Selecting an On-Demand LMS

How to evaluate and select a SaaS (Software as a Service) LMS provider

Josh Bersin
September, 2007
Copyright © 2007 Bersin & Associates. All rights reserved.

About Us
Who We Are

Industry’s primary research firm focused on What Works® in enterprise learning and talent management

Research Areas
• • • • • • •

Planning & Strategy Content Development Enterprise Learning Learning Technology Performance Management Talent Management HR and Talent Systems

Offerings
• • • • •

In-Depth Studies and Reports Research Memberships Workshops Benchmarking Advisory Consulting

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Page 2

Agenda
The challenge of enterprise learning technology Defining an “integrated learning technology solution” Emerging role of talent management The SaaS Model
• What it is • Cost of ownership • How to select the right solution

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Page 3

Adoption of Learning Technology
LMS

60% 57% 40% 39% 26% 25% 9%
© Bersin & Associates 2007 Corporate Learning Factbook www.bersin.com/factbook

Virtual Classroom

Rapid E-Learning Tool Application Simulation Tools EPSS or KM Tool

LCMS

Podcasting

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Page 4

LMS Market Evolution
Talent Management Talent Management

Performance Management Performance Management Skills and Competencies Skills and Competencies Where are you? Where are you?

Enterprise Learning Application Enterprise Learning Application
Consolidated Data and Analytics Consolidated Data and Analytics Integrated with Other Learning Components Integrated with Other Learning Components ERP, HR, and application integration ERP, HR, and application integration

E-Learning Platform E-Learning Platform
Make E-Learning Possible Make E-Learning Possible Make E-Learning Easy Make E-Learning Easy

Automate the Process of Instructor-Led Training Automate the Process of Instructor-Led Training

Training Management Systems: Training Management Systems:

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Page 5

Why people buy LMS systems
47% 41% 37% 35%
Strategic Strategic Efficiency Efficiency

34% 26%

Biggest Drivers: Biggest Drivers: Administration Administration E-Learning E-Learning

20%

Manage Training Adm inistration

Manage and Deploy ELearning

Consolidate Training Inform ation

Align Training Processes

Support Talent Managem ent

Reduce Training Costs

Meet Regulatory Com pliance

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Page 6

Benefits of LMS System
46% 38% 25%
Biggest Benefits: Biggest Benefits: Information and Information and Content Distribution Content Distribution Strategic Strategic Efficiency Efficiency

23% 11% 6%

Tracking and Reporting

Facilitate ELearning strategy

Manage Improve Training Meet Regulatory Reduce Training Enterprise-wide Efficiency Compliance Costs Programs
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Page 7

Challenges of Implementation
31% 24% 21%
Biggest Challenge: Biggest Challenge: Customization Customization

19% 14% 10%

Customization to meet Business Needs

Content Integration

Integration with Ongoing HR IS Administration

IT Support

System Performance

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Page 8

LMS “Dis” Satisfaction:
The LMS business is difficult - lots of work still to do
Excellent Rating, 10.00 Scalability, 7.10 Product will continue, 7.00 Content Integration, 6.80 Vendor Service, 6.30 Systems Integration, 6.20 Testing/Assessment, 6.10 Ease of Upgrade, 6.00 Ease of Customization, 5.70 Out of Box Functionality, 5.50 Reporting, 5.10
Very Disappointed Not Happy Somewhat Happy Very Happy

© Bersin & Associates: LMS Customer Satisfaction 2007, available at www.bersin.com/lmssat

n=500+
Page 9

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LMS’s ability to give you the information you need
Good, 36%

Excellent, 3%

Poor, 22% Fair, 39%

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Page 10

Data Standards
Standards Documented and enforced 49%

Average 2.9
4= fully enforced 1=none Standards are a challenge

Standards documented and somewhat enforced 31% No real standards 9%

Some standards but not documented 11%

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Page 11

The Content Integration Problem
61% of LMS Users Cite 61% of LMS Users Cite Content Integration as a Content Integration as a Problem Problem
Some Problems, 42%

