Assessment Investments Fuel Instructional-Support Market
The professional-development market sees revenue increases, but LMS companies experience major declines
Districts invested more money in assessment than anywhere else in the U.S. ed-tech marketplace, spurring 37 percent growth in the testing portion of the "instructional support" market segment, according to a survey of companies by the Software & Information Industry Association, or SIIA, a trade association for the software and digital content industries.
The estimated $2.2 billion in revenues that ed-tech companies generated during the 2011-12 school year from various aspects of digital testing and assessment largely fueled the overall growth in instructional support, making it the second-largest market segment studied. Instructional-support technology encompasses the software that "touches" the classroom for teaching or learning, but is not actual content itself, according to the Washington-based SIIA's definition of the category. To calculate total estimated revenues, SIIA took survey respondents' reported revenues and extrapolated to the wider market, based on the organization's own analysis.
Besides testing and assessment, instructional support includes professional development; managing instruction through learning-management systems; productivity tools like word processing, spreadsheet, and presentation applications; and K-12 extensions, such as online tutoring and GED, or General Educational Development, support. While teachers are often the users of those products, they are generally not the decisionmakers for district purchases.
A review of the instructional-support market shows an uneven story. While the segment grew to an estimated $3.3 billion in the 2011-12 school year—increasing for the second year in a row—only the professional-development category joined assessments in expanding. The other portions of the market experienced decided downturns. The learning-management-system category declined by more than 50 percent, according to the SIIA estimates, and the sales of productivity tools and K-12 extensions were also down.
The growing use of online testing—spurred by the coming online common-core-aligned assessments and greater student access to digital devices in schools—means educational technology is gobbling up more of what Outsell, a Minneapolis-based research and advisory business, estimates to be an overall $3.9 billion K-12 testing market in the United States. The market itself is expected to grow 4 percent to 5 percent a year as schools add more formative assessments and adaptive-learning tests, and the new summative assessments to gauge mastery of common-core standards become a reality. Formative assessments gauge the progress of students' learning so teachers can guide instruction, while summative assessments seek to sum up how far students have gotten toward mastery, and how well learning goals have been met.
"While I can't talk about any particular company, just about everyone in that market segment, year over year, did better," said the software-industry report's co-author, John Richards, the founder and president of Consulting Services for Education, a Newton, Mass.-based company that advises education companies.
The 9,500-student Consolidated School District 158 in Algonquin, Ill., is one example of a district that made an assessment purchase around the time period covered by the SIIA report. Consolidated 158 selected Schoolnet, which offers a suite of student-assessment tools, after a "pretty healthy search process," said Marisa Burkhart, the director of educational technology for the district. "We had data all over the place. This was a way to pull it together; it also gave us the functionality to distribute the data."
More Content, More Data
Ms. Burkhart's district bought the Schoolnet product about the same time the company was acquired by Pearson, a global education business based in London and New York City. "Things were changing very rapidly in the assessment space. For our use, it was perfect then, and as our use developed, the tool developed," she said.
Much of the growth in this testing segment of the ed-tech market is spurred by the fact that K-12 education is at a crossroads of adding devices, digital content, and the ability to extract more data via online assessments, according to assessment experts.
"There have been significant improvements in the ways schools are able to get reports and explore the data, even trying to use some diagnostic tools to help identify specific misunderstandings of students," said Michael K. Russell, a senior associate for the National Center for the Improvement of Educational Assessment, a Dover, N.H.-based nonprofit organization that consults with states on assessments. "That's clearly an advancement that should benefit instruction and learning," said Mr. Russell, noting that it's a trend he sees increasing.
"I think the market is going to have more and more need for high-quality assessment as we move into the common core," added Ellen Haley, the president of CTB/McGraw Hill, a Monterey, Calif.-based educational assessment publisher. "The standards are different now; it will be challenging."
The market for instructional support is shifting on several fronts:
Professional development grew by more than 10 percent, to approximately $543 million in revenue in the 2011-12 school year, based on extrapolations by the SIIA. That growth occurred as educators were facing—and continue to face—new standards, new technologies, and new accountability based on student-performance data.
“We’re asking 3.5 million teachers to make a huge fundamental shift in the way they teach. That requires professional development,” said Alvin H. Crawford, the CEO of Knowledge Delivery Systems, a New York City-based business that helps districts provide blended and online learning for educators. His company’s revenues doubled between 2012 and 2013, and are on track to do so again, he said.
Annual growth is also the norm at Bloomington, Ind.-based Solution Tree, according to CEO Jeff Jones. “There’s no place for fluff,” he said. “Professional development has to be research-based.” Both CEOs said they anticipate ongoing growth in the professional-development market, propelled by the Common Core State Standards and new technologies entering classrooms.
Drop in Productivity Tools
The market for productivity tools stood at an estimated $246 million in 2011-12, a decline from the previous year, according to SIIA extrapolations. That downturn reflects districts’ interests in exploring free options, experts say.
“Many school districts have moved, or are planning to move to Google Apps for Education,” said Keith A. Bockwoldt, the director of technology services for Township High School District 214 in Arlington Heights, Ill. “This reduces the cost for using suites like Microsoft Office.” While Office 365 is free to school districts, the technology director said, “they came to the party too late. On the other hand, Google is constantly improving their suite of tools, and it’s free, too.”
Earlier this year, Google came under fire for scanning the contents of millions of student users’ Gmail messages within Apps for Education. In April, the company announced that it had halted the practice of scanning student accounts for any potential advertising purposes.
LMS Market Downturn
Revenues for learning-management systems declined by more than 50 percent, to $182 million dollars in 2011-12 from the school year before, according to SIIA estimates. Industry observers are divided on whether that drop represents a critical turning point for this portion of the ed-tech market as more districts turn to free options such as Edmodo—or whether it is just a temporary lull.
Steven Hodas, the executive director of Innovate NYC Schools in the city’s department of education who speaks regularly with district leaders around the country about innovation, said a LMS is “an easy kind of expense to defer,” and he believes the declining revenue numbers reflect a decision by districts to put their investments in what they consider to be more critical needs, such as testing or professional development.
But Mr. Bockwoldt predicts that LMS purchases will be on the upswing with the need to integrate different types of technology into 1-to-1 computing initiatives, which increasing numbers of districts are putting in place. “Many of the LMS [programs] like Canvas and Schoology have excellent integrations with mobile devices,” he said.
Tutoring, GED Services Decline
Online tutoring and GED-related services represent the smallest sector of the instructional support market, at an estimated $133 million in 2011-12, declining from the previous year, according to the Software & Information Industry Association. During that timeframe, states that received waivers under the No Child Left Behind law were freed from a requirement to provide supplemental education services, or tutoring, for students at academically struggling schools.
However, that revenue picture may change if teachers’ and educational leaders’ “wish lists” are fulfilled. In the SIIA’s 2013 Vision K-20 Survey, the 1,093 K-12 educators and district administrators said they want more online tutoring accessible to all students. And a 2014 revision to the GED exam, making it more difficult and available via computer, could spur an increase in test preparation for credit-recovery efforts, according to experts.
Vol. 33, Issue 35, Pages s16,s17