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Why Are There So Many LMS Vendors? - Talented Learning
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# Why So Many LMS Vendors?

Published On: April 14, 2016By [John Leh](https://talentedlearning.com/author/johnleh/ "Posts by John Leh")

![Why are there so many LMS vendors? Independent learning tech analyst John Leh explains](https://talentedlearning.com/wp-content/uploads/2016/04/Why-so-many-LMS-vendors.jpg)

By our estimates, more than 800 LMS vendors compete in today’s [learning platforms marketplace](https://talentedlearning.com/best-lms-2016-talented-lms-vendor-awards/) in 2019 (up from 600 we originally tracked in 2014). These LMS vendors range from global software companies to tiny cloud vendors.

Why so many? How do they all survive? Who is buying these systems? And what are they accomplishing with them?

I believe this spike can be explained by a combination of factors – primarily the rise of cloud computing and software-as-a-service (SaaS) business models, as well as growing interest in extended enterprise learning.

## **The Impact of the Cloud and SaaS Business Models**

[The cloud](https://talentedlearning.com/cloud-lms-name/) has lowered the barrier of market entry for LMS vendors. New LMS vendors with minimal investment can create a [SaaS](http://talentedlearning.com/lms-license-models-what-in-the-world-is-going-on/) cloud LMS of limited scope to target a specific business problem, industry or region with a low-cost solution.

The SaaS model implies that the vendor puts its LMS online in the cloud, and all of their customers access the same LMS via a web browser.

Every customer has its own unique, secure area with its own content, users and business rules, and is unaware of any fellow clients on the common platform.

This approach eliminates many technical considerations and [implementation tasks](https://talentedlearning.com/you-just-selected-new-lms-next-steps/)/fees. It also simplifies the process, and cost of support and maintenance. This makes it a good deal for buyers and sellers if buyer requirements match seller functionality.

* * *

**_Want a better way to manage the business of learning? Find vendor profiles, reviews, case studies and more in our free [Learning Systems Directory](https://talentedlearning.com/learning-systems-directory/)_** **_…_**

* * *

In a SaaS model, customers pay a monthly or annual fee to use the platform – forever. So with each new customer, the vendor builds an incremental, predictable, profitable and recurring revenue stream.

Revenue is reinvested in expanding functionality to broaden the vendor’s market and price point.

It’s a great business model, and I know over 100 vendors who think so, also!

## **Extended Enterprise is the Growth Sector**

If the cloud and SaaS model made new vendors possible, then extended enterprise learning gave them something in which to specialize.

Corporations have the need to train both internal employees and their extended enterprise audiences – channel partners, customers and prospects. The responsibility to train these distinct learner audiences many times falls to unrelated business units. Each business unit can have its own budgets and buying cycles.

The purchase point for employee LMS initiatives is typically in human resources, while the purchase point for extended enterprise initiatives can be in sales, marketing, channel management or customer service departments.

Unless these groups explicitly decide to work together, they won’t. This leads to multiple LMSs in the same corporation.

Because extended enterprise LMS buyers are not from HR, they do not know the HR nomenclature, making it tough for them to describe their requirements and communicate with HR-focused LMS vendors.

Extended enterprise buyers know, for example, that they want to easily train their customers with online training, but do not know the terms LMS, authoring tool or SCORM. They have a business problem they want to solve, and are looking for the most direct path to qualified, specialist vendors.

In reaction to the market demand, LMS vendors have been founded specifically to target customer, channel, franchise, dealer, customer or prospect use cases.

With unique audience and purchase points, these vendors leave employee learning behind and compete freely anywhere in the global extended enterprise marketplace.

There is no single dominant vendor in extended enterprise learning. This is encouraging even more vendors to enter the market.

## LMS Vendor Market Growth: Conclusion

All of these factors have led to a fragmentation of the corporate [LMS market](https://talentedlearning.com/lms-meets-2017-top-learning-tech-predictions/). There is now an [LMS for every industry,](https://talentedlearning.com/four-corporate-lms-flavors-which-do-you-choose/) need and budget – from individuals to the largest global corporations. Due to a better license model and technical efficiency of the cloud, new LMS vendors have flooded the market.

Many have chosen to target the extended enterprise market because of the independent, non-HR buying point. Taken together, it is a perfect storm for fierce competition. Fun times ahead!

Thanks for reading!

* * *

## **Looking for For a New Learning Systems?**

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## About the Author: [John Leh](https://talentedlearning.com/author/johnleh/)

![](https://talentedlearning.com/wp-content/wphb-cache/gravatar/bf2/bf22f58e45dfa249e6c227fcea5d6fb8x72.jpg)

John Leh is Founder, CEO and Lead Analyst at [Talented Learning](https://www.talentedlearning.com) and the Talented Learning Center. John is a fiercely independent consultant, blogger, podcaster, speaker and educator who helps organizations select and implement learning technology strategies, primarily for extended enterprise applications. His advice is based upon more than 25+years of learning-tech industry experience, serving as a trusted LMS selection and sales adviser to hundreds of learning organizations with a total technology spend of more than $100+ million and growing. John would love to connect with you [on Twitter](https://twitter.com/JohnLeh) or [on LinkedIn](https://www.linkedin.com/in/johnleh).

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