Industry | Trends
SIIA: U.S. PreK-12 Is a $7.9 Billion Software Market
In the United States, preK-12 is nearly an $8 billion-a-year software market, according to new data published by the Software & Information Industry Association. And that figure is on the rise despite obvious funding hurdles faced by schools over the last several years.
In its latest report, the SIIA's Education Division revealed that, exclusive of hardware, education technology vendors saw revenues of about $7.97 billion in institutional sales during the 2011-2012 school year, up 2.7 percent from the previous year and 6.4 percent overall since the start of the survey three years ago. This growth came despite state and federal education spending cuts, including the defunding of the Enhancing Education Through Technology program and $1.2 billion in overall cuts to the U.S. Department of Education's budget, the SIIA noted.
Based on these figures, preK-12 represents as much as 5 percent of overall U.S. software sales. (It can be difficult to pin down estimates on the scale of the overall software market in the United States. MarketReseach.com estimated sales of $153 billion in 2011 and $163 billion in 2012, averaging $158 billion over the period covered by the SIIA report. Market research firm IDC published similar figures for North America in 2012.)
The SIIA report, "2013 U.S. Education Technology Market: PreK-12," collected data from 122 participating education technology vendors, whose institutional revenues totaled $2.4 billion in the 2011-2012 school year. Those figures were then extrapolated to represent the entire universe of ed tech software vendors (those companies with institutional sales), which the SIIA pinned at 722 total companies.
Based on the extrapolations, the SIIA identified three major ed tech software segments:
- Content, which represented 42 percent of the market in 2011-2012;
- Instructional support, 41 percent; and
- Platforms and administration, 17 percent.
Instructional support in particular saw banner sales in 2011-2012, up 36 percent. This segment includes assessment, the single-largest revenue category. The content category was up 20 percent. (All content areas except English/Language Arts saw increases in 2011-2012.) Platforms and administration fell 32 percent.
The report identified Common Core State Standards and the impending adoption of online assessments as major opportunities for vendors. The trend toward BYOD was cited as an opportunity for platform and IT infrastructure vendors.
"The rapid growth of the testing and assessment market will slow, but remain an important area of investment in school districts and states. Digital assessments and interest in personalized learning contribute to this growing market," according to the report's principal author, CS4Ed President John Richards. (CS4Ed is an education consulting service.) "The strong growth in content also shows that the print to digital transition is clearly in process in the educational technology market."
However, vendors will have to revise their sales strategies as education purchasers become more sophisticated. According to the report: "... [O]pportunity remains for vendors offering educationally efficient, cost-saving technology products to schools. Increasingly, local decision makers are looking at technology not as a distinct budget item, but as a means to more efficiently and effectively address core goals and needs throughout their budget. Companies will, however, need to be more creative and focused on results as they present new technology products to schools and districts nationwide. Education leaders are becoming more sophisticated. They are not looking for companies to sell them technology products but are instead looking for partners who understand their challenges and can help provide matching solutions."
An executive summary of the report is freely available on the SIIA's site. The full report runs $1,500 and is available through the SIIA store.