Docent and Click2learn Complete Merger

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Two leaders in the learning technology business, Docent Inc. and Click2learn Inc., have completed a merger of equals to launch SumTotal Systems Inc. With more than 600 customers, including 40 percent of the Fortune 50 and 35 percent of the Global 50, the new company is an industry-leading provider of learning technology and services.

Headquartered in Mountain View, Calif., SumTotal boasts client successes such as a 30 percent reduction in cost per training hour at Cingular Wireless, a 33 percent gain in revenue per agent per month at Century 21 and a 199 percent return on investment due to increased productivity and the elimination of training-related travel at OneBeacon.

“A lot of organizations are recognizing that learning is very strategic inside their organization and if used effectively, can really impact the bottom line,” said Kevin Oakes, president of SumTotal Systems. “SumTotal is all about impacting results, impacting the net of what a company does. Whether it’s increasing revenues, decreasing expenses or improving cycle time or time to competency, we’re seeing many of our customers use learning in much more strategic ways, and that’s why we named the company SumTotal.”

The combined resources of the new company emphasize its leadership in the industry. The company has the largest customer base in the industry, with more than 600 enterprise platform customers across a wide range of industry sectors. SumTotal also brings a strong network of strategic partners to the table, including Accenture, Deloitte, IBM, Microsoft, HP and Thomson Learning.

“Both Docent and Click2learn had a lot of momentum going forward back over the last year,” said Oakes. “In October we decided to get together primarily to create a leader in this industry. The two of us have been duking it out, there’s other players in the industry, and there’s never been a real, defined, clear leader. Together as SumTotal Systems, we feel we’ve leapt to that leadership position by almost any metric.”

SumTotal has approximately $35 million in cash, with the scale to leverage operational efficiencies, delivering long-term stability. In addition, SumTotal has large research & development, customer service and customer support teams to drive innovation and customer satisfaction.

“We have twice the R&D resources, twice the customer support resources, twice the customer service resources and twice the sales staff as our next nearest competitor,” said Oakes. “More importantly to buyers, we have three times the cash and are going to be cash-flow positive very shortly.”

SumTotal Systems achieved $15 million in cost synergies as a result of the merger, and as a result, the company expects to be cash-flow neutral in the second quarter and cash-flow positive by the third quarter of 2004.

Integrating the enterprise learning products of Docent and Click2learn into a single enterprise suite is the first order of business for the new company. The product integration team consulted a broad audience, from current and future customers to industry analysts to enterprise software companies, in order to get feedback and input on its long-term plans for the products. A result of the integration process, SumTotal Enterprise Suite 7.0 should see detailed beta testing with customers in the second quarter of 2004.

“What we are doing is essentially combining the best of both platforms, and we will come out with our SumTotal Enterprise Suite in the second half of this year,” Oakes said.

The suite will consist of an open, standards-based architecture that supports common industry standards and offers seamless interoperability with numerous customer environments, including J2EE, .NET and newer environments like SAP’s NetWeaver. The suite will include a learning management system, learning content management system, a dashboard for analyzing enterprise learning data and bottom-line impact, a virtual communication solution, 360-degree measurement of employee performance, mobile access to learning, knowledge management and collaboration functions.

Upgrade paths will be available for customers using the existing Docent and Click2learn suites. In addition due to SumTotal’s development, service and support structure, the company will continue to provide support for existing customers on their existing suites for several years with no forced migration.

“Our tagline is ‘Accelerate Performance. Accelerate Profit.’” Oakes said. “And that tagline is very deliberate in what it tried to boil our value down to. So as companies come to that realization, our technology becomes a much more mission-critical buy. It becomes typically an enterprise-wide buy. Companies are recognizing the need to buy for the enterprise. It’s no longer a departmental decision, and as part of that, the financial help of the vendor and the long-term stability of the vendor become pretty important, and that’s an advantage we certainly have in the industry.”

For more information on SumTotal Systems, visit www.sumtotalsystems.com

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