Many Problems, 29% No Problems, 18% NA, 8%
Study conducted in May 2004, 10,000+ Surveys

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Page 12

The LMS Ecosystem
Call Center Course Call Center Course

LMS “Learning Integration Platform”

Internally Developed Content

Assessment and Competencies

HR and Other Corporate Systems

3rd Party Content

Leadership Training Course

Performance Mgt Training Course

Skillsoft, Others

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Page 13

Four Stages of E-Learning
Where are you?

Stage 4: On Demand Stage 4: Support, Search On Demand LCMS, Performance
LCMS, Performance Support, Search LCMS, Performance Support, Search

Stage 3: Integrate & Align Stage 3: competency-based, performance management Integrate & Align LMS, governance, Stage 2: Expand Stage 2: Expand
Blended programs, rapid ee-learning,outsource sophistocated content Blended programs, rapid -learning, outsource sophistocated content

LMS, governance, competency-based, performance management LMS, governance, competency-based, performance management

Stage 1: Get Started Stage 1: Buy off the shelf – one size fits all Get Started Get content online:

Get content online: Buy off the shelf ––one size fits all Get content online: Buy off the shelf one size fits all
© Bersin & Associates The Four Stages of E-Learning www.bersin.com/stages

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Page 14

E-Learning Metamorphosis
Collaboration Systems Blended Learning Communities of Practice Performance Support Online Video

Webcasting

LMS LCMS

Application Simulations On Demand RSS Podcast

Rapid E-learning

Assessment

Courseware
Text, Images, and Audio
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Page 15

Innovative Approaches to Learning
Supports the Talent Development Process and Appeals to GenX Learners

Expert
Self Assessment EPSS Tools

Learning on Demand
Coaching Programs Communities of Practice Career Curriculum

Re te

Training Event

nt io

n

is L

Job Aids

os

t

Novice

Traditional Training
Time
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Integration with Performance Support
Courses Online Help

LCMS

Help System
Page 17

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Enterprise Context for the LMS

Enterprise Portal
Documents Job Aids Price Lists Videos Audios Powerpoint PDFs Word Excel Goals Perf Plans Organization Assessments Benefits Compensation HRMS

Courses Webcasts Assessments Events Podcasts Presentations

LMS

Other Data

HR Apps
Page 18

Copyright © 2007 Bersin & Associates. All rights reserved.

Enterprise Context for the LMS

Enterprise Portal
Documents Job Aids Price Lists Videos Audios Powerpoint PDFs Word Excel Goals Perf Plans Organization Assessments Benefits Compensation HRMS

Courses Webcasts Assessments Events Podcasts Presentations

LMS

Other Data

HR Apps
Page 19

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Search is a critical element

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Page 20

Directions of the LMS Market
Increase in Enterprise Learning Capabilities
Tools, LCMS, Content Integration, Analytics, Domain mgt, Collaboration Systems, Publishing, Performance Support Search, Web-services, Portals, Self-publishing, Communities of practice, blogs, wikis, online video…

Increase in Talent Management Capabilities
Employee profiles, job descriptions, performance management, succession planning, HIPO selection, manager/employee portals, assessment, recruiting, applicant tracking, internal recruiting, compensation, workforce analysis, career planning, candidate selection, competency analysis, skills-gap analysis, integration or building of HRMS,interface to external data sources

Today’s LMS Systems

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Page 21

Agenda
The challenge of enterprise learning technology Defining an “integrated learning technology solution” Emerging role of talent management The SaaS Model
• What it is • Cost of ownership • How to select the right solution

Copyright © 2007 Bersin & Associates. All rights reserved.

