Affiliates of Providence Equity Partners, a private equity company, are in the process of acquiring Blackboard Inc, the owner of one of the major learning management systems in higher education. Blackboard is considered to have a market value of about $1.4 billion.
Jim Farmer, Chairman of Sigma Group Inc., provides a comprehensive analysis of the implications for higher education in a guest post in Michael Feldstein’s blog, e-Literate:
Farmer, J. (2011) Investment bankers and Blackboard’s future, Part 1, If…. e-Literate, July 2
I leave you to read the analysis, but if your organization is running Blackboard, I would be quite concerned. For instance, UBC has just announced that it is recommending Blackboard Learn as its new learning management system, subject to Provost approval and contract negotiations. I doubt if this decision was made in the knowledge that Blackboard would have new owners, although whether this information would have changed their decision is moot.
Providence Equity also has a large stake in Sungard, which owns the Banner suite of services used by a large number of colleges for financial services, HR and student services. Private equity companies are often looking for ‘synergy’ between their investments, so integrating Blackboard with Banner for instance is not an unreasonable speculation.
Farmer speculates that one way to increase their return on investment is for Provident Equity to increase license fees, but Farmer recognizes that this may be difficult, given that there are a number of alternatives in the market, such as Desire2Learn or open source systems such as Moodle and Sakai. However, it should also be recognized that there is considerable inertia in the HE system which makes the possibility of relatively large annual increases being absorbed rather than go through the disruption of moving all the learning materials to another system (which seems to have been the deciding factor at UBC). For instance, Oracle has managed quite hefty annual fee increases of over 15-20% the last few years without losing any business. Once locked into these large proprietary software systems, it is extremely difficult to get out.
In the long run, though, I suspect it is highly academic (sorry for the pun) who owns Blackboard . Over time, I think institutions will gradually move away from the course-in-a-box model of online learning epitomized by learning management systems into more flexible and open systems of learning that allow much more freedom to teachers and learners to create their own learning environments and materials. The technology is already there, it just needs assembling and organizing, and linked to a compelling educational philosophy or pedagogy. In the meantime though the convenience and lazy thinking that LMSs support will ensure that change comes very slowly, even if the price does rise considerably.
For an alternative, more optimistic view on this acquisition, see:
Kim, J. (2011) Providence Equity and 5 Steps for a Successful Blackboard Buyout Inside Higher Education, June 26
Dr. Tony Bates is the author of eleven books in the field of online learning and distance education. He has provided consulting services specializing in training in the planning and management of online learning and distance education, working with over 40 organizations in 25 countries. Tony is a Research Associate with Contact North | Contact Nord, Ontario’s Distance Education & Training Network.
Hi Tony,
I agree with your take on the BB buyout. I do think that the new owners will seek to take advantage over enormous institutional inertia and weak strategic leadership in higher education institutions to justify increasing costs. They have a little way to go before they gouge as much out of HE as other vendors. Most HEIs don’t have sufficiently advanced budgeting techniques to be able to appropriately take account of the costs of big IT systems.
I am, however, optimistic that eventually we will see a breakdown of the monolithic nature of the LMS within HEIs and a much more flexible approach adopted. I am quietly excited about the prospect of institutional cloud email and collaboration tools. If implemented properly they can almost be an email Trojan horse for a much more flexible approach to the use of online technologies in learning and teaching through collaboration tools.
We’ll see. One thing I’m reasonably certain of and that is when change comes it will be rare for it to be planned and strategic. In most cases it will be knee jerk and reactionary. It’ll be interesting to see HEIs wondering what to do about the horse that has bolted and is being ridden furiously by the genie just out of its bottle.
Cheers
Mark
I agree with you also. Bb stopped developing good software a long time ago, can’t imagine the new owners will think it very important to dump some dollars into making a good product and providing good support for it. More strong arm tactics to extract money from institutions too entrenched to make the change is what I think will happen. I’d love to see the more flexible, customizable learning environment come into being as quickly as possible.
There are a great deal more public schools and school systems than there are colleges and universities. The real growth potential of LMS is at the K-12 level. My school system has over 8000 log-ins at 7:00 every night during the school year. LMS as part of a blended curriculum is going to have a major effect on public education in the next couple of years. All of this is about getting there “first-est with the most-est”
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