The corporate learning system (CLS) market continues to consolidate. Consequently, buyers are shopping for replacement options as their original suppliers are acquired by others or become nonviable. As a customer evaluating CLS vendors and products, you should focus on getting the most critical functions you need, while ensuring that the system is modular enough to let you "turn on" individual components as required and easily add new components later. Also look for:

• Integration: A CLS should integrate with third-party content and e-learning products, and with other business applications. There is growing interest in a tighter connection between human capital management (HCM) and learning management, as well as community support, to enable networked, "just in time" learning.
• Analytics: Learners, managers and training professionals require analytical features to track parameters such as status, usage and return on investment (ROI), and to create reports in real time.
• Software as a Service (SaaS): In the past, vendors offered either on-premises (behind the firewall) deployment or hosted solutions, not both. Now, many vendors offer three options: on-premises, hosted and SaaS. A SaaS-based offering can be very quick to put into production, so it is becoming the preferred choice of many clients.

When using this document, don't look just at the vendors in the Leaders quadrant. In terms of vendor, product and market served, the best match for your requirements could be in one of the other quadrants. Also, don't make this Magic Quadrant the only tool you use to select a vendor (see "Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market").

Identify all the stakeholders and needs that your CLS must address. Write detailed, comprehensive requests for information that reflect those needs, ask vendors to demonstrate their solutions in use-case scenarios, and check references.

With this approach, you can remain focused on your business goals, and the system you select will be more relevant and flexible. It will also deliver better results.

The justification for using a CLS is that it aids the process of educating employees, partners and customers, so that an enterprise can achieve its desired level of business performance sooner than if people had been left to work things out for themselves. As attitudes toward training have matured, enterprises have come to appreciate the need to create engaging content that enhances the learning experience and increases retention. And as their awareness of how much learning occurs in social and informal settings has grown, they have placed more emphasis on features that support collaboration and community activities. To reflect these changes and the shift in focus from provisioning e-learning to supporting talent development, Gartner has changed the name of its Magic Quadrant on this topic from "Magic Quadrant for E-Learning Suites" to "Magic Quadrant for Corporate Learning Systems."

Volatility in the CLS market has subsided, but we expect consolidation to continue through 2010. Also, CLS products are themselves consolidating more and more functions into a learning architecture. Mixing multiple products with services has long been the only way to meet a full range of enterprise requirements, and vendors often team up to provide the necessary scope. However, following some key acquisitions in recent years, the major learning management systems (LMSs) vendors now integrate learning content management systems (LCMSs), analytics and employee performance management into more holistic CLSs. Vendors that in the past had HR-centric or learning management-centric offerings are now adopting a product development strategy that is employee- or learner-centric. They are augmenting traditional LMS features with community support to enable a blended, networked learning environment. That said, there are still no products available that "do it all."

Since 2004, LCMSs have grown in importance to become the second-most vital component of a CLS, after the LMS itself. Many vendors claim to offer LCMSs, but don't promote them, in some cases because they have only lightweight capabilities. Other important components include analytics, authoring tools, Web services capabilities and simulation engines (usable online and offline).

The degree of integration of individual e-learning applications into a single packaged product varies widely. This has caused confusion and disillusionment among buyers, but has become a significant differentiator for those CLS vendors that offer more complete offerings. Vendors that score more highly for Completeness of Vision (the horizontal axis on the Magic Quadrant) tend to have more comprehensive offerings as well as integration with installed employee performance management applications.

The interoperability of components within CLSs and the integration of these systems with other mission-critical applications will dominate the learning technology agenda for the next two years, particularly as companies adopt an enterprisewide approach to learning and as demand for Web 2.0 features that support social learning grows (see "Key Issues for Creating a Networked Learning Environment, 2008").

CLSs continue to expand in functionality and in the robustness of their components. A CLS has four core components, which are coupled either loosely or tightly:

• LMS: This supports a variety of functions relating to the administration and management of learning interventions, such as assessment, records management, provision of learning, management of training resources and reporting.
• LCMS and content authoring tools: These enable the creation, storage, delivery and reuse of learning content.
• Virtual classrooms and multimodal electronic delivery capabilities: These underpin formal, informal and blended approaches to learning.
• Professional services: For the creation of custom content, development of learning strategy and support of implementation.