Page 22

Enterprise Learning Technology
Portals: Employee | Manager | Customer | Partner Collaboration (Webcast, Discussion, Blog, Wiki) Content Development Tools
Learning Content Learning Content

Career Development Succession Planning

Content Management (LCMS)
Content Interfaces

Management

Programs, Courses, Objects, Assessments Prices, Fees, Student Hours, Credits, Resources, Certifications, Scores, Completions, Ratings

Goals, Objectives, Performance Plans, Development Plans, Assessments Reviews, Ratings, Rankings

Competency Requirements, Organizational Competencies, Skills Organizational Data (Relationships, Hierarchy, Geography) Compensation Data (Current, planned, short/long term) Employee Profile Data (Demographics, History)

Data Management - ERP
Job and Role Descriptions, Open Requisitions

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Page 23

Data

Application

Performance Support 360 Assessment Learning Talent Management Management Performance LMS

Tools

Reporting

Enterprise Learning Technology
Portals: Employee | Manager | Customer | Partner Collaboration (Webcast, Discussion, Blog, Wiki) Content Development Tools
Learning Content Learning Content

Career Development Succession Planning 360 Assessment

Content Management (LCMS)
Content Interfaces

Performance Support

LMS
Programs, Courses, Objects, Assessments Prices, Fees, Student Hours, Credits, Resources, Certifications, Scores, Completions, Ratings

Performance Management
Goals, Objectives, Performance Plans, Development Plans, Assessments Reviews, Ratings, Rankings

Competency Requirements, Organizational Competencies, Skills Organizational Data (Relationships, Hierarchy, Geography) Compensation Data (Current, planned, short/long term) Employee Profile Data (Demographics, History)

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Page 24

Data

Job and Role Descriptions, Open Requisitions

Application

Tools

Reporting

Enterprise Learning Technology
Portals: Employee | Manager | Customer | Partner Collaboration (Webcast, Discussion, Blog, Wiki) Content Development Tools
Learning Content Learning Content

Career Development Succession Planning 360 Assessment

Content Management (LCMS)
Content Interfaces

Performance Support

LMS
Programs, Courses, Objects, Assessments Prices, Fees, Student Hours, Credits, Resources, Certifications, Scores, Completions, Ratings

Performance Management
Goals, Objectives, Performance Plans, Development Plans, Assessments Reviews, Ratings, Rankings

Competency Requirements, Organizational Competencies, Skills Organizational Data (Relationships, Hierarchy, Geography) Compensation Data (Current, planned, short/long term) Employee Profile Data (Demographics, History)

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Page 25

Data

Job and Role Descriptions, Open Requisitions

Application

Tools

Reporting

Types of Integration to Consider
Portals: Employee | Manager | Customer | Partner Collaboration (Webcast, Discussion, Blog, Wiki) Content Development Tools
Learning Content Learning Content

Career Development Succession Planning Sourcing & Recruiting

Content Management (LCMS)
Content Interfaces

Performance Support

LMS
Programs, Courses, Objects, Assessments Prices, Fees, Student Hours, Credits, Resources, Certifications, Scores, Completions, Ratings

Performance Management
Goals, Objectives, Performance Plans, Development Plans, Assessments Reviews, Ratings, Rankings

Competency Requirements, Organizational Competencies, Skills Organizational Data (Relationships, Hierarchy, Geography) Compensation Data (Current, planned, short/long term) Employee Profile Data (Demographics, History)

Data Management - ERP
Job and Role Descriptions, Open Requisitions

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Page 26

Data

Application

Tools

Reporting

Agenda
The challenge of enterprise learning technology Defining an “integrated learning technology solution” Emerging role of talent management The SaaS Model
• What it is • Cost of ownership • How to select the right solution

Copyright © 2007 Bersin & Associates. All rights reserved.

