At this year's Ellucian users' conference #elive15, one of the two big stories has been that Ellucian acquired the Helix LMS, including taking on the development team. I have previously described the Helix LMS in "Helix: View of an LMS designed for competency-based education" as well as the subsequent offer for sale in "Helix Education puts their competency-based LMS up for sale". The emerging market for CBE-based learning platforms is quickly growing, at least in terms of pilot programs and long-term potential, and Helix is one of the most full-featured, well-designed systems out there.
Ellucian has acquired Helix Education’s competency-based education LMS and introduced a 2015 development partner program to collaborate with customers on the next-generation, cloud-only solution.
As the non-traditional student stands to make up a significant majority of learners by 2019, Ellucian is investing in technologies that align with priorities of colleges and universities it serves. CBE programs offer a promising new way for institutions to reduce the cost and time of obtaining a high-quality degree that aligns with the skills required by today’s employers.
I had been surprised at the announcement of intent-to-sell in December, noting:
The other side of the market effect will be determined by which company buys the Helix LMS. Will a financial buyer (e.g. private equity) choose to create a standalone CBE platform company? Will a traditional LMS company buy the Helix LMS to broaden their reach in the quickly-growing CBE space (350 programs in development in the US)? Or will an online service provider and partial competitor of Helix Education buy the LMS? It will be interesting to see which companies bid on this product line and who wins.
And I am surprised at the answer - a private equity owned ERP vendor. Throughout the mid 2000s there was talk about the ERP vendors like SunGard Higher Education (SGHE) (which combined with Datatel in 2011 and renamed as Ellucian in 2012) and Oracle entering the LMS market by acquisition, yet this did not materialize beyond the dreaded strategic partnership . . . until perhaps this week. But the Helix LMS was designed specifically for CBE programs, not general usage, so is this really a move into the broader LMS market?
When I interviewed Helix Education about the LMS last summer, they stated several times that the system could be used for non-CBE programs, but there is no evidence that this has actually occurred. I'll admit that it is more likely to expand a CBE system into general usage than it is to convert a course-based traditional LMS into a CBE system, but it is not clear that the end result of such an expansion would remain a compelling product with user experience appreciated by faculty and students. The path is not risk-free.
Based on briefings yesterday at #elive15, there is evidence that:
- Ellucian plans to expand the Helix LMS (which will be renamed) beyond CBE; and
- Ellucian understands that there is development still remaining for this broader usage1.
Support for broad set of delivery models: CBE, Online, Hybrid, Blended, Traditional, CE/WFD
One Challenge: Strategy
But there are already signs that Ellucian is not committed to deliver an LMS with "support for broad set of delivery models". As described at Inside Higher Ed:
At its user conference in New Orleans, Ellucian announced the acquisition of Helix Education's learning management system. The company will "blend" the software, which supports nontraditional methods of tracking student progress, into its student information system, said Mark Jones, chief product officer at Ellucian. While he stressed that the company is not planning to become a major learning management system provider, Ellucian will make the system available to departments interested in offering competency-based education.
"The initial goal and focus is on enabling competency-based education programs to flourish," Jones said. "In terms of being a broader L.M.S. solution, if our customers find value… we will certainly have that conversation."
I asked Jim Ritchey, president of Delta Initiative and who is attending the conference, for his reaction to Ellucian's strategy. Jim noted the reaction at the conference to the news "seemed to be more of a curiosity than interest", and then added:
To me, one of the key questions is how Ellucian will “blend” the software. Do they mean that schools will be able to post the results of the competency based courses to the SIS, or are they talking about leveraging other products within the LMS? For example, some of the capabilities of Pilot could be leveraged to deliver additional capabilities to the LMS. The concern I would have is that tying the LMS to other products will cause the LMS development to be dependent on the roadmaps of the other products. Ellucian will need to find the right level of independence for the LMS so it can grow as a solution while using other products to enhance capabilities. Will the LMS get lost?
In addition there the differing nature of the products to consider. The Helix LMS is centered on the learner and the learner's schedule, while Banner, Colleague, and PowerCampus are centered on academic terms and courses. These differing design concepts could cause the blending process to remove some of the unique value of the LMS.
Another Challenge: Execution
On paper, this deal seems significant. The company with arguably the greatest number of US higher ed clients now owns an LMS that not only has a modern design but also is targeted at the new wave of CBE programs. The real question, however, is whether Ellucian can pull this off based on their own track record.
Since the 2011 acquisition of SGHE by the private equity firm Hellman & Friedman, Ellucian has endured wave after wave of layoffs and cost cutting measures. I described in 2011 how the SGHE acquisition could pay for itself.
If Hellman & Friedman can achieve reasonable efficiencies by combing SGHE with Datatel, this investment could potentially justify itself in 5 – 7 years by focusing on cash flow operating income, even without SGHE finding a way to reverse its decline in revenue.
Add to this Ellucian's poor track record of delivering on major product upgrades. The transition from Banner 8 to Banner 9, or later to Banner XE, was described in 2008, promised in 2010, re-promised in 2011, and updated in 2012 / 2013. Banner XE is actually a strategy and not a product. To a degree, this is more a statement of the administrative systems / ERP market in general than just on Ellucian, but the point is that this is a company in a slow-moving market. Workday's entry into the higher education ERP market has shaken up the current vendors - primarily Ellucian and Oracle / Peoplesoft - and I suspect that many of Ellucian's changes are in direct response to Workday's new market power.
Ellucian has bought itself a very good LMS and a solid development team. But will Ellucian have the management discipline to finish the product development and integration that hits the sweet spot for at least some customers? Furthermore, will the Ellucian sales staff sell effectively into the academic systems market?
A related question is why Ellucian is trying to expand into this adjacent market. It seems that Ellucian is suffering from having too many products, and the LMS addition that from the outset requires a new set of development could be a distraction. As Ritchey described after the 2012 conference (paraphrasing what he heard from other attendees):
The approach makes sense, but the hard decisions have not been made. Supporting every product is easy to say and not easy to deliver. At some point in time, they will finalize the strategy and that is when we will begin to learn the future.
In The End . . .
The best argument I have read for this acquisition was provided by Education Dive.
Ellucian is already one of the largest providers of cloud-based software and this latest shift with Banner and Colleague will allow its higher education clients to do even more remotely. Enterprise resource planning systems help colleges and universities increase efficiency with technology. Ellucian touts its ERPs as solutions for automating admissions, creating a student portal for services as well as a faculty portal for grades and institutional information, simplifying records management, managing records, and tracking institutional metrics. The LMS acquisition is expected to take the data analytics piece even further, giving clients more information about students to aid in retention and other initiatives.
But these benefits will matter if and only if Ellucian can overcome its history and deliver focused product improvements. The signals I'm getting so far are that Ellucian has not figured out its strategy and has not demonstrated its ability to execute in this area. Color me watchful but skeptical.
By Phil Hill
- See the "development partner program" part of the announcement. [↩]