hosted vs enterprisePurchasing and implementing an LMS for your organization is a business-critical activity. And the wide number of choices available all around doesn’t make it any easier to decide which LMS fits your needs and of course, the bill. Adding to this dilemma is another level of decision making – whether to go for an OnDemand / SaaS / Hosted LMS service, or for a behind-the-firewall LMS deployment.

Let me try to break this decision down into a few factors that’ll make it easier and more objective:
Are you allowed to use hosted services?
If your organization has a strict (and I mean really strict) policy of not using hosted services for LMS (or other business applications), then you don’t have an option but to opt for a behind-the-firewall implementation. In case your organization’s policy is flexible, then of course OnDemand / hosted services are feasible options to start with.

Is the LMS going to be all alone?
Does the LMS need to talk to other business systems – ERP, HRMS, Performance Systems, Authentication systems? If so, are these systems configured and do they follow internet-based communication? If the systems that the LMS needs to integrate with are ‘closed’ (communication cannot happen over the Internet) then deploying the LMS behind the firewall works well. However, integration can be achieved through the Internet by using LMS (and/or another system’s) web services without a compromise on the functionality.
Integration can become a challenge when using OnDemand services only if there’s no option to enable communication over the Internet; otherwise these options are also available with hosted LMSs.

Cost of ownership – what are the recurring costs?
There are a variety of cost factors involved in an LMS implementation, and more so in the case of behind-the–firewall, where some of these costs become hidden and are not easily calculable.

  1. LMS license cost – base and per-user – In both cases these costs are clearly defined and easily comparable.
  2. LMS implementation, configuration and deployment cost – These costs are significantly lower in a hosted model as most of these activities are managed by an offshore team. For a behind-the-firewall implementation, the team mostly works from the client’s location; sometimes, these costs can run really high, increasing the overall cost of ownership. It is good to get a clear idea from the vendor on these costs.
  3. Server hardware and software license costs – In a hosted services offering, these costs are non-existent as a separate cost item as they are apportioned in the per-user fee .Since the servers are shared across customers, the load on one single customer is very low. However, for a behind-the-firewall implementation, this cost is tangible and depends on load requirements, fail-over requirements, data backup capabilities required, etc. In addition, there are also annual maintenance and upgrade costs and there may also be replacement costs in a few years’ time. Be aware and sure of these costs before going in for behind–the-firewall deployment.
  4. IT management and IT support costs – These include the cost of the IT team, which manages the server hardware and overall IT support for the same (uptime, reliability, scalability, and fail-over are the critical factors to be controlled). Whether it’s a part of a bigger infrastructure or a standalone setup, in a behind-the-firewall setup, costs for IT management and support are incurred in addition to the costs above, and add to total cost of ownership. Most of these costs are recurring and increase as system usage increases. These costs, however, are not present in hosted LMS services but are included (apportioned) within the per-user fee. A hosted model not only saves costs in this case but also a lot of headaches!
  5. Time to go live – Though it eventually depends on the level of customization carried out in the LMS, a hosted solution could be made to go live in a matter of weeks, literally! The primary reason is that it’s always ready and all it needs to go live is a domain name and a URL to point to. So while some customizations could be carried out in the background, you could actually start delivering training online almost instantly. This may not be possible in a behind-the-firewall setup as there is an inherent lead time in getting the logistics in line. Again a delayed or long time taken to go live is also a big cost to the entire initiative. We have helped some of our customers go live in less than 2 weeks using UpsideLMS OnDemand.

Does internet access speed make a difference?
If the access speed to the Internet is very poor, this could be a real challenge for hosted LMS services. Fortunately this is not usually the case. Most of the leading LMSs are designed to cater to a low bandwidth for general usage and still deliver a good experience. However, it could be a challenge to deliver video-/audio-based content on a very low bandwidth. Though this is resolved in a behind-the-firewall setup to a good extent, it may still be a challenge if your organization is physically distributed and many people either use the Internet or a VPN or a private LAN (most of which again rely on the Internet unless special networks have been laid out).

LMS support and user experience
Eventually the end user needs to be happy with the overall experience. And believe me, a lot of it depends on the ongoing support the user gets while using the system, rather than on the functionalities offered.
As a recent survey indicated, this factor is becoming critical in driving customers to change the LMS they use. If you finally decide to go for a behind-the-firewall implementation, ensure that either you have a well-trained and tuned LMS support team (which is also an additional recurring cost) or smooth and effective (fast turnaround time) back-office support from the LMS provider. The same is true for hosted services – although generally, a support team is already in place to cater to end users (please check your SLA) and they are well-trained (overall not as costly as your own team).

The final verdict
Does this exercise make it easier to take a decision? You now have a list of factors you need to consider. You can put down the costs (to start with) for both models against each point, and then come up with a comparative matrix to decide between a hosted and a behind-the-firewall solution. The good part is that the LMS providers would be more than willing to help you out with the cost aspects. The important part is that you need to be aware of these.
Once you work out the overall cost of ownership for both the options, it will be much easier to pick one based on an objective reasoning.
As a general recommendation, I have found that a good LMS available OnDemand scores high on many of the factors given above. It is a good bet if you’re starting your eLearning initiative or switching from another LMS, and it works well for organizations of varying sizes and readiness.

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