Total Cost of Ownership: An Affordable LMS

With the digital wave and the rise of eLearning as a solution for both corporate training and education, more and more businesses and institutions are looking to invest in a Learning Management System (LMS). However, as budgets get tighter, affordability in such systems has become a priority, especially for many small businesses and schools.

What most don’t realize is that implementing eLearning is more than just buying an LMS. Multiple processes and their costs also need to be considered before choosing an LMS service provider.

So what makes an LMS affordable, and how do you know what it will truly cost? This article covers everything you need to know about the total cost of LMS ownership as well as which expenses you need to take into account before investing.

How to Calculate the Total Cost of LMS Ownership

When determining the total cost of ownership of an LMS, it helps to plan ahead and understand the direct and indirect costs. While having a reliable LMS is a top priority, you also require a strategy to successfully manage it. A strategy needs, at the bare minimum, both a content and a deployment plan.

i) Content Strategy

An LMS is nothing without content. An effective strategy to create and build all the content within the LMS is a major step to ensuring a successful learning experience. Your content needs to be easy to understand, navigate, and access while also providing insightful information that accomplishes the goals of your employees or students. More importantly, your content strategy must be feasible within the system you’re choosing.

You need to decide whether you will handle your course creation internally or hire a content creation service. A service will provide you with experts that can help you create engaging and well-designed courses, which is helpful if you lack that expertise in your team. If handled internally, you need to ask yourself:

  • Who will be developing the courses?
  • Do they need to acquire new skills?
  • How long would they spend developing the content?

READ MORE ON CONTENT CREATION |Content Creativity: A Space to Play and Learn

ii) Deployment Strategy

What you need today might completely change in the future. To create a successful deployment strategy, you need clarity on what your company or institution will look like in the short and long term. Ask yourself: “How much do you plan to grow?”.

An LMS implementation that falls short can cost you in the long run, forcing you to re-design the implementation, and sometimes even find new services that fit with your current growth. An effective strategy must be scalable.

A scalable LMS means that the system architecture can deploy more resources to support heavier usage, if necessary. That way, users have the same experience no matter if they’re the first person logging in or the hundredth. As more people log in, it's going to self-scale and deploy more technology resources to support that concurrency.

Some questions you should be asking a prospective LMS vendor are: “What are their plans for the future?” and “What are you doing next that might benefit our business?”. You want to ensure that they’re able to grow with your deployment strategy. For example, Open LMS offers an open source LMS that enables you to still have all the features of a big LMS but in a smaller package that can change as your business grows.

Peripheral Expenses: 3 Hidden Costs of LMSs

In theory, an LMS will cost you a certain established amount of money per year. However, to obtain the real cost, you need to sum up the peripheral expenses. These are expenses that you would need to account for to run the service optimally and to ensure good results. Watch out for:

1) Employee Time

You shouldn’t buy a system where you need to hire 30 people to run it. An LMS should be able to manage itself, providing cost-effective solutions to handle the security, privacy, and updates. A good, reliable LMS vendor won’t require you to hire people to maintain the system. However, at the bare minimum, you need a project manager dedicated to looking after the implementation. That should be added to the yearly cost of the system.

In the same manner, you need to consider how much of your employee time will be spent on training, or how much time your teachers will now use to operate the LMS. That’s time that to schools and companies costs money, and it’s often overlooked from the total cost of an LMS.

2) Marketing Strategy

It's also important to have a marketing strategy so you don't suddenly turn the LMS on and hope everyone understands what it’s for. You need an internal strategy to let the team know (whether that is corporate teams or teachers) that a system is coming, that it has a name, and that they’ll get all the information about how to leverage it. It’s at this time you make employees aware of what the LMS is and how it will benefit them, their teams, and the organization as a whole.

3) Support

When implementing an LMS, users will always have questions to ask and issues to troubleshoot, from knowing how to use the system to how to retrieve passwords. If your internal teams need to provide all that support, that’s time that also needs to be taken into account.

Usually, internal teams already have their hands full with their respective activities. To avoid spending more on providing support, make sure that the LMS vendor offers a well-built support system, with training sessions and documentation to help the users. You want to have as little workforce disruption as possible, but also as little technical disruption as possible.

Open LMS offers a comprehensive onboarding program that can take an individual or a number of individuals through an extensive learning process. To complement that training, we also have a very active online community. Technology always benefits from community, and it’s a great way to resolve issues.

What Makes an LMS Affordable?

Affordability varies from case to case. “Affordable” doesn’t mean the same for a 50-employee company and a 3000-student school, for example. Pricing always plays an important role when choosing an LMS, but also think about what you need and what your goals are. When you're speaking with a consultant or a salesperson, tell them about your organization and exactly what the use case is.

In reality, affordability doesn’t have much to do with what it costs, but rather the value it actually adds. It isn’t about a price tag; it’s about the return on investment. Some questions you may ask yourself:

  • What did the system do to make my people better and my organization safer?
  • How much have the enrollment rates at my institutions increased?
  • How are students performing?

Businesses or institutions buying a learning management system should shape their thinking along these lines.

If you’re currently looking for an affordable LMS, a good rule of thumb is not to put all of your trust in demos. A demo will always paint a perfect picture in the perfect light, saying only the amazing things, but not really tailored to your use case. Quite often, you won’t even see the product. You want to approach demos with specific questions about your needs and how the LMS will fulfil them.

Affordability for Higher Education Institutions

When thinking about the cost of a higher ed LMS, first we need to understand student expectations. With higher education, an LMS has a bigger user base and is highly utilized. Students log in every day, download or upload assignments, check their progress, and see their test results, among other things. They want to be able to access the system from their mobile device, to easily find assignments in an intuitive environment. They need to find materials quickly and get constant reminders of what’s due.

Also, getting the best possible student outcomes is important to establish ROI. Great schools inspire and shape great people because of great curriculums, great systems, and great teachers. Giving teachers the right tools to perform their job well and giving students the best technology to enable them to learn, fosters education that will lead to better outcomes for everyone.

Affordability for Corporate

Measuring the return on investment from an LMS in a corporate setting comes down to setting clear goals from the beginning. For example, you could measure how much sales increase after creating online courses to improve the effectiveness of the salesforce. Likewise, you can measure how much accidents and incidents decrease after rolling out ongoing safety training to your workforce. After comparing results against costs, you’ll know how affordable your LMS implementation is.

Another important point specific to corporate environments is around timely and organized rollout strategies. Contrary to an educational institution, you can't have the entire workforce doing a course at the same time because employees have work to do.

What kind of training does your organization need? Is it product training, onboarding, technical training, or something else? All these need to be scheduled into the flow of work. We've seen organizations break it up by surnames, geography, or department, for example. Having an effective rollout strategy is important, so it's not disruptive to your workforce.

At Open LMS, we build affordable and flexible learning cloud-based technology that can adapt to your needs, no matter how big or small. Contact us if you want to know more. We’re more than happy to help!

Dean Saunders
About the author

Dean Saunders

VP of Product Development at Open LMS

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Open LMS provides world-class LMS solutions that empower organizations to meet education and workplace learning needs .