Page 27

Global Talent Shortage
Top Jobs which are Difficult to Fill, Ranked in Order
World
Sales Representatives Engineers Technicians (production/opns) Production Operators Skilled Trades (carpenter/ weld) IT Staff 40% employers have difficulty filling positions 32,975 respondents

USA
Sales Representatives Engineers Nurses Technicians (production/opns) Accountants Administrative Assistants

UK
Sales Representatives Administrative Assistants Skilled Trades (fitter, plumber) Engineers Drivers Chefs/Cooks

Germany
Production Operators Sales Representatives Engineers Management / Executives Restaurants and Hotel Staff Administrative Assistants

India
Sales Representatives IT Staff Accountants Marketing and PR Executives Engineers / Technical Mgrs. IT Managers / Project Mgrs

Japan
Sales Representatives Engineers Administrative Assistants IT Staff Production Operators Accountants

China
Production Operators Sales Representatives Technicians (production/opns) Management / Executives Engineers Machinists

44%
1275

42%
2122

53%
1004

13%
4382

58%
892

24%
2692

Manpower Inc. 2006 Talent Shortage Survey 33,000 employers

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Page 28

Global Shortage of Technical Skills and Development Capabilities
Capability Excellence
Recruit and develop talent Provide Career Development Throughout Organization Define, measure and reward collaboration Provide appropriate training for managers and executives
PWC, October 2006, n=153

Overall
15% 14%

US
17% 14%

Europe
10% 18%

Asia Pac
17% 11%

11%

18%

10%

7%

8%

9%

8%

6%

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Page 29

Workforce Demographics
Succession Planning Identification of Key Leaders Management & Leadership Development Critical Talent Management Capturing and Sharing Knowledge Mentoring

Recruiting New Hire Training Onboarding

At-Risk Industries
Government Energy Oil & Gas Telecommunications Manufacturing

25-34
© Bersin & Associates

35-44

45-54

55-64

65+
Page 30

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Evolution of the HR Function
Talent Management Strategic HR
Recruiting L&D Org Design Total Compensation Communications Business Partner
Recruiting, ATS HR Portals Compensation Learning Management

Competency Management Performance Management Succession Planning Business Integration
Performance Management Succession Planning Competency Management Pay for Performance Leadership Development

Personnel Department
Payroll Benefits Business Function
Payroll Systems

© Bersin & Associates: Performance Management 2006: Market Analysis, Trends, Best Practices and Case studies, available at www.bersin.com/perfmgt Copyright © 2007 Bersin & Associates. All rights reserved.
Page 31

Traditional HR Processes and Systems
Slow response to changing business needs

Silos in HR
Recruiting – Applicant Tracking Performance Management Leadership Development

• • • • •

Do not clearly understand where current critical talent gaps exist Lack of disciplined workforce planning to drive future talent needs and capabilities Hiring strategy and development planning not in sync No clear picture of future “talent profile” Leadership pipeline in jeopardy

Disconnected and Cumbersome
• • •

Learning & Development

Compensation - Benefits

Succession Planning

Data and processes not integrated Talent not shared across businesses/units Learning plans not linked to assessments and skills gaps in current talent pool

Workforce Planning

Not responsive to employee demands
• • •

Employees want career development Millenia generation expects growth and flexibility Defined career paths and competencies not clear and consistent

Administratively intensive
• • •

Data entry is repetitive High volume of manual work to complete HR review processes Difficult to obtain executive-level talent information

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Page 32

Integrated Talent Management?
Sourcing & Recruiting

2

3

Performance management

1
Talent Strategy & Planning

HR Systems & Metrics

4
Learning & Development

Competency Management

7
Compensation

5
Succession planning

6
Leadership Development
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Page 33

High Impact Talent Management Framework
Comp Base Comp Planning Plans

Talent Strategy & Planning
Business Strategy Critical Talent Strategy Target Metrics & Measurement Process Governance Systems Strategy

HR Systems & Metrics

Sourcing & Recruiting
Sourcing Candidate Pools Assessment Employer Brand Recruiting Selection

Performance Management
Goal Setting Cascading Goals Self-Assessment Manager Assessment 360 Assessment Development Planning Competency Assessment

