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