Schoology Layoffs: Focusing on smaller higher ed opportunities

We’ve noticed and had several people ask us about corporate changes at Schoology, the LMS vendor. More specifically, the questions have been based on whether they are laying off staff, and what that means for the higher ed LMS market. Short answers – yes to the layoffs, and the company will be more selective on which higher ed opportunities to pursue.

Through phone and email interviews, I asked CEO Jeremy Friedman to respond to these questions.

As you and I have talked about, operational efficiency is a strategic objective for Schoology in 2017. As we built our plan for the year we saw opportunities to focus our efforts and operate at a higher level. This meant that we decided to reduce our headcount by a little over 10%, primarily across sales and marketing. To be clear, we reduced how much we are going to spend in Sales and Marketing, and we increased how much we are going to spend in Research & Development and Customer Success. The net impact is a more efficient company that can invest more in product innovation and our customers.

Beyond affecting the number of staff, these changes will also affect which LMS opportunities in higher ed that Schoology will pursue. The large procurements, typically driven by an extensive request for proposal (RFP) process, is very expensive for vendors, and Schoology has not had any higher ed breakthroughs beyond Colorado State University’s Global Campus in 2015. In a post this summer, I called out one barrier that the company would have to overcome.

At the same time, there is a question about the market’s appetite for another native-cloud highly-usable LMS in higher ed. In terms of mindshare, Canvas has that category locked up right now. While a second competitor makes sense from a general market perspective (more companies delivering what schools seem to want), it might not make as much sense in higher ed where there has been a historical tendency to accept a very small number of vendors. Institutions do not have a clear sense of why they should consider both Canvas and Schoology as options, at least until they dig deeper.

Based on our phone conversation, part of what Jeremy means by “operational efficiency” is that Schoology will not proactively pursue these expensive large-school or large-system RFPs, instead deciding on a case-by-case basis whether they want to compete. The company is so far not getting the payoff to justify the investment in a broad sense.

Jeremy stated that the company management understands their sweet spot in the market better now, and he included a postscript to the email:

Since I know you’re always in interested in the growth in HE, we had a great year, brought on about 50 new customers, and we continue to see strong market traction and interest.

Looking at our data for the LMS market analysis subscription, we show that the majority of Schoology’s higher ed clients are smaller schools, like Wheaton College. While smaller schools often go through an RFP processes – at least for their primary system – the business development investment is smaller, and Schoology seems to be getting some payoff.

There are some larger clients using Schoology as a secondary system, by which we mean a system that is not the default campus standard. An example of the latter is the University of Denver’s Center for Professional Development program for K-12 educators. The primary LMS for the university is Canvas.

We’ll look deeper at the data and keep watching Schoology and other non-mainstream LMS providers as the market evolves.[1]

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  1. Disclosure: Schoology is a subscriber to our e-Literate Big Picture: LMS subscription service. []

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About Phil Hill

Phil is a consultant and industry analyst covering the educational technology market primarily for higher education. He has written for e-Literate since Aug 2011. For a more complete biography, view his profile page.
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One Response to Schoology Layoffs: Focusing on smaller higher ed opportunities

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