LMS = Losing My Smile

[Association LMS Vendors, Take Note!]

Every time I see a report that shows what an organization can expect to spend on an LMS (learning management system), I lose my smile. Worse, I want to hang my head and weep.

In her “Building the Business Case for e-Learning,” published by the eLearning Guild, Temple Smolen writes, “Most off-the-shelf LMS products require some customization. The costs can vary widely for a LMS with customization, but under $100,000 is a reasonable starting assumption for most organizations with less than 2,000 employees.”

Ikes! Those prices!

But wait — there’s more!!

Notice the word “employees”?

It’s fair to say that most LMS providers are still oriented to delivering learning modules via an LMS to employees — individuals within the same corporation. The corporate business rules often allow LMS costs to be leveraged across various departments in ways that associations cannot model.

For now, let’s ask the companies providing instructor-led options to stand aside (companies such as Blackboard, CommPartners, etc.) and focus on LMS systems that facilitate asynchronous, online access to uploaded courses and tutorials.

As colleagues of mine know, I’ve been advocating for an association-specific alternative for a long time. We need something that reaches past our staff offices so our statewide, national, and international members can easily and affordably access.

Doesn’t have to be fancy, but it does have to work.

Did I mention the need for affordability, too?

It’s funny how what seems like a few dollars to many LMS providers adds up a lot faster on our side of the table.

Let’s take the data Jeff Cobb and Celisa Steele at Tagoras uncovered in their Association Learning Management Systems report (October 2009), which showed that for small associations, the average start-up cost for an LMS was:

 $50/user/year (at the low end)

Sounds reasonable.

Until you do the math:

$50 x 1000 members (we assume 1/2 our members might access?) = $50,000/year!!

Double Ikes!!

And don’t tell me to add that $50 onto the registration fee.

Because that $50 will be on top of marketing costs… and any revision costs we’ve set aside in case there’s a boo-boo we need to fix or an update we need to add… or any other items we need to include in our overhead (pay extra for e-mail service? how about registration processing fees through an outsource agency?)…

It’s not like we can charge that much money for an online course in the first place (though some organizations do — you know who you are; that’s why I haven’t signed up for your online courses).

Ready? Let’s walk through a one-year budget for one online course (after development).

Cost of doing online business (marketing, updates, etc.) = $1200/year
Hosting fee/LMS fee = $50,000

Total = $51,200

Now let’s say I think my members would pay — AT MOST — $200 for a course. That means I need 256 learners EACH YEAR just to BREAK EVEN.

But that’s not all!!

According to the Tagoras report, the average cost per learner goes down only slightly over a three-year average, so you can’t expect much savings over time.

This is too bad, as associations are generally known as loyal clients and willing references to other associations seeking services and products.

Something that will bring my smile back is a business model for LMSs that suits small associations and non-profits, not just large organizations.

One company is listening — and is willing to work with associations to forge a partnership that will help alleviate costs while providing quality LMS service.

More about this company and its program for associations and non-profits in the next entry.