Today’s Buying Trends: Seismic Shifts and Integration Inertia

In 2014, we observed that learning had moved to the center of the talent technology stack. Because of that shift, we declared that the learning function had a new mandate: Enable the workforce to adapt, at speed, through continuous learning and development. From our latest research, it’s clear that buyers are embracing their new mandate. The pendulum has swung. In many ways, buyers’ priorities and challenges today reflect a significant shift in how they buy and what they buy. We may live in an era of hyperbole, but we find it difficult to overstate the significance of this change.

What’s very clear is that buyers are moving away from the nuts and bolts of traditional corporate learning. The number of buyers who said that leadership development — a traditional learning priority and the top response in 2014 — could benefit their organizations dropped by more than half. And the percentage of respondents who saw benefit in virtual classrooms also dropped by more than half. As Michael Rochelle from Brandon Hall put it, “Whether you’re in the classroom or on a conferencing platform, someone is still talking at you and you are left to being a sponge.” That’s not an ideal way to learn, and buyers get it. “As learner preferences move toward just-in-time, just-for-me, just-the-way-I-want-it learning (performance-support learning, high interactivity, and immediate feedback loops), formal instruction becomes diminished,” Rochelle added.

What are the technology trends that buyers think will benefit their organization? In order, the top responses were mobile learning, better integration with career development, and continuous learning. It would appear that organizations are finally catching on that completing learning is no longer the outcome; change in behavior and performance is the outcome. “It is no surprise that organizations want to sync up their learning and performance technology to tell the true tale on whether learning is moving the ball on career development and performance management,” said Rochelle. “Without this link, there is no clear understanding of the return on learning investment.” Continuous learning is now table stakes with learners. “The new generational workforce is lifelong learners,” Rochelle added. “Organizations must realize that to hold on to their workforce, they must invest in continuous learning that meets the needs of the organization and the needs of their employees.”

Interest in collaboration technologies, video-based coursework, user-generated content, and context- and location-aware coursework each more than doubled in interest. This is not surprising given how we learn outside of work; the corporate world is catching up to the personal world of learning.

Exhibit 6: Which three trends in learning technology do you believe have the most potential to benefit your organization?

As shocking as these shifts in priorities were, the challenges that learning buyers face have similarly experienced radical swings. How radical? The perennial top challenge that all technology buyers face — not just in learning — is lack of budget. It was the No. 1 challenge for learning buyers in 2014. In our latest study, it tied for fourth with integrating learning technologies with other enterprise systems.

Exhibit 7: What are your three greatest challenges with learning management technology?

Key Market Themes

The replacement market essentially doesn’t exist anymore.

With few exceptions, rip and replace ain’t happening. Buyers are taking baby steps and spending in small and very measured ways. Lack of budget and measuring ROI are challenges you have when you know the technology you want to buy and can’t get where you want to go fast enough. Integration and adoption challenges, combined with encouraging knowledge sharing, seem to indicate buyers are testing and experimenting with different approaches. This dovetails with the results from Sierra-Cedar’s latest HR Systems survey. It shows that few organizations (28 percent) are taking a bold rip-and-replace approach to managing their HR systems — learning included. Instead, they’re supporting a hybrid or patchwork approach. Buyers are looking to have their existing technology coexist with and complement new solutions. This should be a familiar model to tech vendors — iterating your way to next steps, seeing what works and what doesn’t.

In buying, pilot programs are the new black. Vendors will have a chance to come in and prove their value in a single department or division. Expect overdelivery and heavy involvement in the strategy component. The technical term for this is “free consulting” if your revenue model doesn’t include a services component.

User adoption has increased in importance.

This is now the No. 1 challenge for buyers — jumping up 14.2 percent (Exhibit 7). As employers experiment with new technologies, we see them being under more pressure to prove results. Part of this is pressure to prove ROI (the No. 2 challenge), and another is pressure to show that employees are actually embracing these new technologies. “There is a big push going on within organizations to make technology more attractive to employees and prove that the technology enables them to do their job better,” said Rochelle. “The battle is not being won right now. Employees consistently report that the technology within organizations is not enabling and often detracting.” So, whose fault is it if user adoption suffers? Does the blame rest on the vendor for bad technology? Or is the fault with the buyer? The answer depends on who you ask.

Video-based coursework continues to surge.

Companies such as Lynda and Udemy have engaged successfully with consumers, getting individuals to lay down their own money to improve skills on their own. Can they be successful in the corporate learning market? If not, it won’t be because buyers don’t see the value — interest in video-based coursework has almost doubled since 2014. “The rise of video is indicative of a real shift in how people consume and engage with information,” said Yvonne Chen, head of marketing of Udemy for Business. “Millennials are now the largest generation in our workforce, and to successfully engage and train them, companies must provide training that is on-demand, self-directed, video-based, and scales with business needs.”

However, video isn’t just replicating instructor-led training in a different format. “This is no fad; it’s fact,” said Rochelle. “The shift is real and will continue to move the needle on content toward ‘bite-size,’ highly visual, and interactive learning that drives greater depth and length of retention and is just plain more fun and interesting to the learner.” Video especially has power as a performance-support tool. “Learners want more referenceable content that can be used while they are performing their job,” said Rochelle. “They want quick and easily digestible content.”

