Two recent acquisitions by leading learning and development companies show just how quickly the crowded L&D space is consolidating post-pandemic.
Cornerstone announced a $200 million deal to buy L&D and HCM provider SumTotal Systems from parent firm Skillsoft earlier this month, and Degreed purchased talent academy firm Learn In for an undisclosed sum last week.
Both purchases are signs of a wave of consolidation that is underway in the crowded L&D market space and shows no signs of slowing down, says Rebecca Wettemann, principal analyst for market research firm Valoir and an HRE Top 100 HR Tech Influencer. Wettemann will be speaking on a closing panel of the Women in HR Tech Summit at the 2022 HR Technology Conference later this year. The panel, titled “Is your digital transformation connecting and engaging all of the workforce?” also features HR leaders at Corvesta, IMI and Kimberly-Clark. Register here for the Sept. 13-16 event at Mandalay Bay in Las Vegas.
“We’ll see more consolidation in this space along with more investment in the coaching and ‘pull’ learning space,” she says, referring to the practice of employees choosing which skills they wish to learn as opposed to employers assigning certain education requirements on the job.
Whether it’s called upskilling, employee development or L&D, employee education is one of the most vibrant spaces in the HR technology arena as employers scramble to retain and develop the careers of valuable talent.
The wave of L&D provider partnerships may limit choices for HR leaders making selections for their employees.
For example, Cornerstone’s acquisition of SumTotal aims “to deliver a differentiated, expanded portfolio of learning, talent, and people growth solutions with broader vertical expertise, greater financial resources, and a shared vision for the future of work,” according to a press statement.
“If you’re a SumTotal customer, this is probably good news since you now have a focused technology provider as your vendor,” writes global analyst Josh Bersin, who will discuss what’s new in the HR tech market during his keynote at the HR Technology Conference.
“For people looking for new learning technology, it’s more or less a non-event. Except for the fact that Cornerstone as a company is becoming more and more of a legacy technology provider,” Bersin continues. “And this lets Skillsoft (SumTotal’s former owner) invest heavily in Percipio, its world-class learning platform.”
That said, fewer solutions in the L&D marketplace could lengthen the selection process for CHROs, warns Dani Johnson, co-founder and principal analyst for RedThread Research.
“While there may be fewer solutions, it’s a more complex buy now. Instead of looking for, say, talent marketplace software, you’re looking for that functionality within a bigger purchase,” she says. “That often means that more people need to buy in and that it won’t meet everyone’s needs exactly.”
She adds, “I wouldn’t bet on the purchasing cycle to shorten much.” Johnson will delve into the topic in-depth during her HR Tech mega-session titled “Learning Tech Market: Get Ready for Disruption.”
This is not the end of Cornerstone’s buying spree. It acquired EdCast in March for an undisclosed sum and itself has a valuation of around $1 billion after being acquired by private equity firm Clearlake for $5.2 billion last year. Cornerstone has more than 75 million users who work for more than 6,000 organizations.
“As for our longer-term acquisition strategy, Cornerstone is committed to growing and innovating in ways that will benefit our customers—through organic and inorganic growth. We will continue to invest in our broader portfolio and enhanced capabilities to ensure our customers continually experience increased value from their investment with us,” says Himanshu Palsule, CEO of Cornerstone, in an interview on the company’s website.
These consolidations could spur improvements to learning management systems, most of which Wettemann says, frankly, “stink.”
“They’re mostly old technology focused on old push training models where HR makes sure it can check the boxes when it comes to providing training,” she says. “I’ve never heard an HR or training leader say ‘I love my LMS.’ “
This may be why Wettemann has noticed “inertia and resistance” among employers to upgrade their current training content systems, which were costly to develop.
“This [inertia] means a nice recurring revenue stream for acquirers like Cornerstone,” she says.
Wettemann believes that the future of learning is in two areas:
- So-called “pull models,” where employees can find the training they need and want and
- Microlearning, where workers can learn in the moment while working.
“Also, the technology that provides mentoring and coaching at scale” will thrive, she says, adding “employees believe this is the best way they learn at work.”
To learn more about upskilling and employee education and its impact on employee experience, join Human Resource Executive® at the 2022 HR Technology Conference and Expo on Sept. 13-16 at Mandalay Bay in Las Vegas. Register here.
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