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SumTotal Likely to be Acquired by Private Equity Firm

Monday, April 06, 2009

Today was a very important day in the world of corporate learning and talent management systems.

Today, Vista Equity Partners, a mid-sized private equity firm, announced a proposal to acquire SumTotal Systems, the largest independent provider of LMS software, and one of the pioneers in this industry.

Typically such transitions occur because the shareholders have lost faith in management and believe the company can be restructured or merged to create higher value. (Press release available here.)

This announcement reflects many of the rapid trends taking place in this market, making it even more important for buyers to understand the history and financial strength of their technology providers. The trends which are causing these changes include:

The increased demand for a consolidated HR systems platform which manage enterprise learning, talent management, and other HR functions. We believe that today integration is more valuable than functionality in the majority of companies.
The tremendous demand for collaborative and social learning platforms, which are slowly replacing formal learning and even traditional e-learning platforms, forcing LMS vendors to redefine their offerings. Many companies today are building their own YouTube-like learning systems which provide social, collaborative learning, often without the need for an LMS.
The tremendous growth in SaaS (Software as a Service) solutions for mid-market companies, making it difficult for licensed software vendors to transition into the mid-market segment.
Price pressure on LMS and talent management software providers, driven largely by unprofitable companies which are willing to discount below their own cost of delivery.

We have been working closely with SumTotal for many years and have followed the company through its early days as Docent, through its merger with Click2Learn and rebranding, its acquisition of Pathlore and Mindsolve, and its transition into a SaaS business model. If this buyout goes through it will likely mean a replacement of the board of dirctors and some of its management team, making this the most significant chapter in the company's history to date.

Next week at IMPACT2009 we will be tackling the challenges and issues in this market head-on in our vendor panels on the future of learning and talent platforms and press event: LMS and Learning Platforms: The Pivot Point. In addition to hearing our latest findings about this market, attendees will have the unique opportunity to discuss the market's future with senior executives from all the leading solution providers.

In this rapidly changing time, I encourage you to join us - or set up a time to talk with one of our analysts about what these changes mean for your organization.

http://marketing.bersin.com/Learning_Management_Systems_LMS2009.html

2 Comments

Thursday, April 09, 2009 12:06

I would like to know more about the social learning metrics that organizations think are worth tracking and how we might link these to business objectives and learning efficiency.

Posted by Eric Davidove

Friday, April 10, 2009 01:40

Good question David. David Mallon covers this extensively in his blog. What we have seen is measures such as (A) utilization of the tools themselves, ie. number of people downloding content, active discussions, (B) monitoring tags, tag hits, and tag growth, (C) ratings of content, rated by employees and users, (D) number of hits on key content. All these are typical "website" type of metrics of course.

In addition to this, the more important measures come from management and business leaders. How well are the social networks being adopted within the company? What is their reputation?

As far as really linking this to the business, its a perfect opportunity to use some of the approaches in our Impact Model - using the tools of alignment measurement, utility measurement, and correlation of usage to various HR and business measures. For example, at Sun, they have proven that groups which are actively using the Sun Learning Xchange actually sell more and have higher talent retention.

Let's see if we can get others to give us their thoughts...

Posted by Josh Bersin

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About This Analyst

Josh Bersin writes on the ever-changing landscape of business-driven learning and talent management. His favorite topics include strategic talent management, creating high-impact learning organizations, and how organizations drive business change and competitive advantage through talent strategy and technology.