Oct 31 2006

Tech Outlook

The academic computing market continues to grow as learning management systems help institutions with accountability and online education demands.

The academic computing market continues to grow as learning management systems help institutions with accountability and online education demands.

With learning management systems found on 90 percent of U.S. higher education campuses, suppliers are looking beyond these platforms to add value to technology-enabled learning environments. Early in 2006, Eduventures, a Boston-based education research and consulting firm, conducted research to determine the changes driving the academic computing market by interviewing CIOs, provosts and academic technologists at leading colleges and universities nationwide. Based on our research, we defined the market to include learning management, learning outcomes management, communication and collaboration, and content delivery systems segments.

Postsecondary academic computing technologies play a major role in supporting the achievement of institutions' top strategic goals. In academic computing, the learning management system sits at the core. Eduventures believes that two driving forces – the evolution of the LMS segment and external pressures for institutional accountability – will have the most significant influence on the development of academic computing segments.

As a result, two overarching market dynamics have emerged:
1. CIOs are re-evaluating supplier strategies. Technology leaders are using request for proposals (RFPs) and other mechanisms to take a fresh look at suppliers such as ANGEL Learning and Desire2Learn. LMS providers are taking advantage of this opening by creating migration packages to move institutional LMS databases from one platform to another and re-emphasizing differentiated value propositions.
2. Nonproprietary application options are available. Open-source and community-source applications are providing a nonproprietary code alternative option within the market. Although the community-source Sakai project and its open-source counterpart Moodle do not match the market penetration of the proprietary software providers, they are playing the role of the industry disruptor.

Accountability Effects

Building on the accountability drumbeat by regulators, accrediting agencies and tuition-weary parents, institutions are debating the need for tools to manage and provide proof of their learning and performance outcomes. The federally sponsored Commission on the Future of Higher Education has made institutional accountability a key theme in its hearings and public comments to date. Many states, including Arizona, Connecticut and North Carolina, are also developing systems for higher education accountability. Interviewed CIOs and senior academic administrators note that their institutions are focusing on accountability issues primarily in terms of student-outcomes tracking and the value to institutional accreditation processes.

Learning Management Systems

Eduventures estimates the learning management systems segment's revenues at nearly $235 million in 2006, rising to nearly $333 million by 2009. The market landscape is currently dominated by the combined Blackboard/WebCT, and additional active commercial providers in this market include ANGEL Learning, Desire2Learn, eCollege, Jenzabar and Ucompass. While institutions are also allocating dollars to open- and community-source solutions such as Moodle and Sakai, Eduventures' estimates focus on commercial revenues realized by suppliers.

Growth in the LMS market is occurring through providers' expansion of platform capabilities, ongoing efforts to drive enterprisewide deployments, and continued growth and acceptance of online learning. On many campuses, learning management systems are securing a larger share of institutional academic computing expenditures. Eduventures believes that incumbent providers will continue to capitalize on the relative maturity of the LMS segment to secure the bulk of market spending. Chief barriers include increasing acceptance of open- and community-source solutions and continued faculty adoption challenges.

Learning Outcomes Management Systems

Eduventures estimates the learning outcomes management (LOM) segment's revenues at $31 million in 2006, rising to $50 million by 2009. Our research indicates that institutional readiness for LOM applications is in the earliest stages, with a lack of clear market definition, underutilization of technologies and a lack of funding as the principal barriers to adoption. Among commercial providers, the market is characterized by a fragmented mix of standalone products, modules available as add-ons to LMS systems and repurposed horizontal solutions (e.g., business intelligence systems).

Drivers for LOM systems include tracking student performance and supporting institutional accreditation. Although e-portfolios have received significant press coverage, this market has yet to mature commercially in the United States.

Communication and Collaboration Systems

Eduventures estimates the communication and collaboration segment's revenues at $48 million in 2006, rising to $59 million by 2009. Adoption drivers include growth in demand for online learning, increased availability of appropriate content and increasing readiness of professors to teach online. Student demand for convenience and flexibility – an underlying driver of distance education – is also pushing institutions to adopt virtual collaboration. Virtual classroom platform features are particularly effective for online and blended learning settings and include application sharing; recording, editing and play back of live sessions; and polling.

Barriers to adoption include the need for expensive upgrades to colleges' technology infrastructures and the unwillingness of some professors to incorporate new technologies into instruction. With the constant challenge of budgetary constraints, cultural barriers and the relatively shallow adoption of LMS features, development of market scale is expected to take time.

Content Delivery Systems

Eduventures estimates the content delivery segment's revenues at close to $123 million in 2006, rising to approximately $173 million by 2009. Several factors are contributing to growth in this segment, including the prevalence of digital content resources to augment traditional text-based formats, robust institutional network environments that support multimedia content delivery, adoption and acceptance of online learning models, and user-friendly software and hardware applications that facilitate content development by faculty and students.

Institutions desire greater efficiency from authoring applications and more effective management of digital assets. The proliferation of digital content resources increasingly requires an institutional strategy for managing and distributing materials. Eduventures expects to see institutions craft enterprisewide digital asset management strategies – in much the same way that they established enterprisewide online learning strategies.

Market Drivers

In coming years, the academic computing market will be marked by smaller, entrepreneurial companies jockeying for position in emerging segments and larger, established providers extending capabilities. The developing learning outcomes management and communication and collaboration segments will see considerable activity as administrators and faculty gain a greater awareness of the value and impact of these solutions. Meanwhile, decision making is broadening considerably beyond the CIO to encompass a wide array of academic and administrative stakeholders.

Eric Bassett is managing director for industry solutions and Catherine Burdt is a senior analyst for industry solutions at Eduventures.