate, academic, association and continuing education type LMSs.
Although there is common “LMS” functionality in all the types (managing learners and content for example), each type of LMS also has unique uses, functionality, integrations and vendor experience/expertise not required by the others. The uniqueness that differentiates each LMS type is where exciting innovation is rapidly occurring.
To give you a taste of the many flavors of LMSs and the pockets of specialization that exist, let’s dig into the diverse and not-so-easy to digest corporate LMS market.
Corporate LMS Market Snapshot
For many years there were less than 12-15 viable, similar, one-size-fits-all, corporate LMS competitors. Now hundreds and hundreds of LMS vendors compete in the corporate market. These vendors range from global software conglomerates to tiny, regional cloud startups. Some vendors have full system-integrator type professional service teams, while many others are based on a self-service implementation model. A handful of corporate LMSs are free, the high end can cost over a $100/user/year. The business focus of the LMS could be compliance, talent development, enablement or commerce.
Today’s heterogeneous corporate LMS buyers have highly diverse needs and have learned painful lessons from the past. One-size-fits-all solutions are great when a company simultaneously has lots of learning problems, locations, business units and learning audiences. But if a buyer has only one audience and a laser focused business use, one-size-fits-all is too big, bulky and expensive. Discerning, educated buyers want specialized vendor solutions to help them achieve their goals better, faster and cost effectively.
The Rogue Extended Enterprise LMS Buyer: Rarely in HR
Extended enterprise learning is defined as the education a corporation provides to their non-employee audiences such as external channel partners, customers, prospects, dealers, franchises, distributors and/or retailers. By doing so, corporations are generating measurable direct and indirect income, increasing customer satisfaction and expanding their global reach.
However, those who own the responsibility and budget for channel and customer audiences often reside in different, unrelated organizational functions and/or business units. Purchasing decision makers for employee learning technology initiatives are typically in HR or training department roles, while the purchase point for extended enterprise LMSs could be in sales, marketing, product groups, channel management or customer service.
Specialized extended enterprise LMS vendors know this and have developed their solutions specifically to target extended enterprise use cases — and budgets. With unique audiences and non-HR purchase points, these vendors have left employee learning solutions behind to serve rogue extended enterprise LMS buyers. Of course, this may mean that the same organization is investing in multiple LMSs — many times without even knowing it. LMS vendors aren’t complaining.
The diversity of employee vs. extended enterprise learning needs and audiences has contributed to the explosion of specialized LMS vendors who are shaping today’s corporate LMS.
4 Flavors of Corporate LMS
Interestingly, there is no universal blueprint that shows how vendors target corporate LMS buyers. Many viable and competing strategies exist. There is apparently room for many competitors. Here is a snapshot of the corporate LMS market:
CORPORATE LMS MARKET
Source: LMS Almanac
Based on our research, we believe there are at least four different types of corporate LMSs including:
- Employee LMS – The original LMS focused on employee compliance, training automation and in some cases talent management. Employee LMSs are often considered “boring” and “LMSy” by the end users, primarily due to the mandatory nature of the compliance training content these platforms manage.
- Channel and Partner LMS – Modern learning platforms, designed to build, grow and certify external sales and distribution channels such as dealers, franchises and retailers. Channel LMSs provide the most measurable and predictable ROI of any type of corporate LMS by simply comparing the sales performance of trained vs. untrained channel partners.
- Customer and Prospect LMS – Solutions designed around ecommerce and integration with CRM solutions. They are adept at helping organizations attract prospects, educate new customers and develop loyal, satisfied customer relationships. Customer-centered LMSs are often thought of as “learning marketing systems” and are not a bit “LMSy”.
- All-Purpose LMS – Designed to support any or all of the above, simultaneously. All-purpose LMSs are the biggest, most comprehensive, most configurable kind of corporate learning system but seldom can do it all at a high level. Jack of all trades, master of none. They can also be costly to license, implement and support but if deployed correctly offer significant economies of scale in cost, licensing and content sharing.
A key take-away here is that there is a big difference between what an LMS “can do” vs. “designed to do.” Many corporate LMS vendors think they are all-purpose but are really just employee LMSs that have external users or B2C commerce. Pure extended enterprise vendors bring a new level of ecommerce, interface design, social media, marketing automation and web expertise unknown to the typical HR LMS.
In future posts, we will dig into each of the above four types and provide more detail, characteristics, case studies, top vendors and more.
What does all this category analysis mean? Why does it matter? LMS vendors are now carving out a competitive edge through specialization. Generalists tend to compete on price and broad functionality, while LMS specialists compete with incremental capabilities that add value by helping customers move the business needle. For LMS buyers, this new market means more buying complexity, but also the opportunity to find matching business partner specialists that can help them compete better.
Sure, you can find any old LMS to manage learners and content, but if you want to use learning technology as a competitive differentiator, find a specialist flavor. It is a fascinating time to be an LMS selection consultant.
Thanks for reading!
Want More Corporate LMS Market Insights?
In the LMS Almanac: Corporate Edition 2016, we provide in-depth detail about each of the four types of corporate LMS solutions. Including:
- Type overview
- Business uses
- Business case
- Top 10 features groups
- Real-life case studies
- Top LMS vendors in category with in-depth profiles
If you’re interested in the LMS Almanac, but would first like to talk with co-author and CEO of Talented Learning, John Leh, please submit the form below to schedule a conversation:
Photo Credit: Sally Robertson via ColoredPencilMag on Flickr