Succession Planning
Calibration Meetings Talent Reviews HIPO Identification Career Planning Talent Migration Plan

Leadership Development
Formal Programs Stretch Assignments Executive Education Coaching Mentoring Job Rotation Assessment Evaluation

Compensation
Pay for Performance

Competency Management
Onboarding Role-based Curricula Content Development & Delivery

Job Profiles

Corporate Values

Leadership Competencies

Functional Competencies

Management Training Operational Training

Leadership Curricula E-Learning Strategy

Coaching/Mentoring Programs Developmental Assignments Certification Programs

Short and Long Term Incentive

Learning & Development

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Page 34

A New Role for Learning
Performance-Driven Learning
Drivers:

Talent-Driven Learning
Talent and leadership gaps, critical skills shortages, engagement and culture Develop organizational capabilities driven by competencies, not performance Multi-tier leadership development New-hire onboarding programs Aligned to all job roles in a job function Multiple quarters to years Enterprise or Divisional-wide Performance management, recruiting, succession planning Resource allocation, program design, job alignment, manager adoption Filling and solving talent gaps (ie. shortages, recruiting goals)

Business performance issues in operational units and functions Develop individual capabilities and fill performance gaps Sales Training, Customer Service Training, Field service certification Aligned by job within function Months or even shorter Functional Product launches, new service offerings, geographic expansion Performance consulting, program design, manager engagement Solving business problems: sales, service, quality, turnaround

Goal: Examples:

Organization: Timeline Complexity Integrated with:

Challenges:

How to measure success

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Page 35

Example: Wal-Mart
Situation: Store hiring and personnel processes developed around goal of reducing costs Problem: Millions of dollars of legal problems, turnover, and inconsistent development of store managers Solution: Integrated HR talentdriven learning curriculum, with certification, for all 4,077 HR professionals Developing competency model for 1.8 million people, behavioral assessment tools, 180 job families SVP HR HR VP HR Director HR Manager HR Coordinator 5 Divisions

29 Regions

382 Markets

3740 Stores

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Page 36

Talent-Driven Learning Programs
The Six Key Elements

1. Designed around clearly defined competency gaps 2. Require a complete curricula to develop people through the leadership pipeline 3. Aligned with performance and development planning 4. Fit into a career development program 5. Use techniques which attract millenia and Generation X workers
Competency Management
Onboarding Role-based Curricula Content Development & Delivery Job Profiles Corporate Values Leadership Competencies Functional Competencies

Management Training Operational Training

Leadership Curricula E-Learning Strategy

Coaching/Mentoring Programs Developmental Assignments Certification Programs

Learning & Development

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Page 37

History of HR Systems
Hiring Recruiting E-Learning Compensation Performance Talent Integrated Solutions

Market Growth - Adoption

Learning Management Recruiting Sourcing Applicant Tracking HRMS Benefits Administration

LCMS

Integrated Talent Management??

Performance Management Succession Planning Competency Mgt

Compensation

2000

2003

2006

2009
Page 38

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HR Software Markets
Category LMS Performance Management Recruiting HRMS Compensation Core Functionality
Manage all aspects of training, scheduling, compliance, e-learning, content management, learning paths, customer training, e-commerce, collaboration, reporting Goals, performance plans, appraisals, assessments, competency assessments, ratings, rankings, development plans, succession planning Applicant tracking, resume database, workflow management, source analysis, career portals, hiring metrics, recruiter portals, manager portals Employee data and history, job profiles, corporate hierarchy, compensation history, key training, language, and employee profiles Compensation plans, short term plans, long term plans, incentives, budgets, interface with sales and financial systems

Market Maturity & Growth
Middle Majority Fast Growth Early Majority Very Fast Growth Majority Slowing & Rebuilding Late Majority Stable Early Adopters Slow Growth

