Shrinking LMS Implementation Fees Drive Market Expansion

As little as five years ago, it was common for average LMS implementation fees to exceed $100,000.  An LMS needed to be installed and then configured in either the vendor’s data center or at a client location.  IT played a time-intensive, authoritarian role in the selection, deployment and maintenance of the LMS.  Firewalls, server sizing, bandwidth, database preference, historical data migrations, customizations and integrations were complex and problematic.

A typical LMS implementation could last six-nine months and was more like off-roading than highway driving.  Unprepared buyers had huge expectations and vendors inevitably under delivered.  By the time the first learner ever hit the LMS, the honeymoon with the LMS vendor was long over.  Divorce was fiscally and politically out of the question.

LMS Implementation Fees in 2016

So how much does a modern LMS implementation/configuration cost?  We wanted to find out.  In our recent Talented Learning 2015-2016 LMS Vendor Survey (full report to be published in March) we asked 74 diverse vendors about their typical LMS implementation fees.   The chart below summarizes what we found:

None of the 74 vendors stated they have typical implementations over six-figures.  It is possible though to spend that much with more complex projects.   Surprisingly 26% of vendors have free implementations.  99% of vendors responded that their typical implementation/setup is under $50,000!  That’s truly an amazing market transformation in a relatively short timeframe.  Shrinking LMS implementation fees has opened up LMS to the masses.

The Cloud Redefines LMS Implementation

The cloud LMSs changed everything.  The cost and time required to configure an LMS is now a fraction of what it used to be.  A cloud LMS is already installed and implemented in the cloud.  When an organization buys or licenses an LMS they only need to configure their own, private, secure area of the LMS.

The LMS vendor is responsible for the servers, security patches, backups, disaster recovery, updates, upgrades, browser support – everything.  The terror of the technology has been tamed and the buyer IT role has been reduced from autocrat to strategic project adviser.

Additionally, vendors have productized common integrations and historical learning data migrations.  Integrations that used to take weeks and cost tens of thousands now can be activated instantly for free or near free.  Customizations are generally forbidden so buyers need to find one of the 650+ LMS vendors that meet their requirements.

Removing the prohibitive fiscal barrier of implementation has also led to a dramatic expansion of the LMS marketplace.  If buyers are not happy they can fairly easily and inexpensively take their LMS business elsewhere.  All of this has led to a nice equilibrium in the industry of satisfied buyers and sellers.  It’s a regular love fest out here.

Change Breeds Opportunity and Danger

With all the change comes new opportunities and dangers for buyers.  The good news is that there are many lower-priced options but with that comes the risk of over or under buying.  I’ve seen buyers have entry-level needs but pay top dollar for an unnecessary implementation.  I’ve seen the opposite where buyers with complex requirements think they can get by on a $10,000 assisted setup.  Neither scenario turns out well.

Before buying or even shopping for an LMS, it is imperative for a buying organization to define the level of configuration/implementation support they will need.  It is fool’s errand to review LMSs that do not provide the appropriate level of professional services and support.  Most LMS vendors list the type of services they provide on their website so a buying organization just needs to get internal agreement on what they want, need and can afford.

Defining LMS Implementation Requirements

Defining LMS professional services need is about asking the entire LMS selection team and stakeholder the right questions. Most organizations don’t know what they need until they get together and talk it through.  Here are some professional services questions to ask, answer and use to qualify potential LMS vendors:

• Do you have resources to support the LMS implementation and roll-out?  If so, what?  If not, what is the plan?
• Do you have an established project team and decision-making process for the many in process implementation and configuration questions/decisions?
• Do you want onsite implementation support — at least some of the time?
• Scope of unique audiences and number of users?  Global, employee, extended enterprise?
• Do you want to migrate users, completion and progress data and content from an existing LMS?
• What are the types/media of learning you currently manage?
• What integrations do you require?  eCommerce, HCM, ERP, SSO, AMS?
• Do you need help defining your LMS governance or overall strategy?
• Do you need ROI definition and measurement help?
• FDA CFR Part 11 or federal validation services?
• Mobile and eLearning content strategy or development services?
• Adoption marketing services?
• Administrative training requirements?
• Global service teams?
• Is there a compelling go-live event date that must be achieved?  What and why?

Conclusion

All of this translates into more organizations being able to afford an LMS and the rapid expansion of learning technology.  If an organization can start off for as little as free and prove a business case, asking for more money is a cinch.

Hundreds and hundreds of LMS vendors have flooded the market and all have different capabilities in the depth of professional services they can and do provide.  Making sure your LMS selection team is on the same page in regards to implementation/configuration needs will allow a buying organization to quickly disqualify many vendor options without the labor of investing a ton of time.

There is no sense evaluating or buying any vendor’s LMS at any price if it doesn’t provide the level of professional services required to make you successful.

For more analysis on this topic, see my second post in this series: “LMS Implementation Pricing — Take Two”

Thanks for reading!

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The Economics of LMS Replacement

Stuck with a learning management system that no longer meets your needs? Do you pay for annual maintenance and hosting, but haven’t upgraded in years, and rarely use tech support? Want to expand your learning program reach to customers, channel partners or others, but can’t afford the incremental licenses? Ready to move up to a new solution, but unsure about what it should cost? If any of these scenarios are familiar, this webinar is for you.

Join Talented Learning lead analyst and CEO, John Leh, as he shows you how to take charge of the LMS replacement process and lead your organization into the modern learning age. In this fast-paced, information packed session, you will learn how to:

•  Analyze what you’re currently spending (and why)
• Define what you need in a new LMS
• Outline the best license model for your intended use
• Develop realistic budget expectations
• Create a business case your stakeholders can support
• Find vendor intelligence you can trust

Replay this on-demand webinar now!

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