In a move that set the entire education market a Twitter, Blackboard recently announced plans to acquire rival learning management system provider, Angel Learning. Yet the real significance of this deal may actually be found in the response of its rivals and the extent to which the newly combined company can take advantage of the opportunities this acquisition potentially offers, said market analyst Datamonitor.
Blackboard reached an agreement to buy Angel Learning in a deal worth $95 million in cash and stock. While Blackboard has an established history of acquiring competitors and complementary solutions, having purchased vendors such as WebCT in 2005 and the NTI Group in 2008, the announcement to acquire Angel Learning shocked the industry and prompted one insider to ask, “Is this the ed-tech story of the year?"
Without question, this acquisition is big news and has considerable implications for the education technology market, higher education and the learning management system (LMS) competitive landscape. However, whether Blackboard’s acquisition of Angel becomes the most significant story of 2009 largely depends on the consequences of the deal. In essence, the real story is not the acquisition of Angel, but what the industry as a whole does in response to it.
A quick scan of the vendors offering an LMS solution suggests the competitive landscape is shrinking. Appearances, however, are deceiving as the market is actually evolving due to the emergence of strong commercial vendors and an increasingly vibrant open source community. There are three major vendors offering a proprietary LMS solution to the market (Blackboard, Desire2Learn and Pearson eCollege) and two popular open source solutions (Sakai and Moodle) supported by a number of service providers, including rSmart and Unicon.
In all likelihood, the acquisition will drive more institutions to consider an open source LMS solution, thereby expanding the demand for the services market and even prompting the entry of a proprietary solution built on an open source core.
Hosted LMS is already a high-growth area for commercial vendors, but as institutions become comfortable with software as a service, the demand for a LMS solution delivered through this method will increase the uptake of Pearson eCollege and encourage new players to enter the market. With a little vision on the part of vendors and institutions, Angel’s acquisition will contribute to a more vibrant rather than consolidated competitive landscape for LMS.
But it is not all about the competitive landscape. Actions taken by Blackboard and its newly expanded end-user community will have a significant impact on whether the acquisition has a positive effect. Internalizing and then scaling Angel’s success with customer service and support is cited as a key argument for the acquisition.
It’s an obvious story, but a difficult one to accomplish in real terms. Angel is a small organization, less than 10 percent the size of Blackboard and as the underdog in the market, has needed to fight for, win and keep each of its clients. Knowing customers by not only their names but their unique issues and context has been the cornerstone of Angel’s success in the market.
Figuring out how to incorporate Angel’s Midwestern values into its own and then scale enhanced service delivery across thousands of institutions on multiple continents should be high on Blackboard’s to-do list. These will not be easy tasks to accomplish, but the potential reward of improved client retention provides ample incentive.
Blackboard has also identified delivering better products to the market as a driver for the acquisition. The outlook suggests it will be able to deliver on this promise. Already under way, Project NG is the strategy for bringing together the WebCT and Blackboard solution into a single suite and then evolving it to meet the future needs of colleges and universities. The parallel to Fusion should not be missed, as it is Oracle’s strategy for more effectively leveraging the assets of an aggressive acquisition strategy.
While these types of strategies often strike fear into the hearts of institutional end users, evolving the two products into a single solution in a planned and thoughtful manner is far superior to the vendor allowing the acquired solution to languish with little or no investment and eventually ending technical support and maintenance for it.
The competitive landscape for student information systems (SIS) is still littered with the remains of solutions discarded by vendors after an active period of consolidation. Clearly, in the case of Blackboard, the acquisition of Angel was not about buying market share but instead accelerating the more innovative development of its solutions. Taking the LMS market to the next level of capability will require a large and sustained investment by vendors. Early outcomes from Project NG suggest that Blackboard is making this commitment, which bodes well for the existing Angel end users.
In the end, whether Blackboard’s acquisition of Angel Learning results in a more vibrant competitive landscape for LMS and improved products and services for the newly combined end-user community depends on a lot of hard work and individual aspirations. But from Datamonitor’s perspective, all indicators suggest it’s a safe bet to label this acquisition as the story of the year for 2009. (Chief Learning Officer)