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Page 39

The Prevailing Wisdom
LMS Performance Management Recruiting HRMS Compensation

Talent Management Suite

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Page 40

Evolution of Learning Technology
Continued Growth and Expansion Even Faster Growth and Expansion

On-Demand
Tools LCMS Content
Skills

Performance Collaboration Support

Competencies

Succession Planning

Learning Management Systems

Learning Paths

Performance Management Systems
Development Plans

Comp

The Training Organization

The HR Organization

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Page 41

Some Facts to Consider
The market for ITM suites is currently less than 10% than the total market for LMS systems alone Fewer than 20% of ITM suite vendor customers have more than one application in production Oracle and SAP, who have 10X the resources of the suite vendors, have yet to deliver a total suite solution Each of the independent HR application areas is undergoing continuous expansion in functionality Organizations do not implement each of these solutions at one point in time, and implementations take 2-3 years Web-services APIs now enable enterprise applications to share data, workflow, and portals very easily

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Page 42

A few other facts to consider
What is the business driver for your learning technology?
• Compliance initiatives? • Customer or partner training? • Talent-driven learning programs? • Adoption of e-learning? • Consolidated view of learning? • Efficient management of enterprise training? • All of the above?

Would you be willing to sacrifice any of this functionality for the benefit of an “integrated solution?”

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Page 43

Agenda
The challenge of enterprise learning technology Defining an “integrated learning technology solution” Emerging role of talent management The SaaS Model
• What it is • Cost of ownership • How to select the right solution

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Page 44

Three Models for Enterprise Software
Model Licensed Where is Software? Installed and operated in your organization. Licensing Model You purchase the software and pay 18-22% per year for support and service You may purchase the software or rent it, and a third party charges you to operate it. You “rent” the software and pay an annual fee for software availability. Tenancy and Architecture Software is installed on your servers, using your database, and can be integrated with your internal systems. Software is installed on a third party company’s servers, using their networking to provide access, with a dedicated database for you. The software is installed on the LMS vendors’ servers and shares database and other resources with other clients.

Hosted “SingleTenant”

Installed and operated in a third party location.

On-Demand SaaS “MultiTenant”

Installed and operated by the LMS vendor.

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Page 45

How the Models Differ
Model Licensed Upgrades and Fixes You are responsible for patches and fixes, and likely will install when you have time. The hosting vendor installs these patches and upgrades whenever you are ready for them. The LMS vendor installs these patches and upgrades transparently to you, whenever they want to. Cost Considerations You must purchase the software as a capital investment and budget for implementation, operations, fixes, and upgrades. You typically purchase the software and pay an annual fee for implementation, operations, fixes, and upgrades. All your fees are monthly or annual and the LMS vendor takes on any cost of hardware, database, fixes, and other service. $ Model You own the software and it is yours to maintain. You own the software but someone else maintains it and operates it. The LMS vendor provides it to you as a service.

Hosted “SingleTenant”

On-Demand SaaS “MultiTenant”

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Cost of Ownership - Licensed
Cost model follows cost of any capital purchase (buy)
Annual Costs Initial Initial Implementation Implementation
System purchase System purchase Implementation Implementation

Enterprise LMS Licensed

Systems Integration Content integration Content integration Training Training Change Management Change Management Custom Report Generation Custom Report Generation Customizations Customizations

Integration Integration Systems Integration

System System Upgrade Upgrade

Time
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Page 47

Cost of Ownership - Hosted
Cost follows model of capital acquisition by a leasing agent (lease)
Annual Costs Initial Initial Implementation Implementation
System purchase System purchase Implementation Implementation

Enterprise LMS Licensed

Systems Integration Content integration Content integration Training Training Change Management Change Management Custom Report Generation Custom Report Generation Customizations Customizations

Integration Integration Systems Integration

System System Upgrade Upgrade

Hosted

Time
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Page 48

Cost of Ownership - SaaS
Cost follows model of a rental agreement (rent)
Annual Costs Initial Initial Implementation Implementation
System purchase System purchase Implementation Implementation

