The For-Profit LMS Market

Blackboard historically has been synonymous with learning management technology. While the company in recent years has lost some clients in that market to competitors, it still provides the learning management platform for more than half of nonprofit institutions, according to the latest data from the Campus Computing Project.

But in the growing for-profit market for learning management, Blackboard is not king.

That crown belongs to eCollege, the learning-management provider owned by the media conglomerate Pearson. A peon in the nonprofit world (it owns less than 2 percent market share, according to the Campus Computing Project), eCollege cornered the for-profit market early on by offering a product tailored to meet the unique needs of that type of institution, says Richard Garrett, managing director of the higher ed consulting firm Eduventures.

The online learning platforms offered by eCollege and Blackboard “were evolved with different goals in mind,” says Garrett. The eCollege platform “was built with top-down enterprises in mind,” he says, whereas Blackboard’s product was designed to “enable individual faculty to experiment with online, or to use it at an individual course level as a supplement to the classroom” — more in line with the governance structure of the traditional college, where professors have more autonomy.

At for-profit institutions, decisions about the format and tools of course delivery tend to be made at an administrative level. “There is something to be said about their ability to understand how we operate,” says a top executive at one major for-profit institution that uses eCollege. The executive asked not to be named so he could speak candidly without irking his handlers. “We are not a purely faculty-centric model. Blackboard historically has been more faculty-centric.”

Shared governance is not the only area where the learning-management needs of for-profits and nonprofits have historically differed. For-profits were generally ahead of nonprofits in running large-scale academic programs either mostly or completely online. In such courses, the online learning platforms serve as the primary point of contact between students and the institutions — and since they are asynchronous, students are using them all the time. At such institutions, it is critical that the platform not crash despite heavy use.

At a time when Blackboard and others were still setting up their online learning platforms to run on their clients’ servers, eCollege was hosting its clients on its own servers — and developing a reputation for reliability, especially among institutions with high online enrollments.

There was also the matter of logging data on student and faculty activity inside the system — another capability eCollege had “early and often,” according to Tim Gilbert, chief marketing officer for Campus Management, a technology support company that deals with both eCollege and Blackboard.

Mining learning-management systems for data has come into fashion among nonprofit colleges relatively recently, but for-profits have been doing it for much longer, says David Harpool, provost and chief academic officer at the for-profit Westwood College. Accrediting bodies and other regulators have always scrutinized for-profits extra closely, Harpool says, so there was a high demand for tools that would log data on student attendance and the degree of activity by students and instructors in the online learning environment — and make the data easy for for-profits to organize and show to accreditors and others by way of proving their legitimacy.

For-profits also have a unique interest in by-the-numbers scrutiny of both students and faculty: faculty because the institutions have greater power to fire them based on classroom performance, and students because, as Harpool puts it: “When an average school in the for-profit sector spends between $4,000 and $8,000 to attract each student, you want to make sure you keep the student and make the student successful.”

Back when these different data tools were critical only to for-profits, eCollege had the goods, Harpool says. Tim Hill, director of Blackboard’s professional education division, admits that back in those years Blackboard chose to focus on the needs of traditional higher education and K-12.

And so eCollege came to be the Blackboard of the for-profit sector. “The way that each member was initially positioned, and eCollege ended up with a niche in the for-profit world, and Blackboard ended up with a niche in the nonproft world, and they played to where those markets were at the time,” says Garrett, the Eduventures director.

To be fair, Blackboard has, by all accounts, pulled even with eCollege on servicing the needs of for-profits in terms of functionality, if not market share. Noting the changing demographics of higher education, Blackboard created a professional education division, which Hill now heads, four years ago. At present, it counts over 60 for-profit institutions as clients. It offers a hosted learning-management option for those who do not want to have to deal with managing the system on their own servers. And its reporting and data analytics equal or exceed those of eCollege or anyone else, says Hill.

Harpool agrees. Years after he, as an executive at Kaplan University, had selected eCollege over Blackboard, Harpool switched Westwood from eCollege to Blackboard — citing its reliability and reporting tools as the main reasons. “I didn’t come to that easily,” he says. But Harpool says he thought Blackboard picked up a lot of good ideas on the reporting front from its much-maligned acquisitions of WebCT and Angel Learning; and, in his opinion, eCollege had become too much a platform for Pearson to push its other products on clients since the company bought the platform in 2007. (Pearson disputes this, noting that its platform “has a lot of non-Pearson content at for-profit clients.”)

By now, “there are clearly no definitive barriers in these platforms to using the platform in different ways,” says Garrett. He points to the example of Liberty University, the Virginia-based Christian nonprofit founded by the Rev. Jerry Falwell, whose online enrollment has more than doubled, to 45,000, in the past three years — a pace more typical of for-profits than nonprofits. And Liberty has achieved this growth using Blackboard’s learning-management system.

Nor is the example unique. Nonprofits in recent years — and especially since the financial crisis made urgent the need for greater enrollments — have laid plans for ambitious growth online. The Lumina Foundation and the Bill and Melinda Gates Foundation have made grants available for institutions looking to expand online programs for nontraditional students, with Gates placing a special emphasis on using data mining tools to improve completion. The nation’s second-largest nonprofit university, Arizona State University, recently made Pearson an equal partner in its online program. In some ways, what were once for-profit values are now everyone’s values.

What does this bode for the increasingly lucrative market for learning management systems? In terms of market share, probably nothing dramatic, says Garrett. In the absence of one company that is clearly superior at providing a flexible, remotely hosted, data-intensive, scalable platform amenable to nontraditional students, there will probably not be mass migration from Blackboard to eCollege, or vice versa.

What does stand to change is the importance of learning management systems. In a presentation at Educause earlier this month, the University of Phoenix — by far the largest higher ed institution in the country, serving 400,000 students (300,000 of them online) — said it has plans to redesign its own, homegrown learning management system based on the theory that increasing the system's capabilities will be crucial to student success. With the online learning platform becoming the primary point of contact between many institutions and a growing proportion of their students, you can bet that both sectors — and the vendors that serve them — were playing close attention.

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