Blackboard Customers Consider Alternatives

Open-source software for course management poses market challenge

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By JEFFREY R. YOUNG

Las Vegas

Matthew Henry, programming-services manager at LeTourneau University, sat near the front of a ballroom with his arms crossed, ready to watch a multimedia preview of Blackboard Inc.'s next course-management system.

He arrived here in July for the company's annual user conference with more than a few complaints about the company. Its service is poor, he said, its behavior toward competitors is overly aggressive, and its fast growth in recent years has distracted it from supporting the product that helped make it a giant in the usually quiet world of college software.

Blackboard has become the Microsoft of higher-education technology, say many campus-technology officials, and they don't mean the comparison as a compliment. To them the company is not only big but also pushy, and many of them love to hate it.

Mr. Henry's mission here, as he waited with four colleagues from LeTourneau, was to determine whether the company's software remains the best choice to run the Texas university's course Web pages, online discussion boards, digital gradebooks, and other teaching tools, which have become as standard as physical whiteboards on college campuses.

New software called Blackboard NG, for Next Generation, is supposed to keep the company a step ahead and keep people such as Mr. Henry as customers. The user conference was its first public display. "I'm anxious to see whether Blackboard NG is just hype or something that's going to solve our problems" with the company, said Mr. Henry, as the lights dimmed for the presentation.

LeTourneau's contract with Blackboard ends this year, and campus officials may join the growing number of colleges switching to Moodle, a free, open-source course-management system, or Sakai, another free program. Those systems have grown feature-rich enough to pose serious challenges to Blackboard. Giants like the Georgia Institute of Technology and the University of California at Los Angeles, along with smaller colleges, like Louisiana State University at Shreveport, have made the jump.

"There are a lot of institutions right now that are upset with Blackboard, to say the least, and looking for alternatives," says Michael Zastrocky, vice president for research at Gartner Inc., a consulting firm that tracks trends in higher-education technology. "They caused a backlash that's been very difficult for them to overcome."

Blackboard is heading for a showdown with the free-software movement, according to some observers. Although Blackboard remains the clear market leader — about 66 percent of American colleges use its software as their standard, says the Campus Computing Project, an annual survey — there are signs that open-source alternatives are starting to gain ground. The survey found that the proportion of colleges using Moodle as their standard rose from 4.2 percent in 2006 to 7.8 percent in 2007, and that about 3 percent of colleges have selected Sakai. A recent survey by the Instructional Technology Council, which promotes distance learning, found that the proportion of its member colleges using Moodle jumped from 4 percent last year to more than 10 percent this year. The proportion using Blackboard fell slightly.

Blackboard's leaders say they see no sign of an exodus to commercial or open-source rivals. "There's not more people leaving now than there were yesterday," said Blackboard's chief executive, Michael L. Chasen, in an interview this summer in the company's new corporate offices, in Washington, where the brightly lit white corridors and modern accents in staff lounges make it look a bit like a Star Trek starship.

Growing Goliath

How big is Blackboard? Three years ago it acquired its major rival, WebCT, solidifying its dominance of the course-management market. The company has also bought other companies in recent years, including the NTI Group, which makes emergency-notification software, and Xythos Software, which makes content-management programs.

How pushy is it? Blackboard claimed a patent on processes that many college officials say were already in widespread use. After the U.S. Patent and Trademark Office granted the patent, in 2006, Blackboard sued a leading rival, Desire2Learn, claiming infringement. Many saw the move as trying to bully a competitor. (A federal judge found in favor of Blackboard, although the decision has been appealed).

Such tactics are common in other business sectors, says Trace A. Urdan, an education-industry analyst with Signal Hill, an investment firm, but not in the world of college software. "They're sharks operating in this universe where you don't see a lot of sharks," he says of Blackboard's leaders. For him that is a compliment. "They're smart," he says.

Mr. Urdan argues that the legal battle has probably caused enough uncertainty about Desire2Learn's future to scare off larger software companies who might otherwise have considered buying it and turning it into a more serious competitor.

Colleges say they have reason for concern about Blackboard's growing dominance. Their biggest fear is that the company will jack up prices once colleges have become reliant on its products. As one of Sakai's founders, Bradley Wheeler, chief information officer at Indiana University, puts it, "When switching costs get high, you can raise the rent."

Blackboard officials have attempted to calm such concerns and to convince colleges that it is a good partner. Two years ago, after the higher-education technology group Educause took the unusual step of issuing a statement criticizing the company's behavior over the patent, Blackboard's leaders held a town-hall session at Educause's annual conference to answer questions and listen as college officials vented.

But some of those college leaders say the company's ways haven't significantly changed since then.

"That's the first thing that comes to people's mind when you come to Blackboard — its lawsuit," says Stephen G. Landry, chief information officer at Seton Hall University, which uses Blackboard. "I don't like working with a company that seems to spend as much money on legal and financial folks as they do on developers."

So now that open-source options are ready for prime time, many colleges are taking a cold, hard look at the price, reliability, and features of Moodle and Sakai.

Hidden Costs

Price seems like an obvious advantage of open-source software. After all, it is free. But officials say open-source programs can end up costing just as much as, or even more than, Blackboard's software when staff time is taken into account. It all depends on how much customization a college wants, or how many features it needs.

"The software is free, but you have to buy the computers to put it on, and you have to buy a development team to move it forward," says Donna Crystal Llewellyn, director of the Center for the Enhancement of Teaching and Learning at Georgia Tech, which recently switched from WebCT to Sakai. Saving money was not the goal, she says, adding that the university already had a staff of programmers to tackle the challenge.

