Thursday, April 26, 2012

Staying True to the Mission

The following is a post from 
Moodlerooms Chairman and CEO, Lou Pugliese. 

Rather than jump into the social media fray following my current and new Blackboard colleagues, I made a deliberate decision to delay my reflections on what’s transpired with our recent merger over the past two weeks. In expressing my off script observations, I thought it essential to get perspectives from customers, the Moodle community, partners and the education business community at large. Amidst the market ruckus, hundreds of press and social media postings and conversations, my position from the beginning has always been, let’s let the market speak.

To set the context, at Moodlerooms, the opportunity that I brought to the management team and board was based on a set of gating questions:

  • Can a merger with Blackboard accelerate and better support the successful adoption of open source and offer something of greater value that can impact student outcomes more quickly and cost effectively?
  • Can Moodlerooms be better resourced to continue to innovate and more profoundly impact the education community using Blackboard’s global presence in the market?
  • Can we preserve our current relationships with customers and continue to offer our products and services at the same value, as an independent business?
  • Can Moodlerooms maintain its brand and add value to the Moodle community in ways we couldn't as a standalone business?
  • Can we more cost efficiently operate our business by leveraging resources in both technology and human capital in ways that allow us to continue to offer economic value?
Among other options, our decision weighed heavily on the post merger impact on achieving these objectives more quickly and effectively. In the final decision, if we can pass through these gating factors and can create new value for the market, the method doesn’t matter, the outcome does. Most importantly our new owners needed to understand that our value is not measured in currency, it's measured in character and what our company brings to the market. I’ll state emphatically that we, at Moodlerooms, will continue to bring the same value we have for years. Our mission remains unchanged: to be the predominant global open source eLearning software and services business, dedicated to making enterprise open source deployment successful for institutions worldwide. After a great deal of deliberation, we felt our company and the market would be better served with this combination than if operating independently as a small growth stage business.

Market reaction and common questions

I’ve spent a majority of my time since the merger having in-depth discussions with numerous stakeholder groups all of whom have expressed a wide variety of opinions, concerns and attitudes about this merger. Among the dialogue I’ve had with customers, prospects, business partners and a handful of industry luminaries, since the announcement, the constellation of issues revolve around four themes; strategy, innovation, service and economics.

Strategy- The overall strategy for this merger revolves around the changing needs of the market and following what is emerging as a vendor neutral trend. We see this in the transformation of large fortune 100 companies; IBM has moved from a singular hardware business play to a service model business, sometimes even selling and managing what once were competing products. Dell is migrating away from a pure hardware focus to cloud and cross-sector IT consulting services. In our own market we’ve seen this in the recent merger of Datatel and Sungard, now Ellucian. In a market where numerous legacy systems, new market entrants and the growth of open source options continue to evolve the market, we believe that customers will be best served by choice, options and services to back solutions. The modular architecture of Moodle and Moodlerooms provisioning, customization and configuration capabilities, and Blackboard’s assets beyond core LMS provide a powerful combination of options that, in the end, better serves the changing needs of the market. Adding Netspot to the mix gives the combined companies truly global focus on open source products, support and services.

In our ongoing interaction with our customers and prospects, we see a continuing trend in institutions maintaining multiple LMS systems across campuses. Many continually request integration with Blackboard components such as Collaborate, Connect, Transact, and other Blackboard applications and we’re now in a position to offer a wealth of choices that in the end can help create order out of what could be chaos. Some of our own innovations we’ve developed inside and outside the Moodle core can also be advantageous to Blackboard’s product roadmap.

From a strategic view, this merger also underscores Blackboard’s commitment to open systems and interoperability. As I’ve written in the past, the hype cycle continues to escalate with vendor claims of “open source” and “open architecture.” These two concepts are very different and often get intermingled and leveraged as marketing speak. Open source is source code level application development sharing, open architecture is about platforms designed to allow third parties to make products that plug into or interoperate with other systems. The result of this merger allows us, as one company, to provide both at scale. The ability for both of these concepts to coexist provides the necessary ingredients for a highly flexible, networked platform that can be more responsive to education institutions’ unique business requirements. In an exponentially growing market of open, we now have an opportunity to invite an extensive base of Blackboard customers and developers into the open source community.

Innovation- During the process of the merger, each company gets to know each other’s businesses intimately. We get a unique opportunity to stare into the eyes of a competitor to better understand what makes them tick, but also to determine if a relationship can be formed toward a better market outcome . The discovery process revealed that Moodlerooms’ fast and nimble approach to the market and industry leading talent was an extremely good match for Blackboard’s stable eLearning solutions and the people that create and support them. The combined organization will provide the necessary union of assets and human capital needed to pioneer new innovation in the market to fulfill the still latent promise of eLearning globally. A good example of the potential of this relationship is a recent two-day product overview between both companies. As the day ran on, our meetings emerged as product innovation “meeting of the minds.” Both days were electric with new exciting ideas and charged with amazing synergies. Our initial meetings exceeded our expectations on all fronts and I believe you’ll see great new ideas emerge between our collective teams. Keep your ears to the ground for great things to come.

Service - Over a year ago at Moodlerooms, we conceived, published and launched a company-wide initiative we titled “Gold Standard Manifesto” (GSM). GSM was a pledge, starting with our Services division, to define and uphold levels of performance standards for our customers. Knowing that large scale implementations of open source LMS are nascent in the market, we invested millions in creating professional services and training programs designed to make enterprise scale transitions from proprietary LMS to Moodlerooms joule an exceptional experience. These transitions require significant proficiency in:

  • Cloud hosting configuration management that results in a scalable, secure and cost efficient delivery of enterprise scale online course environments;
  • Integration with legacy system and third party applications and other complex systems
  • Configuration to unique, individual institution requirements with features, functions and single sign-on interoperability
  • Deployment of enterprise open source LMS with a replicable business processes that include launch planning, course conversion, technical and end user training, administrative and end user support
  • Training and education programs designed to support institution administration of open source LMS and drive broad based adoption among faculty and students

I know of no other new entrant in the market that has invested in professional services at the levels Moodlerooms has. This is the post contract “heavy lifting” we’ve been able to deploy in hundreds of institutions, all of this led by many of the same staff from ANGEL Learning who built its reputation on service and quality. One of the key values that Blackboard realized was our service component and the complex requirements to create an end-to-end successful partner experience. Our pledge to our current and future customers is that we will maintain, improve and build on our Client Services operation and the high levels of satisfaction we have been able to achieve. We value now, and will continue to value our relationships with customers of all sizes and scopes. We will continue to take our relationships very seriously-you are a customer, not a commission.

Economics- Perhaps the most frequent question I received was concern over our current agreements, pricing and any changes to our current business. We will honor all our current agreements with our customers with no change in pricing or contract terms. Looking forward, one advantage of the merger is cross leveraging assets and human capital in ways that can continue to provide substantial value as we have in the past and maintain levels of product innovation and service that Moodlerooms has provided for over five years. With the backing of Blackboard, we have the tools to run our business more effectively and cost efficiently, but still remain independent and true to our mission.

Will this merger be an ideal solution to the entire changing landscape of the market? Absolutely not. While this rationale on paper is a compelling value proposition, the value creation will need to be in the execution of the original mission. Both companies in the merger realize that we will need to prove our current and future customers of the combined companies. We’re asking that you allow us to do that.

Most important, we want to hear from you during the process. Now more than ever, we need to take our direction from you, our customers and the market, on whether or not we’re fulfilling our original purpose and the course corrections needed to stay true to the mission.

The future starts now, let’s reinvent it together.
- Lou