Enterprise LMS Licensed

Systems Integration Content integration Content integration Training Training Change Management Change Management Custom Report Generation Custom Report Generation Customizations Customizations

Integration Integration Systems Integration

System System Upgrade Upgrade

SaaS

Time
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Page 49

Cost of Ownership - Licensed
Initial Infrastructure 5-20%
Hardware Software Security Networking Monitoring tools Reporting tools Facilities

Deployment Personnel 5-15%

Ongoing Infrastructure 5-15%

Ongoing Personnel 50-85%
Scheduled maintenance Unscheduled maintenance Outage response End-user support IT staff training and support Upgrades and addons Security monitoring

Needs analysis Hardware upgrades Configuration Network Tuning and Testing Security Launch Bandwidth IT Staff training Redundant End-user training systems Backup Helpdesk

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Page 50

Cost of Ownership - SaaS
Setup Fees 2-5%
Vendor setup fees

Deployment Personnel 3-5%
Application testing Integration with other systems Configuration Launch and end user training

Ongoing Costs 80-90%
SaaS subscription fees (typically include implementation, support, upgrades, end-user support, content integration, and other services)

Ongoing Personnel 5-10%
System administration Working with vendor End-user support and marketing

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Page 51

TCO Calculator: You can Compute

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Page 52

The Illusion of a Breakeven Point
Total Costs Incurred

Theoretical SaaS

Theoretical Licensed Issues which Affect This:
Implementation cost Operations cost Efficiency of your IT group Complexity of implementation You may not EVER see savings in Licensed

Time

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Page 53

Operational Benefits to SaaS
Licensed
Content Integration Systems Integration Cost Justification Typical Risks Best Fit Customer Satisfaction Key Vendors
Vendor tests content but responsibility lies with you Highly flexible but complex

OnDemand
Vendor takes full responsibility and must deliver integrated solution Relies upon vendor’s programming interfaces (APIs) and services Much lower initial costs and can be justified as a new expense Vendor’s services Vendor’s experience Flexibility of product Enterprise or mid-market, fewer resources Generally higher if the fit is right

A typical capital cost justification is needed High cost Long implementation Possible failed configuration Global enterprise, heavy IT commitment Fair but rarely high

GeoMetrix, Oracle, Plateau, Saba, SumTotal, SAP

CornerstoneOnDemand, GeoLearning, KnowledgePlanet, Learn.com, MeridianKSI, TEDS
Page 54

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Selecting an SaaS Vendor
Licensed or ASP
How they Make Money
1. 2. 3. Revenues from licensed software (1/3) Revenues from support contracts (1/3) Revenues from implementation services (1/3) Selling Software Implementing Software Supporting Software GeoMetrix Oracle, Plateau Saba SAP SumTotal 1. 2. 3. 4.

OnDemand SaaS (Multi-Tenant)
Revenues from subscription fees Revenues from subscription fees Revenues from subscription fees ……

Biggest focus for organization Key Vendors

Developing Software Providing Services Ensuring Renewals CornerstoneOnDemand GeoLearning KnowledgePlanet, Learn.com MeridianKSI TEDS

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Page 55

The Simple Difference

Licensed software vendors sell products SaaS vendors sell subscriptions
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Page 56

The Simple Difference

Licensed software vendors want you to “go-live” SaaS vendors want you to “deploy” and “renew”
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Page 57

Signs of a Great Supplier

Licensed software vendors who have most of their customers live on current releases SaaS vendors who have high renewal rates (> 90%)
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Page 58

Litmus Test for SaaS LMS Vendor
Multi-tenant architecture All clients on same release of software Rapid-deployment solution Tier-one systems and networking facility Documented Service-Level Agreements (SLAs) Availability over 99.9% Experienced with HRMS integration Content integration services Content available for resale Learning services (design, program support, integration) Understanding of learning programs Understanding of talent management processes High rate of renewals (>90% ideally)