The CLS market is evolving (see "Forecast: E-Learning Suites and Management System Software, Worldwide, 2006-2011"), and several trends complicate the picture for buyers:

• Enterprise deployments: Learning is moving away from the narrow focus of training and HR departments into the broader arena of enterprise and business-unit sponsorship.
• Compliance: Regulatory and statutory certification requirements are making analytics and automatic notification of training requirements increasingly important to a learning strategy.
• "Stack" offerings: Major software vendors such as SAP and Oracle have begun to include CLSs as part of comprehensive software stacks that combine infrastructure, middleware, software and enterprise applications.
• Standards: Vendors continue to invest in converting their proprietary technologies to software stack standards — Microsoft .NET and Java Platform, Enterprise Edition (Java EE) — and to adapt their products to comply with key technology standards such as the Sharable Content Object Reference Model (SCORM). Buyers are demanding standards compliance, and SCORM compliance is a critical requirement in many a request for proposal.
• Consumerization: The consumer clamor for Web-oriented social software tools that enable collaboration is spilling over into the field of corporate learning and development. There is a desire to support informal learning situations and learning communities using tools such as wikis and blogs, whether these are provided by CLS vendors or bought separately and integrated into the learning architecture.

With the growing focus on managing workforce assets better, analytics that focus on the planning and measurement of an organization's workforce have also emerged. Yet many current learning reports do not successfully measure enterprise learning ROI beyond travel savings. Metrics are often too focused on internal details (for example, attendance at training classes) and do not reflect the impact of newly trained workers on business productivity. In addition, measures of skills are not viewed highly by senior executives unless those skills influence performance metrics such as revenue growth, customer satisfaction and operating efficiency. It's crucial to link business process and learning metrics within the enterprise — relating training effectiveness, for example, to the speed at which new products are introduced. Recently, organizations have begun focusing on the use of business productivity analytics to move their training programs beyond traditional e-learning and HCM to a more strategic, "business-critical" level focused on workplace performance and innovation.

To be included in this Magic Quadrant, a vendor must:

• Focus on the CLS market. Its products must provide functionality for all of the following core capabilities:
  • LMS
  • LCMS and content authoring tools
  • Links to Web conferencing, virtual classrooms and multimodal electronic delivery capabilities
  • Professional services
• Integrate learning management, content management and electronic delivery components, even if some components come from other vendors.
• Earn revenue from CLSs of at least $10 million a year. This includes revenue from software licenses, maintenance and learning-related services.
• Be regularly identified by Gartner clients and prospects as a focused player in the CLS market.
• Be confirmed by secondary research as a significant or emerging player in the market.
• Market, sell and support its learning products in at least two of the following continents: North America, Europe and Asia.

IMC appears in this year's Magic Quadrant as a Visionary.

Vuepoint has changed its name to Certpoint Systems, under which name it appears in this year's Magic Quadrant.

KnowledgePlanet has acquired Prospero and changed its name to Mzinga, under which name it appears in this year's Magic Quadrant.

IBM and WBT Systems have been dropped from the Magic Quadrant because they no longer meet the inclusion criteria.

Gartner evaluates vendors based on their ability to articulate logical statements about current and future market direction, innovation, customer needs and competitive forces, and on how well they map to Gartner's position. We also assess their understanding of how market forces can be exploited to create opportunities. In addition, we consider their products' capabilities. Vendors' overall viability, installed bases, geographic distribution capabilities, customer support and satisfaction, and management teams are considered as well.

Table 1 shows weightings for our specific evaluation criteria.

Gartner evaluates vendors on the quality and efficacy of their processes, systems, methods and procedures that enable their performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. Providers are judged according to their ability to capitalize on their vision, and their success in so doing.

In 2008, on the Completeness of Vision axis, we evaluated CLS vendors particularly for the comprehensiveness of their offerings. Those that presented more effective components and capabilities generally improved in the areas of analytics, content creation and resources management, including traditional classroom and professional services (such as for planning, implementation and content).

Table 2 shows weightings for our specific evaluation criteria.

Leaders must not only meet the market's current requirements, which are continually changing, but also anticipate future requirements. Also fundamental is the ability to articulate how they will address these requirements as part of a vision for an expanded CLS. In addition, Leaders have a proven track record of financial performance and an established market presence. Their installed base gives them a strong presence in the CLS market, and they demonstrate continued growth in customers and revenue. In terms of vision, they are perceived as thought leaders, with well-articulated plans for product development, marketing and channel support. Leaders have the highest combined scores for Ability to Execute and Completeness of Vision. These strategic providers will continue to drive the market forward by broadening their CLS functionality and integration. Buyers can expect that, as a group, Leaders will be considered as part of most new product purchases and will continue to have high success rates in winning new business.

