Helpful information for benchmarking an LMS purchase
LMS PRICES: HIGHS, LOWS, AND AVERAGES
"The different in pricing between different
learning management systems is staggering. In our most current LMS
research, we asked 50 LMS vendors to provide the cumulative cost
of a 3-year license, including maintenance and hosting fees (if
applicable) for 500; 10,000; 25,000; and 100,000 learners. For a
LOCALLY INSTALLED, behind-the-firewall implementation, the vendors
reported the following price ranges:
INSTALLED Pricing Ranges
"To put this in perspective, the cost
of the most expensive 100,000 user implementation is almost 450
times more expensive than the lowest-cost implementation. For a
three-year HOSTED implementation, the price difference is only slightly
smaller, with the highest-priced implementation about 410 times
higher than the lowest-priced implementation.
HOSTED Pricing Ranges
"For many years, we were often approached
at conferences by representatives of smaller companies and nonprofit
organizations saying they could not afford a learning management
system. They would often ask us about alternate ways to track the
training of their workforce -- such as manually entering data into
a spreadsheet. The good news is that learning management systems
can certainly no longer be thought of as luxuries that only the
wealthiest organizations can afford. Systems now exist that are
within reach of any budget."
– Richard Nantel, analyst, brandon-hall.com
How to keep the organization's
budget in check
FEATURE SCOPE CREEP: AN LMS HORROR STORY
It was a dark and stormy night.
A large financial institution wanted to license
a learning management system. This organization required a simple
e-learning portal that would provide online courses to its 10,000
learners. In addition, the company needed a system that could manage
classroom-based training. Members of the selection committee had
read that the average three-year cumulative price for a locally
installed LMS managing 10,000 users is approximately $357,000, and
they were hoping they could find a solution for less.
The organization assembled an LMS selection committee
to identify a list of functionalities needed in the system. As is
often the case, the committee ran amok, adding all kinds of business
and technical requirements. By the end of the process, they had
specified that all content must run on a Palm Pilot. They also required
360-degree evaluation, even though they already used a 360-degree
evaluation program with their HR system. The committee decided they
also required advanced learning object technology, although their
primary plan was to create a small number of courses. Finally, they
wanted telephone registration for courses automatically linked to
the database, although no one was quite sure how they would ever
Once the committee had identified the institution’s
requirements, they drafted a request for proposal and sent it to
the most popular names in the LMS industry, without first checking
to see if the vendors could match their needs. A few weeks later,
the vendors’ proposals arrived. The cost of the proposed systems
ranged from $1.2 million to $2.3 million. The LMS selection committee
couldn’t understand why the prices seemed so high.
What went wrong? Feature scope creep nearly ate
them alive. This happens in far too many projects.
Unfortunately, many organizations become convinced
during their LMS selection process that they require as many features
as possible. Although their learners could register for a course
using a browser, doing so using a telephone is just too appealing
to ignore. Although the organization doesn’t have a mobile
workforce, using personal digital assistants (PDAs) such as Palm
Pilots and Pocket PCs becomes a must-have requirement.
LMS features such as the ability to view e-learning
content on a Palm Pilot are valid requirements for some organizations.
In the medical field, for instance, a growing number of medical
practitioners have begun using PDAs to access training and performance
support information while visiting patients. These organizations
are willing to pay a premium for such a feature because it is a
key business requirement. For most organizations, though, good basic
LMS features are all that are required.
If your organization has limited funds for purchasing
an LMS, don't despair. There are surprisingly good products out
there for companies on a limited budget. Find out more about low-cost
options by downloading a complimentary executive summary of our
new report, Low-Cost Learning Management Systems: 17 Products
for Limited Budgets.
Watch an informative
pre-recorded Webinar on LMS trends
WEBINAR: NEW RESEARCH ON LMS PRODUCTS
Over the past year, LMS products began adding
exciting new features like analytics and more integrated virtual
classroom capabilities. In this free Webinar session that took place
on September 30th, 2004, Brandon Hall and Bryan Chapman share highlights
from new LMS research. Full of tips, tricks, and advice, this Webinar
can help you tackle the selection of an LMS for your organization
or just keep abreast of the new offerings in the LMS marketplace.
here to access past issues.
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