Features

Published July 2008

Where Have All the LMS Vendors Gone?

Paul Somerville

Almost eight years ago, analysts predicted that consolidation in the LMS industry would shrink the number of vendors from more than 100 to a small fraction of that number. The analysts were right. Today, most learning and development professionals would correctly guess that there are less than a dozen major LMS vendors. But even those vendors seem to be disappearing. And consolidation is not the cause.

Talent Management on the Rise
Instead, LMS vendors are purposefully morphing into talent management vendors. Talent management is clearly a hot topic. But are LMS vendors taking the right tack? According to Forrester Research, “C-level executives increasingly view learning and talent management as an essential initiative in developing razor-sharp talent that can move the organization toward its goals.”

In its simplest form, talent management is defined as attracting, developing, rewarding and retaining high-caliber employees to meet an employer’s goals.

To some degree, industry analysts, shareholders and institutional investors have pushed vendors to chase talent management. By selling software that manages talent instead of merely learning, vendors are thought to net bigger profits, greater market share and a more compelling story. As vendors have tried to meet the expectations of analysts, investors and venture capitalists, the scope of the wares that vendors are selling has grown and grown. But growth can come at a price.

Who’s Paying the Price?
Learning and development solutions providers are paying a price when they emphasize talent management at the cost of learning. For example, for an LMS vendor to develop a truly competitive talent management solution, the company must invest in research and development (R&D) to write software for, say, compensation management or performance management. Or the vendor must spend money to acquire such technology, and, then, integrate the product into its portfolio.

But there are a lot of products, features and functions coming into the LMS market that have little value to a learning and development professional. Training is focused on developing the workforce. And while some organizations have an entire department devoted to managing compensation and figuring out how best to leverage pay to attract talent, these tools are not vitally important to learning and development professionals.

Vendors are spending tens of millions of dollars each year on R&D. But what percentage of this is being spent on bringing next-generation LMS technologies to the market?

Meet the New LMS, Same as the Old LMS
Unfortunately, developing better, smarter LMS technology has taken a back seat to developing or acquiring software for recruitment, compensation and performance.

That means in a lot of cases, training professionals are “driving” an LMS model that looks largely the same as it did three, four or even five years ago. Imagine what would happen if the auto industry sold its customers the same car, with no substantive improvements, for six years in a row.

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