Skillsoft – An Analyst Perspective

This is a story about a one-time giant in the 3rd party off-the-shelf content providers. A behemoth, impressive and at the same time, seen in an “Evil Empire” perspective among other vendors in the mid-2000s.

This is also about a vendor who lost their way.  A vendor who made not only poor business decisions with the likes of Percipio but also with the monumental blunder of acquiring SumTotal. 

The buy was a bad relationship in the making, one where the owner – “Skillsoft” and ownee “SumTotal” never seemed to get on track with one another.  Where SumTotal salespeople never pushed Percipio as an add-on or addition to SumTotal Learning, even referring it an an “afterthought” as one senior sales executive once told me.

Where I learned from a senior sales exec at SumTotal that SumTotal salespeople sold less than one percent of Percipio, and he never understood the reason that Percipio was created, because Degreed was the dominant leader in the LXP space. 

It is where Skillsoft was eventually acquired by a PE firm (Charterhouse Capital Partners LLP) in 2014, and while the PE firm also, therefore, owned SumTotal, there was clearly a communication challenge between Skillsoft and SumTotal.  Not uncommon with some companies that own two different learning system brands if you will, but in this case, it seemed that SumTotal was the driver and Skillsoft the secondary. 

It just wasn’t a good marriage as they say, to such an extent there were rumors at one point that a spin-off of SumTotal was in order (At least one company received a “letter of interest”).  It failed to materialize.

Layoffs meanwhile started at Skillsoft Corporation in November 2019, February 2020, and most recently in early June 2020. 

Employees at Skillsoft were notified in May 2020, that a reorganization of debt was occurring, a method that usually means the company is trying to avoid filing for bankruptcy.

The truth of the matter is that Skillsoft started to enter forbearance agreements, before the end of April 2020, because payments totaling 42 million dollars to first and second lien-holders, was due by April 30th, 2020. (360 Law).

Skillsoft Corporation Files for Chapter 11 Bankruptcy

Skillsoft Corporation and all their subsidiaries are part of the bankruptcy including SumTotal Systems LLC, Accero, Inc., Amber Holding Inc., CyberShift Holdings, CyberShift, Inc., Mindleaders Inc., Pointwell Limited, SSI Investments I limited, SSI Investments II Limited, SSI Investments III Limited, Skillsoft Canada, Skillsoft Ireland Limited, Skillsoft Limited, Skillsoft U.K. Limited and ThirdForce Group Limited. 

Agreed to a deal with their lien holders, but the deal still needs approval, by the court, to exit bankruptcy.

Skillsoft’s goal is to reduce approximately 2.1 billion dollars from their, current debt to approximately 585 million dollars in debt. 

The deal that was agreed upon (pre-packaged plan) by their lien-holders are as follows (according to 360 Law and Personnel Today)

• First lien holders would receive shares of $410 million in new term loans for their nearly $1.4 million in claims along with 96% of the reorganized company’s equity
• Second lien holders would receive 4% of the new equity and additional warrants for their $670 million in claims. They would also have the opportunity to purchase up to 15% of equity in the re-organized Skillsoft.
• Unsecured creditors would be fully paid
• Current equity holder claims would be wiped out

“.. liabilities exceeding assets by more than 18-fold currently, with debt maturities looming both this year and next year. That debt-to-equity ratio would fall to 5.2 times under the plan.” (360 Law, https://bit.ly/37R7OMX)

Furthermore, if the plan is approved, Skillsoft’s liquidity will be “around 50 million dollars” (Reuters).

Skillsoft – What went wrong from a learning perspective

Percipio was, well, to say it politely an unmitigated disaster, a result of poor business decision making by Skillsoft.   It wasn’t due to the product per se, rather it was the approach Skillsoft decided upon when it came to Percipio.

When they rolled out the system ways back (at a trade show), it was missing quite a bit, and from my perspective should have been held until it truly was ready for prime-time.

It was never noted during that rollout that Pericipo wouldn’t follow a “standalone” approach when it came to selling the system.  Yet, that is exactly what happened, i.e. not as a standalone.

Do you wanna buy Percipio? (as of 6-22-20)

Well, you are fortuitous because it only requires you to purchase some content from the Skillsoft library. That’s it.

Once you buy the content, Skillsoft will give you Percipio for free. Albeit, there were salespeople on the SumTotal side who actually sold Percipio (not from the buy content you get it free, angle, either). 

If the buy content you get Skillsoft system sounds familiar you are correct because the same approach was taken with Skillport, an LMS from Skillsoft, which was really a stripped-down version of the old Element K system back in the day.

And yes, there were salespeople who ignored the buy content get Skillport for free, by selling it, on top of a client buying the Skillsoft content. 

The weirdness of the whole Percipio strategy includes having a swath of content in the platform, including from their partners, on top of the content you initially purchased. Thus if you want to read, view, listen to the other pieces of content, you pay. 

Percipio was late to the game in adding content partners, with the system initially having only Skillsoft content.  On the other hand, it had IBM Talent Watson in its system, before SumTotal did.

SumTotal’s Learning’s home learner page? It is from Percipio.