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Page 59

Questions?
For more information: www.bersin.com/lms

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Page 60

Cabelas: Best of Breed Solution
$2 Billion outdoor sporting goods company, opening 34 new stores 500 people per store need extensive training on sales, products, vendorprovided content GeoLearning developed content and delivered it in GeoLearning’s Domino LCMS Q2 Learning GeoEngage collaboration system used for continuing education KnowledgeAdvisors used for measurement and assessment
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Page 61

Cabelas: Keys to Success
Laser focus on the problem at hand: flexible, talent-driven e-learning for retail sales rollout Cabelas did not originally have development skills, so they relied on a full-solution to get started Wide range of tools (collaboration, LCMS, development, analytics) made up the total solution Cabellas did not have to “shop” or “select” the right elements of their solution Cabellas rates their solution very highly and is now self-sufficient
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Page 62

Utica National
1400 employees, small business insurance, among the 25 largest insurance companies in the US Needed a solution for employee assessment, learning, and performance management to improve career development Director of Learning decided that LMS-based solution was the best fit LMS vendor solutions were not complete: needed help with competencies, content, and performance management

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Page 63

Utica National Solution
Evaluated 7 LMS vendors, chose one (GeoLearning) in conjunction with SuccessFactors and ITG insurance competency library, Webex for collaboration LMS vendor providing single source of contact, but PM vendor providing design assistance with PM process Content from NETg, Mindleaders, Kaplan Financial, and internally developed using LCMS Single point of contact from LMS vendor providing excellent support and service
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How much LMS do you need?
Things you Must Have
“Learning technology must have…”
Functionality must meet the needs of your learning requirements. LMS must be easy to implement, configurable, and have excellent support in your environment. Vendor-provided and supported content and content integration Excellent, flexible, and easy-to-use reporting and analytics OEM or partner-provided development tools, LCMS, and collaboration Proven and experienced professional services and vendor expertise Excellent references doing the type of learning and scale of your organization

Things that are Nice to Have
“It would be nice …”
Development planning integrated with LMS Integrated competencies across performance and learning. Vendor-provided collaboration tools and platform Succession planning and career planning integrated with learning Vendor stated direction toward integrated performance management Vendor experience with broader HR applications and processes Excellent references and ROI from customers using the modules you plan to use

Copyright © 2007 Bersin & Associates. All rights reserved.

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Bottom line
1. Remember the business problem that got you here, and select a vendor with the greatest experience in delivering on that solution. Evaluate vendors based on actual reference customers, not features, checklists, demonstrations, or websites. Vendors that offer “solutions” drive much higher satisfaction than those which offer “products.” All LMS implementations are complex and 24% of LMS buyers want to switch vendors, so expect implementation to be 3-5X purchase cost. The LMS is “the core system” for your learning programs, and it must flexibly support every talent management program you implement. If you are embarking on a talent management strategy, develop the strategy, process design, and governance before you start looking at systems, this may dramatically change your focus on an “integrated” or “best-of-breed” strategy.
Copyright © 2007 Bersin & Associates. All rights reserved.
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Directions of the LMS Market
Increase in Enterprise Learning Capabilities
Tools, LCMS, Content Integration, Analytics, Domain mgt, Collaboration Systems, Publishing, Performance Support Search, Web-services, Portals, Self-publishing, Communities of practice, blogs, wikis, online video…

Increase in Talent Management Capabilities
Employee profiles, job descriptions, performance management, succession planning, HIPO selection, manager/employee portals, assessment, recruiting, applicant tracking, internal recruiting, compensation, workforce analysis, career planning, candidate selection, competency analysis, skills-gap analysis, integration or building of HRMS,interface to external data sources

Today’s LMS Systems

Copyright © 2007 Bersin & Associates. All rights reserved.

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