Here is the press release on the article: SyberWorks Media Center Presents a New Article – "Hosted (SaaS) Vs. Licensed Cost Analysis of a Learning Management System/Learning Content Management System (LMS/LCMS)"
The article, Hosted (SaaS) Vs. Licensed Cost Analysis of a Learning Management System/Learning Content Management System (LMS/LCMS) can be found in the SyberWorks Media Center.
I have also posted it below:
Hosted (SaaS) Vs. Licensed Cost Analysis of a Learning Management System/Learning Content Management System (LMS/LCMS)
There are two ways a company may purchase a learning management system/learning content management
system (LMS/LCMS). They can license
the software and host it on their own servers internally, or they can purchase
a hosted service where the software is hosted on the vendor’s servers.
The hosted vendor service option is also called SaaS. SaaS (vendor hosted applications) stands for
Software as a Service. Vendor hosted
applications/SaaS have become a very popular option in the last ten years. There
are benefits to both types of configurations and it ultimately depends on the
specific business case.
Licensing an LMS/LCMS
Licensing Learning Management System/Learning Content Management
System software allows companies to have full control over their
installation and system configuration.
They are able to internally monitor usage. In most but not all cases, it
ends up being the most cost effective in the long run (over 5 years). Generally, the disadvantages of licensing are
higher upfront costs because of the purchase of the software itself,
installation, set-up and configuration. It
also can take longer to deploy the system and IT employees may need training. Organizations
must also pay ongoing personnel costs and training for internal operation and
maintenance of the software.
Hosting an LMS/LCMS
The advantages of a Hosted Learning Management System/Learning Content Management
System model are usually lower upfront costs, no installation required and
shorter deployment times. There are also
no ongoing costs associated with employing technicians (IT personnel) to
maintain the product. Software upgrades
and fixes are done automatically by the vendor. The company has the option to
ramp up quickly or reduce usage if their business expands or contracts. In this
scenario, depending upon the usage plan, companies can sometimes pay as they
use the service (pay as they go). Generally, the disadvantages to hosting are
the company has less control over the LMS/LCMS and maybe less-cost effective in the long run (over 5 years).
Running the Numbers
So you say hosted (SaaS) is the way to go. But not so fast, you really
need to look at the costs spread over a five year period. Heck, you may even impress the guys in
accounting! Below is a sample cost worksheet:
Sample Hosted vs. License LMS/LCMS Worksheet
|
Licensing versus Hosting |
Licensing |
Hosting |
|
Number of Users |
1,000 |
1,000 |
|
LMS Software and Services |
|
|
|
Base Product |
$X,XXX |
Included |
|
(Add-on Functionality, Etc.) |
|
|
|
Module A |
$X,XXX |
XXXXX |
|
Module B |
$X,XXX |
Included |
|
Module C |
$X,XXX |
Included |
|
Total LMS Software Cost |
$X,XXX |
$X,XXX |
|
Professional Services |
|
|
|
Campus Setup |
$X,XXX |
$X,XXX |
|
Branding |
$X,XXX |
$X,XXX |
|
Training Data Migration |
$X,XXX |
$X,XXX |
|
HRIS Interface (one-way/two-
way/multiple batch updates) |
$X,XXX |
$X,XXX |
|
Single Sign-on |
$X,XXX |
$X,XXX |
|
Active Directory Interface |
$X,XXX |
$X,XXX |
|
Own Web Site |
N/A |
$X,XXX |
|
Training and/or Consulting |
$X,XXX |
$X,XXX |
|
Total Professional Services Costs |
$X,XXX |
$X,XXX |
|
Hosting Server Hardware &
Software Cost |
|
|
|
Server Hardware |
$X,XXX |
Included |
|
Server Software |
$X,XXX |
Included |
|
Total Server HW/SW |
$X,XXX |
$
- |
|
Total One Time Costs |
$X,XXX |
$X,XXX |
|
Annual Reoccurring Costs: |
|
|
|
Information Technology Resources
(Partial Head Count) |
$X,XXX |
Included |
|
Bandwidth/Network Cost |
$X,XXX |
Included |
|
Separate Database |
|
$X,XXX |
|
Support, Software Upgrades and
Maintenance |
$X,XXX |
Included |
|
Hosting Usage Fees |
N/A |
$X,XXX |
|
Total Reoccurring Costs |
$X,XXX |
X,XXX |
|
|
|
|
|
5 Year Cost |
|
|
|
Year 1 |
$X,XXX |
$X,XXX |
|
Year 2 |
$X,XXX |
$X,XXX |
|
Year 3 |
$X,XXX |
$X,XXX |
|
Year 4 |
$X,XXX |
$X,XXX |
|
Year 5 |
$X,XXX |
$X,XXX |
|
Total 5 Year Cost |
$X,XXX |
$X,XXX |
|
Cost per User per Year |
$XX.XX |
SXX.XX |
|
|
|
|
The worksheet above assumes that some of the add-on modules are included
in the hosted application, but some may not.
The worksheet also accounts for personnel costs. It is by no means
exhaustive and exact. It needs to be
crafted to reflect your company’s requirements. It also assumes that
maintenance and support is included in the hosted arrangement. Keep in mind that in the hosted scenario, there
may be additional charges related to bandwidth usage, especially if your
courses are large, graphic intensive and need to be streamed. Finally, it’s important to compare costs on a
per-user basis.
Typically the decision to license a Learning Management System/Learning Content Management System
versus using a hosting service is made not a cost basis but due to other factors
such as isolated networks (from the internet) or for mandated security policies
(DOD). Generally, costs over a 5 year
period are comparable on a total cost per-user basis.
Good luck!
Bob Goldschneider has over 25 years experience in corporate training and educational services. He has served as Director of Educational Services and Director of North American Sales and Service for the Open Software Foundation. He built their Educational Services division from the ground up into a multi-million dollar business. He also served as Director of Educational Services at Apollo Computer and Training Development Manager for Wang Laboratories, where he managed a staff of over 50 instructors, course developers, video producers, and graphic designers.
About SyberWorks
SyberWorks, Inc. (http://www.syberworks.com)
is a leader in providing Learning Management Systems and custom e-Learning
Solutions for Fortune 1000 corporations, higher education, and other
organizations. Located in Waltham, Massachusetts, the company serves
the multi-billion-dollar e-Learning market.
Since 1995, SyberWorks has developed and delivered unique and economical
solutions for creating, managing, measuring, and improving e-Learning programs
at companies and organizations in theUnited
States
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