Could you as a client purchase Percipio as the standalone? You could, but the number of folks who did was infinitesimal.

At this year’s Skillsoft virtual conference, all attendees received free access to the entire Percipio system, and could view a wide amount of content, but in my test, not every piece of content was made available, although a couple of pieces of content was about the Percipio system (reminded me of a sales angle).

I will concur it was a nice plus for Skillsoft to do that, and no doubt the end game was to get folks to use Percipio for the long-term, which again because the standalone angle isn’t the preferred selling method, Skillsoft content had to be the driver.

Another weird component of the entire Percipio business strategy is that the system continues to add feature sets, and thus R&D, even though the content-first approach exists.

In the history of buy content first and get the system for free approach, it is rare to sustain it for a long period of time, this is due to the R&D factor.  I know of only one vendor who follows a content-first strategy, get system for free, business approach, although they will sell their system as a standalone (which is very rare). 

Other vendors who went content-first and system, is free, ended up scuttling the approach, with the eventual sell the system and we will toss in the content OR sell the system, you get some content for free, but then have to pay for any other content.

The biggest vendor to try to the content-first strategy that failed in the long-run  (which resulted in them selling the system first)? Grovo, which eventually was acquired by Cornerstone. And I should note burned through 73 million dollars. 

Skillsoft content

A totally mixed bag, still.  Some of it is quite good, and some, as you might expect isn’t. For fans of micro-content it does exist, but the vastness of their library is the common longer duration of time (albeit you can use a TOC to follow a non-linear methodology, which is the best way to go).

Remember when I noted that some vendors saw them as the “evil empire?” This was due to the buying spree that Skillsoft conducted in the early to mid-2000s where they bought up quite a few 3rd party off the shelf vendors including NetG (a big player back then) and Element K (strong player back in the day). 

Skillsoft also does partnerships with numerous learning system vendors, which means, that you can buy Skillsoft content in the vendor’s marketplace, and have it in your system (actually it sits on Skillsoft’s servers and is API or some other connector, pushed into your learning system – and again, extremely common with other off-the shelf providers).

Why you may ask, does Skillsoft not try to add Percipio to vendors’ marketplaces, whereas there are LXPs who do?  Which would be a smart business move? Well, you should ask them, because as of now, they have no interest in doing so.  Even though it could open up a new revenue channel for them.

The Floodgates have opened

There are numerous vendors who are offering special discounted rates, a smooth transition from Percipio to their system, and in many cases will work with any Skillsoft client who is stuck in a contract, and wants to exit.

If you are a Skillsoft customer who wants to exit out to another system, or a Percipio customer who wants to switch over – here is a list of vendors offering such deals and transitions as noted.

Switch from Skillsoft Offers (Please contact the vendor directly)

Skillsoft Content Customers who want to switch to another 3rd party content/course provider

• Skill Pill – Great content follows sort of a bundle pack of content approach, i.e. you get the course, some type of flashcards or similar, workbooks, etc.  – Special Discount Rate and will work with you if you are stuck in a contract.
• Open Sesame – Equally great content – Special discounted rate and smooth transition
• Biz Library – Great content – Special discounted rate, smooth transition, will work with you if you are stuck in a contract
• SAP Litmos – Special discounted rate, smooth transition, will work with you if you are stuck in a contract.
• The Access Group – Special discounted rate, smooth transition, will work with you if you are stuck in a contract.

Percipio Customers who want to switch out into another learning system

• The Access Group, Access LMS – Special discounted rate, smooth transition, will work with you if you are stuck in a contract.
• EdCast – Special discounted rate, smooth transition will work with you if you are stuck in a contract. 
• Biz Library – Special discounted rate, smooth transition, will work with you if you are stuck in a contract.
• Learn Amp – Special discounted rate, smooth transition, will work with you if you are stuck in a contract.
• Learnsoft – Special discounted rate, smooth transition

Percipio and/or SumTotal customers

• IMC-AG – Special discounted rate, smooth transition, will work with you if you are stuck in a contract.

Compare Percipio to any of the Learning Systems offering you a deal, OR just to compare them to another LXP or DLP.

With the exception of Learnsoft, every other vendor listed above is in Findanlms.com, you can access immediately, no need to register up-front into the platform.

Additionally, there are many other LXPs in the platform including Degreed and THRIVE.

Bottom Line

The only way Skillsoft survives long-term is that they get acquired by someone.  First, I’d break up the company with SumTotal Systems LLC., as a separate entity, then sell off Percipio, for more of a customer buy, and retain the Skillsoft brand for the courses and content side of the house. 

The end output?  SumTotal as a separate company, Skillsoft Corporation as an only content provider, and Percipio as a sell-off for customer acquisition, then sunset the system. 

That’s my take.

For what it is worth.

E-Learning 24/7

I should note that I reached out to Skillsoft twice last week, requesting any comments, and/or would they will be willing to receive questions from me, and respond accordingly.  Skillsoft never responded.  Nor have they published publicly any messaging to prospective customers to assure that everything will be okay, or that they are committed to current and future clients.