Challengers can deliver the goods today, but have a limited or evolving vision of, and focus on, the CLS market. They have the financial and market resources and capabilities to become Leaders, but the question is whether they have the necessary understanding of market trends and market requirements. They do not own all the most relevant components of a complete CLS; instead, they use partners to fill out their solutions. Also, they may not devote sufficient development resources to deliver a product with broad market appeal and leadership features. Challengers have capable products and can perform well for many enterprises. But their products may have limitations in several areas — for example, capabilities for content management and application simulation, and interoperability and integration with other business applications.

Visionaries are forward-thinking vendors, but their performance has not given them a leadership position. These vendors are differentiated by their product innovation, but they have not achieved the completeness of solution or the sales and marketing success required to give them a high profile.

Niche players either have not achieved a broad customer base or lack some of the modules available in a complete CLS. They lack a substantial presence in the CLS market. Some focus on specific vertical industries or geographic markets, and their learning products are typically optional components of their more comprehensive product offerings. The most significant challenge for Niche Players is to invest in developing their learning products — in terms of making them more robust — and in marketing them to make them more competitive.

• ACS Learning Services is well-known for its hosted learning offering and custom content development services.
• ACS's technology is built on the SumTotal platform. Its LCMS has been improved with customized processes and methods. ACS prefers to use its own content development environment, but can use other content creation systems such as Eedo and Trivantis's Lectora.
• ACS clients — including those of its acquisition, Intellinex — often become loyal customers. They often sign sizable deals, worth significant amounts of money.
• The company develops relationships with its clients and can provide strategic learning program management in addition to content development services.

• Although ACS won a number of new clients in 2007 and the first half of 2008, it still depends on one client for a large percentage of its revenue.
• Awareness of ACS's offerings could be greater, as could the company's focus on winning new accounts.
• ACS offers its products and services using a combination of delivery models — a complex approach that might confuse some potential buyers.

• Certpoint, which recently changed its name from Vuepoint following investment by a third party, does well by focusing on a handful of large deals that involve custom courseware development.
• Certpoint has a solid product offering that handles both online and offline training delivery.
• The company has a three-pronged business model: direct sales, partnerships for service and content development, and a partnership with the Centre of Excellence for Applied Research and Training (CERT).
• Because of its focus on the worldwide market, Certpoint has put considerable effort into developing multilingual functionality.

• Although Certpoint has won several deals in Western Europe and the Middle East, it has little marketing visibility in North America.
• Certpoint's lack of name recognition limits the number of prospective CLS customers who include it on vendor shortlists.
• Certpoint does provide tools for content development, but these do not represent a significant portion of its revenue stream.

• Cornerstone OnDemand has quietly become a solid SaaS-based provider of a complete CLS, as well as of performance management capabilities integrated into a talent management solution. The system scales well and prices are competitive.
• A recent round of venture capital financing gave Cornerstone more resources to focus on worldwide distribution. The company has expanded its sales force and plans to increase its focus on the public sector.
• An approach to knowledge sharing is built into Cornerstone's offering. Users can ask questions of peers, view documents and other types of content, and track topics being discussed in communities. The company plans to continue to expand its social networking functionality.
• Cornerstone is increasing its presence in the European market and is expanding its alliance program.

• Cornerstone offers only SaaS deployment, so enterprises wanting a behind-the-firewall deployment must look elsewhere.
• Cornerstone needs to continue developing its collaboration and social software tools in support of informal learning.
• The company has invested in Europe, but would benefit from expanding its global presence.

• GeoLearning offers its solution on an application service provider, hosted basis (for its Series 4 offering) and a SaaS basis (for Series 5). It includes an LMS for Web-based reporting and analysis, personalized learning, feedback and Webcasting.
• GeoLearning has steadily increased its corporate accounts — from large enterprises to small and midsize businesses (SMBs) — with a concentration on the mid-market. It also provides services such as training outsourcing.
• The company has relationships with many well-known content developers and offers a solution for SMBs that includes content.

• GeoLearning needs to improve its SaaS model.
• The company does not provide an on-premises CLS.
• GeoLearning needs to devote more resources to extending its customer base, which is currently concentrated in the United States.

• IMC provides products for learning management (Clix) and content authoring (Lecturnity), as well as features to support learning communities.
• The latest release of IMC's solution incorporates social software tools such as wikis and blogs into course designs. It also offers functions such as content searching, sharing and rating.
• IMC incorporates learning process technology into its solution, which allows learners to create a personalized curriculum of blended courses according to their profile and skill. The learning process sequencing is linked to integrated skill and competency management.
• Industry-specific reference models contain descriptions of, and recommendations for, how to configure and apply the Clix e-learning suite for business scenarios commonly encountered in various vertical markets.