"Our faculty are very techno-savvy," she says. "They always think they can do something better than someone else that's already put it in a box."

But many smaller colleges say price was indeed a major reason to move away from Blackboard.

"They continued to raise the prices," says Scott Hardwick, assistant director of information-technology services on Louisiana State's Shreveport campus, which a few years ago gave up Blackboard for Moodle.

"Had we continued paying what Blackboard wanted us to pay, it probably would have been $100,000 a year," he says. Now the university pays only about $5,000 a year to an outside company that provides support for the Moodle software. "It's definitely cheaper," says Mr. Hardwick, even considering the time he spends on maintenance.

Professors, too, at Shreveport have been pleased with Moodle. The only complaint Mr. Hardwick says he has heard is that Moodle's user interface doesn't look as slick as Blackboard's. "I'm like, 'Seriously, that's your complaint? It doesn't look as slick?' Apparently that's a huge deal for people."

Blackboard's chief executive, Mr. Chasen, defended his company's prices. "I don't think that we're too expensive," he said in the interview. "Compared to other enterprise software, we're a fraction of the cost." There's a good chance, he said, that colleges "bought their human-resources package for a million dollars."

A Supportive Environment

The downside of open-source software is that because it is free, there's no one company to call if things go wrong. But the downside of buying a commercial program is that if its maker provides poor support, it's hard to get under the hood yourself to make a fix.

Blackboard has a history of poor support, according to many college officials.

"Support in the past has certainly been a challenge for us," Mr. Chasen acknowledged. He blamed the company's rapid growth. "We went from 100 clients to now over 5,000 clients in a relatively short time, and support is one of those areas that lagged behind."

The company recently hired an outside firm as part of an effort to improve its customer service. "We're on the way to answering it," said Mr. Chasen. "We know that support is improving. Is it there yet? No, we still have a long way to go. But over the next few months, you'll start to see significant improvements across the board."

Some colleges running open-source programs initially had concerns about whether free software could be scaled to provide Web sites and services for thousands of courses on large campuses. But UCLA recently decided to use Moodle across the campus, and things are going smoothly as it adds about 900 course Web sites on the system per quarter, says Rosemary Rocchio, director of academic applications in the office of information technoogy there.

But the university has plenty of programmers to handle issues that crop up, she notes. "If you're a small university, and you don't have IT staff, then open source isn't a great solution," she says. "I don't think it's one size fits all."

Innovation as Attraction

The biggest benefit of open-source software, say many observers, is that if a college wants a new feature, it can simply build it, since the entire program code is open. When a college adds a new feature, it shares the code with everyone else using the software.

Blackboard's Mr. Chasen argued that there are benefits to the corporate model of software publishing, too. "I have 300 people on my development team working full time on our products and services," he said. "I don't know if there are 300 full-time people currently working on Sakai. Maybe there are. I have a multimillion-dollar hardware-testing lab just to test scalability."

"At a minimum," he said, "we are at least just as innovative as open source."

Michael Korcuska, executive director of the Sakai Foundation, a nonprofit group that coordinates the use of the open-source software, argues that the open-source model is quicker to react to needs of colleges than Blackboard is. "The people doing the work and deciding what features go in the system are sitting on campus next to the users, not in some back office somewhere," he says.

But Mr. Urdan, the industry analyst, says fine-tuning software is a "luxury" that most colleges can't afford. The slight improvements are often not worth the man-hours and dollar costs of adopting them, he says.

The Next Generation

Many of those arguments, users say, will be settled by the performance of Blackboard's new product.

So people were watching carefully as the lights went down at the Blackboard user conference, and Mr. Chasen took the stage to preview Blackboard NG. (Company officials later noted that they used a mock-up because the software is not finished yet. They could not say when it would be released, but some features will appear in a version expected next year.)

Among the features he touted:

n An easy-to-use interface that lets professors and students arrange course information right in their browsers by clicking and moving sections with a mouse.

n A new "dashboard" that lets students or professors see all of their course information at a glance. The dashboard also is integrated with the company's other products, including its new emergency-notification system.

n The integration of social-networking services, including Facebook and Twitter.

n The ability to interconnect with course Web sites made with open-source software, including Moodle and Sakai.

Some observers see Blackboard's attempt to project a more open policy toward its open-source rivals as a strategic move. As some colleges struggle with the choice between Blackboard and open-source software, the company is offering an easier way for colleges to get the best of both as well as easier access to other Web-based services.

Many features drew enthusiastic applause from the crowd. At one point, Karen Jacobs, an adjunct professor of management at LeTourneau, said to her colleagues, "This is amazing software."

"Over all it was very impressive," said Mr. Henry, the university's programming-services manager, after the lights came up.

"It was a nice commercial," said Ms. Jacobs. But "infomercials sound good," too, she added. "I want to see if it works."

Others were more dubious. Indiana's Mr. Wheeler, a founder of the Sakai project, says that Blackboard has pledged openness before, and that its "claims have rung hollow."

Sakai's leaders say many of the same features touted in the forthcoming Blackboard product are already available in their product. And companies that support Moodle say that developers will quickly add anything that works well.

But many college officials at Blackboard's user conference were eager to find out how to upgrade and said they would probably stick with the company.

"Everybody loves to hate their learning system," says Adam Finkelstein, an educational developer in McGill University's Teaching and Learning Services program. "The grass is always greener."