This year’s D2L Fusion conference in Houston carved out a space somewhere between the carnival atmosphere of InstructureCon in Keystone and the subdued feel of BbWorld in Orlando (note: we plan another post on each of these conferences to share more details of our observations). This was the perfect note to hit for where D2L is in its evolution as an educational technology company. A number of things seem to be falling in place for D2L1 with its LMS product, but we will have to see if the recently expanded management team will be able to address the ongoing challenges that D2L faces with customer experience and expectations.
Like Blackboard and Instructure, D2L is in the middle of a transition partially driven by financial considerations. In D2L's case, the issue is that the two rounds of $165 million aggregate funding in 2012 / 13 lead to expectations of larger market gains. In August of 2017 we shared that “D2L is on a roll, racking up significant client wins in higher education, and the company shows real signs of change in its ability to truly listen to and empathize with customers.” Two months ago we described D2L's concerted effort to move customers to the cloud and some promising improvements surfacing in the new Daylight user experience. Despite these improvements, however, D2L has lost some marquee customers such as the University of Wisconsin system to offset some of the wins, and the company has remained steady or made slight gains in North America, European and Latin American LMS market share.
At D2L Fusion, our goal was to get a better read on how actual customers and prospects are reacting to the cloud deployment move and streamlined user experience that we have observed. A second goal we had was to get a better sense of whether D2L will be able to improve its customer service and delivery on promises made to customers.
Reactions to Cloud and User Experience
From customers we spoke to at D2L Fusion, the value of the move to the cloud as well as user experience improvements have provided breakthroughs. On the cloud front, D2L now has upwards of 98% of their customer base either hosted through Amazon Web Services (AWS) or in the company's data centers. According to a company spokesperson, 55% of what they describe as cloud implementations are hosted by AWS, the remainder by D2L in their leased data centers. All new implementations moving forward will be hosted by AWS and by fall 2019 D2L estimates that nearly all implementations will be on the AWS infrastructure. This will be a significant achievement for a legacy on-premises software provider to make this transition. From our June post:
D2L has long worked on managed hosting options, but in late 2013 the company introduced Continuous Delivery where software releases are pushed to customers incrementally, such that customers would jointly run the latest versions of Brightspace, their LMS. This move is important, as one primary benefit of cloud deployment is to remove the explosion of software configurations and versions that make it expensive and difficult to diagnose and fix bugs and to release new features.
Three years later in 2016 D2L announced their move to AWS for cloud deployment.
At Fusion 2018 we saw a continuation of this strategy, and we heard largely positive reception from customers and prospects, and we are not hearing the grumblings from customers as was evident in late 2016 / early 2017. We should also note that this move to the cloud is more aggressive than that being made by Blackboard and Learn SaaS, but more on that in a future post.
As for the new user experience and recent changes in product design, it’s useful to first establish context for what’s been happening internally at D2L. About three years ago D2L brought in a new chief operating officer, Cheryl Ainoa, and a new VP of Product, David Koehn. One of their goals was to turn the product development process on its head and, drum roll, put the users first. This means engaging with users, listening to users, understanding their problems and viewing them as partners in the effort to deliver better software. It also means solving the small things that annoy users on a daily basis and shifting away from feature releases as the key metric of progress. For companies that have been engaged in agile methodology and iterative development, this likely sounds basic. For D2L, it was a fundamental cultural shift in how development is done. At this year’s Fusion, we are seeing concrete signs that change has taken root both with the company and with customers.
Daylight Experience is the name for D2L's redesign of its streamlined user interface. When it was first announced in early 2017, we were somewhat skeptical as the initial changes were evident in different fonts and cleaner look-and-feel but not significant improvements in the workflow for faculty and students.
As time goes on and we see more advanced demos, our view is changing. The Daylight Experience does have some real improvements not just in look-and-feel but in fewer and more intuitive clicks to get the same job done. A major focus on the Emerald Release this summer (in time for D2L Fusion users conference) is more fully encouraging usage of the activity stream for higher ed clients (this feature was initially targeted at K-12 market but has been adapted for colleges and universities).
The product showcase slide that arguably got the most enthusiastic response from the crowd was the one that focused on the small changes that users had been clamoring after for years – things like “Due Dates in Manage Dates Tool”, “Fixed Headers in Grades”, “Learning Groups”.
These are not sexy, headline-making announcements, but they matter to users. D2L has long been viewed as a platform for people and institutions that like to have a lot of control over how to configure and run an LMS; however, the breadth and complexity of options often came at the expense of an intuitive user experience. While D2L has had a solid product for a sub-set of the market for years, they have had difficulty being viewed as ‘intuitive’ or ‘easy to use’, at least since the advent of Canvas and the resultant change in user expectations. The streamlined design afforded by the Daylight Experience, and the progressive disclosure of more advanced features, could change this situation if they're able to get it in front of potential customers for a serious look.
Customer Experience and Expectations
On the second question regarding customer service and delivery on promises there are several reasons to be upbeat, but also reason for concern. Several new customers we spoke with, from Europe, Latin America and North America, all spoke about “partnership” as being a key reason for their choosing D2L over the competition. During lengthy procurement processes, these institutions got the sense that D2L was eager to engage and work with them to achieve their goals with broad service offerings as well as an eagerness to shape product development to suit these new clients.
That said, D2L has a mixed record on follow through. A number of sources we have spoken with over the past 6-12 months have discussed a pattern of the company over-promising and under-delivering when it comes to implement promised changes. For example, these sources have told us they went into the relationship with this same expectation of a partnership, of having a voice in product direction, only to find out they are having trouble getting D2L staff to respond in a timely manner. It is not clear yet on how prevalent these concerns are, but we do believe they will need to be addressed in order for D2L to make material changes in overall market share.
D2L has made two key hires in recent months, seemingly in recognition of potential market opportunities as well as persistent internal challenges. One targets growth, the other customer satisfaction. Puneet Arora, a former sales executive with several SaaS companies, has been brought in as chief revenue officer, and April Oman, a veteran customer success executive with a number of enterprise software companies, has been added as as Senior VP of Customer Experience. Arora is new to the education space but seems to be asking a lot of the right questions, and his task is to grow the user base in a meaningful way. Expect to see some changes in how D2L positions itself and who they try to sell to, shifting the balance away from administrators and towards faculty and student end users. Oman’s role is a new one and speaks to the need to develop a stronger relationships and partnerships with customers. This will be critical as D2L tries to establish themselves as much more than a software solution and as they attempt to improve customer experience.
Better Position but Needing Results
The center of gravity of D2L's executive team is more diffuse than it used to be. Much of the longer-tenured leadership of D2L is based out of the Kitchener, Ontario home office: John Baker, CEO; Nick Oddson, CTO; Melissa Howatson, CFO; Jeremy Auger, SVP Strategy; and Ken Chapman, VP of Market Research. Ainoa, Koehn, Arora, and Oman (the new hires), however, are all in the Bay Area in California, and Tracy Strauss, SVP Marketing, is out of Los Angeles. There seems to be a deliberate approach to finding new ways of thinking from a broader field of expertise.
D2L appears to have largely revamped its approach to product development that is more responsive to customer needs, and is putting resources into building partnerships. Yet they have not made the market gains envisioned after winning the Blackboard patent wars and then raising two large rounds of financing. We still see a two-horse race for new implementations (LMS product switches) in higher education, largely shared between Canvas and D2L, but the second horse that is looking better than it used to still needs to make further adjustments and run faster.