• Although IMC has high-profile accounts in Europe, it needs to increase its marketing and sales presence elsewhere.
• IMC needs to assure potential customers that its expertise in the educational market is relevant to the corporate learning environment.

• Learn.com has a solid platform called LearnCenter, which it updates regularly. A recent update introduced multilingual capabilities.
• Each of the three editions of LearnCenter — Group Edition, Standard Edition and Enterprise Edition — are offered for a set price.
• WebRoom, a recent addition that is available for an extra charge, allows users to create a collaboration portal with which to host virtual meetings such as demonstrations and training sessions.
• Learn.com has used its extensive library of off-the-shelf IT and "soft skills" content as a key differentiator for its CLS.

• Learn.com expanded its European business in 2007, but needs to continue to increase its presence elsewhere.
• The company's prices can sometimes be high in sole-source bidding situations.

• Meridian Knowledge Solutions has used its .NET-based CLS to expand its installed base, and it is seeing increased adoption by commercial firms, as well as by state and local government agencies. This growth is a result of its SCORM expertise, Meridian Anywhere offering for mobile users, competency management module and workforce analytics functionality.
• Managers and administrators can review status information via a dashboard or drill into the data offered by Meridian's Advanced Workforce Analytics Engine.
• Learners can access SCORM-compliant content in a disconnected mode or low-bandwidth area using Meridian Anywhere 3.0, a desktop application.
• Currently, over half of Meridian's new clients take hosted solutions. However, Meridian can also support customers that prefer to deploy the application behind a firewall.

• Although Meridian's execution has improved significantly in the United States, the company must consider expanding elsewhere.
• Meridian needs to increase its marketing awareness.

• In late 2007, KnowledgePlanet acquired Shared Insights and renamed the new entity Mzinga. In 2008, Mzinga secured $32.5 million in new financing and acquired Prospero, a provider of customer community solutions.
• Mzinga has a solid SaaS offering for learning, branded as KnowledgePlanet On-Demand Learning 2.0.
• The company plans to improve integration between its LMS and community sites to provide users with a more blended approach to learning.
• Mzinga offers products for customer communities, in addition to those for learning and workplace communities.

• Mzinga has been slow to win new customers and has not really focused on markets outside the United States.
• Mzinga does not offer a behind-the-firewall option.
• The acquisition of Prospero and the recent round of financing will require Mzinga to rethink its business strategy. Current users should check that Mzinga does not get distracted from the learning market by the new, high-profile clients it acquired with Prospero.

• Oracle offers three products for learning management: 1) Oracle Learning Management (OLM) is built into the Oracle E-Business Suite and integrates with Oracle Human Resources, Financials and Projects; 2) PeopleSoft Enterprise Learning Management (ELM) is integrated with PeopleSoft and JD Edwards HR applications, as well as PSFT Financials; 3) Oracle iLearning is a SaaS offering for rapid deployment.
• OLM and ELM are offered as hosted solutions, or customers can install them on-site.
• Oracle offers solid Java EE-based solutions, based on the functionality, scalability, multinational support, analytics and integration capabilities that are provided.
• Oracle and PeopleSoft's enterprise learning products offer competitive functionality. Their primary market remains the installed base of Oracle, PeopleSoft and JD Edwards customers.

• Oracle continues to offer multiple products within its Oracle and PeopleSoft lines. There is little information on when the learning management functionality from current products will be included in the Fusion HCM applications suite.
• Oracle is maintaining its commitment to enhancing the functionality of all three of its CLS products, but this will require three separate development efforts.
• Oracle needs to expand its relationships with implementation partners.

• OutStart offers a portfolio of learning applications complemented by knowledge-sharing software. Its knowledge management solution, Participate, can work with any LMS or LCMS. The company's learning solution focuses on its comprehensive LCMS.
• OutStart incorporates features that support learning communities in its TrainingEdge and SellingEdge offerings. Learners can pose questions, post comments to a wiki and participate in discussion forums.
• The company has executed well in the mid-market, government and some Global 2000 organizations.
• OutStart uses its alliance program to gain access to resellers and to service, content and technology providers.

• OutStart needs to align the completeness of its LCMS with other modules in its learning offerings.
• The company needs to focus more on increasing its customer base outside North America.
• OutStart needs to develop a clear set of marketing messages for its portfolio of products.

