Last week, Skillsoft Limited (“Skillsoft”) a leading learning content development and delivery organization, announced its subsidiary, Skillsoft Corporation, had entered an agreement to acquire learning, talent and workforce management software company SumTotal Systems, LLC. Skillsoft has had a long history of acquisitions in the learning space as a way to broaden content, accelerate market growth and expand reach. However unlike past Skillsoft acquisitions, this move positions Skillsoft squarely into the integrated talent and human capital management (HCM) market.
A dominant player in the learning content space, Skillsoft has faced increased pressure from many new forms of online learning (demonstrated by the success of providers such as lynda.com) as well as from new buying options and channels, such as free Massive Online Open Courses (MOOC) and companies such as OpenSesame. This acquisition is in line with the trend of creating integrated learning solutions across technology, services and content. The combination not only expands Skillsoft’s learning capability and offering, but perhaps more importantly, provides the ability to move beyond learning with an integrated talent and HCM solution.
The increasingly complex learning space sees demand for comprehensive solutions that enable delivery and management of a myriad of components around formal learning, informal learning, mobile, video, social collaboration tools, and learning management, as well as linkages to other talent management systems. Given the speed of the changing market, organizations are increasingly looking to vendors to provide the integration. SumTotal’s open platform, elixHR, acts as a virtual system of record and provides the ability for Skillsoft to plug in and deliver its content across systems.
For customers, this combination reduces complexity and cost. We expect the integrated Skillsoft/SumTotal solution to drive savings through content integration, automated updates and reduced learning administration.
The SumTotal acquisition goes beyond acquiring a leading LMS to integrate content and technology (after all Skillsoft had already built out its own Skillport LMS technology to deliver content). SumTotal brings a broader talent management and HCM solution that includes core HR, payroll, benefits, time and attendance, recruitment, performance management, succession and compensation. While many companies still need robust and specialized learning systems, learning is being increasingly absorbed within a single talent management suite and the standalone learning management platform market will dwindle with the growing desire to integrate all of the talent or HCM software under a common solution.
Another benefit of the acquisition is SumTotal’s broad customer base. Both Skillsoft and SumTotal serve leading organizations across a diverse set of industries (Skillsoft has 6,000 customers with 19M users; SumTotal has 3,500 customers with 45M users). We expect Skillsoft to ramp up its sales and marketing efforts to focus on the increased cross-sell opportunities within the established customer bases.
SumTotal’s recent focus has been on trying to accelerate SumTotal’s SaaS and Talent Expansion solutions. More recently, they have garnered some interest with their strategy of flexibility in their elixHR platform and ability to support multiple delivery options including SaaS, on-premise and hybrid models. However, SumTotal has not had the level of traction of some of the other top providers in converting learning clients to talent suite or HCM clients. And this acquisition, which further cements SumTotal as a “learning organization,” does little to enhance SumTotal’s position as a broader talent and workforce management company. It may, however, further strengthen the leadership vision and stability, an area that had been a source of criticism by some of SumTotal in the past.
While we see this as a positive combination given the strengthened integrated learning offer, potential to lower customer complexity and costs, and access to a broad customer base, we will be monitoring whether Skillsoft and SumTotal can continue to innovate and effectively elevate beyond their learning base, which is where we believe the true opportunity (and challenge) lies.
To learn more, contact ISG Principal Consultant Stacey Cadigan.0