It’s tempting to start humming “Another One Bites the Dust” when it comes to learning vendors, as the last few months have brought an onslaught of mergers and acquisitions, from Skillsoft’s purchase of Sumtotal in August to Pluralsight’s acquisition of assessment firm Smarterer earlier this month. It seems like the industry is shrinking.
“The learning space is currently in the heart of an acquisition/consolidation swing of the pendulum,” said David Wentworth, senior analyst for Brandon Hall Group.
Although Skillsoft and Pluralsight’s purchases are signs of that swing — companies expanding client offerings by bringing other service providers under their roofs — last week IT management company Xerox Corp. bought Intrepid Learning Inc.’s learning consultancy and strategy branch. The purchase indicates a new trend: learning providers splitting technology and services firms in favor of specialization and profits.
The deal is beneficial to both parties. Although Xerox has many product branches, the company is looking to expand its learning and development business. It’s doing so by acquiring Intrepid’s consultancy program, and Intrepid can now focus on its cloud-based technology business.
“It’s difficult for learning firms to have meaningful services arms and technology arms,” said Cushing Anderson, vice president for research firm IDC. He cited differences in how each has to be executed, measured and billed as a reason the two business models conflict with each other.
In the end, money-making technology wins at smaller firms, and strategy and consulting businesses get adopted by larger companies that can afford to run them. Xerox makes its money selling printing gear, so it has the resources to expand its learning services division.
This trend means learning leaders looking for both technology and strategy might have to turn to more than one company to get what they want. Wentworth said Intrepid has made it clear it plans to be a best-of-breed technology provider, rather than a one-stop-shop that offers clients both platform and strategy.
But having firms become either service-oriented or technology-focused might be better for clients. Anderson said such a split would ensure clients receive less biased advice. “If you walk into an auto dealer and talk to the car dealer himself, he’s going to sell you one of his cars,” Anderson said. “Consultants who are just professional services folks up front, take a wider view and are more interested in getting right answer to you than selling you their gear.”
Learning service providers might still point clients in the direction of a technology firm like Saba or Sumtotal because that’s what they’re familiar with, and they can bend those tools to their will, but the relationship won’t be ruined if the client selects a different tech vendor.
“For about five or six years after 2000, I was encouraging technology firms to increase their services arms because they were missing an opportunity,” Anderson said. “My thinking has evolved over time to say that if you can’t manage your business, it doesn’t matter how good the pieces are. This is better for the clients because these things (separate branches) are going to grow.”