• Plateau Systems continues to win large enterprise deals, partly thanks to its Java EE-based LMS and well-regarded professional services practice. As a result, the company's installed base has continued to grow. Investments in sales and marketing have helped Plateau's execution.
• The company's capabilities in analytics and performance management should help it compete against traditional CLS vendors and "stack" players (such as SAP and Oracle), which are gradually increasing their focus on this market.
• In 2007, Plateau expanded its offerings with the creation of iContent, to provide users with access to a wide variety of course content. The company has also expanded its partnerships with content creation and packaged content providers.
• Traditionally, Plateau focused its sales and marketing efforts on large, global accounts. But it has now diversified its business model to include international, public sector and mid-market accounts in North America. It has also increased the visibility of its brand in other regions, such as Europe and Asia/Pacific.

• Plateau has not been strong in the LCMS part of its offering, as its core "DNA" comes from the LMS arena. While iContent is a great way to offer customers courseware, Plateau often partners with other companies in deals where a robust LCMS is needed.
• Plateau significantly increased its hosted deals in 2007. It needs to continue to invest in methods and processes to meet customer requirements for reliably supporting this delivery model that can keep pace with the growth in demand.
• Plateau needs to increase its marketing and sales efforts in international markets.

• Saba has a solid CLS and a well-rounded offering that includes an option to use the Saba Centra tool for online learning that supports virtual classrooms and Web conferencing. It scales well, due to its Java EE-based platform.
• Saba's products can be installed behind a firewall, hosted by Saba or accessed using Saba OnDemand.
• The company recently released Saba Enterprise 5.4 Service Pack 2, which includes unified search and recommendation features that support formal and informal learning and extend existing collaboration features such as wikis, discussions, books and communities of practice.
• Saba has a well-developed alliance program that includes global, regional and content development partners. This gives Saba broader geographic coverage and makes up for some of the deficiencies that its own professional services organization has displayed in the past.

• Saba has had mixed experiences in the hosted learning market. It needs to continue to improve its implementation and support services in order to respond effectively to increased demand.
• Saba is pursuing a strategy of convergence between people-centric collaboration and learning management. It is not yet clear whether customers will buy such products. If they won't, it will put stress on sales and development activities for other components of Saba's solution.

• SAP's Enterprise Learning Environment integrates with its HCM and enterprise resource planning (ERP) applications.
• SAP has gradually improved the functionality of its Java EE-compliant learning offering.
• Communication with course catalog components is accomplished using four Web services: register, start, cancel and track. This allows users who buy course content from other vendors, such as SkillSoft and Questionmark, to facilitate set-up in the SAP product.
• In November 2007, SAP released Virtual Learning, which is powered by Adobe Connect. It provides integration to other Web conferencing applications for users that already have them installed. Also included are new self-service features for instructors and tutors.

• Despite the significant opportunity presented by the company's installed base, adoption of SAP's CLS remains low. One reason for this is that customers need to be on the latest release to get competitive functionality.
• SAP needs to keep improving its user interface and LCMS, and be more effective in executing its sales strategy to increase its base of learning customers. SAP's learning applications are applicable only to customers of SAP's HCM and ERP applications.
• Long deployment times are common with SAP because of the integrated nature of learning with the rest of the SAP HCM and ERP applications.

• SumTotal understands the value of learning content in the overall training and learning equation. Its LCMS is solid, as is its stand-alone authoring tool, ToolBook, which has an established reputation in the market.
• SumTotal lets learners access content even without a network connection, using TotalAccess.
• Users can install SumTotal's Enterprise Suite offering on their premises, or use the ResultsOnDemand SaaS solution for learning management.
• SumTotal's go-to-market strategy includes a focused sales effort for larger enterprises, the mid-market and SMBs. Although it maintains a separate product development focus for learning and for performance products, all sales representatives can sell both on an integrated or stand-alone basis.

• Version 8.0 of SumTotal's product was released in 2Q08, after a long period of development that raises questions about the ability of the company's engineering department to deliver software releases in a timely manner. While developing the unified SumTotal 8.0 product, the company added functionality to version 7, through five point releases.
• SumTotal has two business units: Learning and Talent Management, and Performance. Customers that want integrated functionality from both should check that product development plans are coordinated.
• SumTotal has bought various companies over the years. Legacy clients — those of Pathlore, DK Systems and Docent — that have not migrated are a drain on resources and they increase support costs. To improve its focus, SumTotal must quickly migrate them.