Friday, July 11, 2008

Cost justiyfing an LMS

The costs of LMSs are typically much higher than advertised. A rule of thumb is 1x for the hardware, 2x for the software, and 3x for installation services (and that doesn't include content conversion.) That is, if you paid $50K for the hardware on which you ran the software, you would need to pay $100K for the software, and then $200K additional for installation, configuration, and running of the software.

With LMSs, the typical installation process takes 2-3 years. They need to merge their database system with your company's database. This requires custom consulting services since the database designs are usually quite different. This cost needs to be factored in. However, if you want to use the LMS as an independent system (that is, every time someone gets hired or leaves your company, you have to record this fact on your LMS rather than inheriting it from the enterprise employee system), then you can reduce the installation process to a 1-2 month period.

When choosing an LMS, it is important to define your needs, rather than deciding what LMS-vendor-provided-features you'd like. For example, the majority of LMSs will only store a single score and a single pass/fail status for each student/course. So, after you spend many 100's of thousands of dollars, you still won't be able to use the LMS to carry out a survey or see why nobody got higher than 90% on a particular course (was it a bad question? Did you not cover the information in your course?). Before investing in a full LMS, I recommend starting off with a testing assessment system that has full reporting capabilities. For a few thousand dollars you will get a much better idea of your needs.

And then, there is the cost of converting courseware. I have seen no cases where off-the-shelf courseware (e.g. MS-Office Basics, Accounting Basics, etc.) are used at the levels envisioned. Typical usage that I have seen is about 15% of what was desired. Most training content is custom to the company. So, you should become familiar with course creation. In doing so, I recommend taking a course on web instructional design (or visit There are many factors about the web experience that need to be taken into account in order to get return-on-investment for your courses. Simply converting PowerPoint and adding an audio track will be very easy and inviting to the course authors, however, will be a repellent to the company's employees. When viewing web courses, the more control you give the user, the more efficient they will be (in zeroing in on the content they need), the higher their satisfaction, and the higher the chance that you will earn back the cost of your investment. If they have to sit through 1 hour of an automated slide show, of which they already know 90% of the content, you have just wasted 54 minutes of their time, and learners will not forget this the next time you offer them eLearning.

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