Can PowerSchool Keep It Together?
The megalithic conglomerate is making all the right moves, but what’s happening behind the scenes might be cause for concern.
NOTE - This post is a continuation of another post I wrote back in March of 2015 that delved into the SIS market.
As a private company we have no visibility into PowerSchool’s financial statements, but it’s a safe bet that with all the recent acquisitions, the company is working hard to cut costs as much as possible. In the world of private equity this usually means layoffs with jobs moving overseas and long-time employees being cut loose or pressured to leave. New hires tend to be younger and have less experience, but they require a much smaller salary.
Based on what I am hearing from numerous contacts inside the company, this is exactly what’s happening.
As I mentioned in a previous blog post, there’s nothing typical about a student information system. With PowerSchool Group LLC shedding its most experienced employees, there is a real concern that a significant amount of institutional knowledge is leaving with them. New employees may have the technical chops to do the work, but the amount of catch-up required to adequately address the very unique needs of public, private, and charter schools in all 50 states requires a highly specialized knowledge base that can only be developed through relationships with local contacts and a boatload of experience. Put simply, it will take years for newcomers to match the productivity of their predecessors.
Since the acquisition by Vista Equity, PowerSchool Group LLC has been on an acquisition binge and now resembles a multinational conglomerate in many ways. What remains to be seen is how well the company can integrate these various systems together into a unified UX without sacrificing product roadmap timelines for each disparate product, or slipping on state reporting requirements for its various student information systems. (Side note: It is worth asking if the highly touted “32 million students” is an aggregate count of the 20+ products under the PowerSchool Group LLC umbrella, or if it’s actually the number of students supported on the original PowerSchool SIS.)
It’s worth remembering that because PowerSchool Group LLC is owned by a private equity firm, it’s fundamental purpose is to make sure it’s investors profit from its acquisition. The visible side of PowerSchool Group LLC we see today is carefully crafted with the intention of either attracting a buyer, or setting up the company for an IPO. Behind the curtain, the reality may be far more messy than any of us realize.
An IPO seems unlikely in the near-term. In order to attract investors, PowerSchool Group LLC will have to do more than sell the dream — they will have show substantial growth and profit resulting from the successful integration of its various, newly-acquired products into a seamless, unified administrative platform.
I’m not saying this can’t happen. I’m saying that in my experience, integration of existing products from different companies into a seamless, bug-free UX is rarely successful in the short or medium-term. This becomes even more difficult when there is a large, enterprise-level software product in the background that requires it’s own care and feeding. All too often companies rob Peter to pay Paul by reallocating developers, and the result is mediocrity all the way around.
Acquisition seems the more likely outcome given the behavior of the company over the past year, but to my knowledge there are no EdTech companies who could afford PowerSchool Group LLC, especially given the many acquisitions by PowerSchool over the last two years. That leaves the biggest players in education: Apple, Google, and Microsoft.
I think most people would agree that it’s extremely unlikely that Apple would buy PowerSchool again, especially given that nothing has changed for Apple in terms of it being a device company. As a software company (primarily) Google is a better fit, but such an acquisition would be far outside the norm for Google who tends to buy smaller companies for their tech stack and talent.
Strategically, Microsoft makes the most sense. The company has been investing heavily in education and has made great strides with their Microsoft Educator Community. When combined with Skype, Minecraft, and Office 365, the company holds a formidable position and is showing no signs of slowing down. Adding PowerSchool to the mix would provide the company with a new administrative layer that could potentially connect everything together into a universal education suite. This is of course, a very Microsoft thing to do. In fact, PowerSchool Group LLC may have tipped their hand when they announced a partnership with Microsoft back in January.
All that being said, it’s important to consider the amount of technical debt being carried by PowerSchool. The UX for administrators is over 20 years old and while that might speak to the longevity of a simple and elegant design, it also indicates the need for a long-overdue refresh. If state reporting capabilities are slipping; if highly-paid contractors are still flying first class around the world to help schools build their master schedules, and if training for Object Reports (tool used to create custom report cards, transcripts, etc.) still includes graph paper and rulers, then I’d argue that PowerSchool has a long way to go before it’s able to net its investors the big payoff they’re hoping for.