Content challenges evolve.

In 2014, we discussed how user-generated content was changing the game. Is content no longer a challenge? Hardly. We think the drop has more to do with other challenges increasing in priority. We are still hearing stories about buyers struggling with content. For example, one large insurance company is struggling to understand which content is relevant and which is obsolete, but it has millions of pieces of content to sort through. However, as vendors do a better job of integrating technology and content on their end and user-generated content increases, the buyer’s role continues to shift away from delivering coursework to facilitating knowledge sharing and content curation. “Buyers are grappling with managing two forms of content — organizational and user generated,” said Rochelle. “Organizations have their hands full with just their own content — never mind entertaining what to do with employee-generated content.”

The form of content is not the real issue — it’s really how to make content accessible and how to vet it for relevancy. “There is a premium placed today by employees on content to be ‘just in time, just for me, just the way I want it,’” Rochelle continued. “Content can be great, but if it is not accessible and not addressing the immediate need of the learner, then it falls short. A classic example: An ‘on-the-go’ employee cannot carry a course around in their pocket to reference when they need help with an immediate task.”

Integration inertia is a reality.

As radical as the shift in priorities and challenges is, what’s just as remarkable is the lack of progress in technology integration. Not only does it remain a persistent challenge, buyers indicate a low degree of integration of learning technology within other enterprise systems, which limits business impact, accurate reporting, and insight-yielding analysis. Integration is essentially flat since 2014. Not a good sign.

Exhibit 8: Rate the level of integration of your learning management technologies with other enterprise systems.

Key Takeaways for Vendors

Traditional learning technology players must keep on keeping on.

If you’re a traditional learning technology vendor — especially if you’re an LMS vendor, take a deep breath. Compliance is no longer the main driver of learning, but many companies still need some sort of LMS or training solution. Compliance as an LMS-critical function is necessary, but developing and integrating the learning experience are just as critical. “The real shift is that the LMS will not be the dominant or only piece of learning software in the building,” said Rochelle. “The LMS will share company with a variety of technologies, including augmented reality, video, LCMS, social, mobile, gaming, simulation, burst and interval learning, and eventually adaptive learning and AI software.” Also, we believe that leadership and career development are both integral components of learning but, in their traditional forms, they’re more hoops to jump through rather than empowerment engines. What are you bringing to the table in terms of innovation and reimagining corporate learning? The key part of your go-forward strategy will be how you answer the innovation/reimagination question at the product level: build, buy, partner — or all of these. Then, after you set your strategy, what’s the story you tell to the market?

Next-generation players must understand that no brand is an island.

It’s important to note that we don’t see buyers moving away from traditional learning technologies — lock, stock, and barrel. “Other technologies will need to be put in place as organizations shift toward blended learning strategies and more personalized and customized learning approaches to create a more attractive and meaningful learning experience,” said Rochelle. By the same token, you can’t expect to sweep in and become the only learning vendor in the picture. Look at the partnership between Degreed and Fuel50 as an example. Corporate learning is becoming a more blended ecosystem of players. Focus on playing well with others.

User adoption: Your customers will blame you.

As we mentioned above, there are two schools of thought around who’s to blame for lackluster user adoption. How do you think that’s going to play out? Yup, you’re the one who’s going to be thrown under the bus. So, what are you going to do about it? Without a doubt, you’re already investing heavily in UI and UX. What else is there?

Don’t underestimate your clients’ content challenges.

Even though survey respondents who listed managing content as a top challenge dropped almost 10 percent since 2014, this is still a significant challenge. Over a quarter of respondents listed this in their top three challenges, and stories we hear from buyers back this up. Also, interest in user-generated content has more than doubled at the same time. “Vendors need to develop a new approach to learning content management that provides a dynamic software platform that makes all forms of content easy to search, find, and deploy at the speed in which learners need it,” said Rochelle. “Right now, there is a major market gap in this area.”

Buyers are responding to this challenge by looking for content management systems that are specifically designed for learning. “Generic content management systems just don’t cut it,” added Rochelle. “The challenge is that most content management systems for learning offered today only do a good job with certain types of content and are not universally designed to store all forms of content and make it easily accessible.” If you’re looking for an “in” at the product level on content, consider this a place to start.

Become part of the solution on integration and mobile.

Part of what’s holding back vendors on integration is that it’s only one part of a very complex puzzle. Focus on controlling what you can. “The rate of integration is dependent upon whether the provider offers stand-alone learning technology or a learning and talent suite,” said Rochelle. “For the suite provider, this is much easier, and there have been several meaningful advances by top providers to integrate learning with performance. For the stand-alone approach, the behavior has been to build some performance management functionality into their LMS platform, such as cascading goals, goal setting, progress meters, etc. I call this ‘LMS plus,’ and for a fair number of providers, this has been very effective.” Regarding succession and development, learning vendors are slowly getting better at this, too. “Marianne Jackson, chief talent development officer at eBay, said her vision is to have a seamless integration and user experience between career technology and learning technology,” said Anne Fulton from Fuel50.