Sizing Up the Need for an LMS

The vast majority of vendors target companies with at least 5,000 employees.

September 18, 2003
In an effort to simultaneously trim costs and juice up training for its300,000 employees, tech giant IBM has placed 40 percent of its internal educationalofferings on the Web--an eightfold increase from just three years ago.

The corporation reports that using the Web saved $300 million last year onitems ranging from travel expenses to maintaining space for classroom training.It credits the hundreds of thousands of dollars spent on learning managementsystems for making its e-learning programs work.

For smaller companies with far fewer resources, however, the start-up andmaintenance costs--more than $500,000 on average--are prohibitive. Someorganizations simply do not have enough people to justify the investment. If youneed to traina few hundred employees sporadically, it’s usually more practical to managethat in-house, without LMS software, says Massood Zarrabian, chief executive of OutStart, an e-learning services provider in Boston. But, in terms of companysize, there’s no magic cutoff point.

A manufacturing company may have 15,000 employees, for example, most of whomneed ongoing training. If 90 percent of those people work on assembly lines,with no regular computer access, e-learning is probably not going to work and anLMS is probably not a wise investment.

If a company has only 1,000 employees, but 90 percent of them work infinance, an area in which services, products, and laws are constantly changing,ongoing Web-based training is likely to be fruitful.

Industry observers say that a solid gauge of whether your company is toosmall for an LMS is whether vendors are marketing their products to you. Thevast majority of vendors target organizations of at least 5,000 people. Itusually requires that many people to make the computerized tracking andmanagement of courses a cost-saver.

And cost-saving is the leading reason that corporate America invests inlearning management systems, according to a study by Corporate UniversityXchange. "If you only have a few thousand employees, the cost of implementingan LMS is not going to have the saving effect you’re looking for," Zarrabiansays.

He adds that medium-sized companies--those with 10,000 to 20,000workers--mostoften will be looking at an LMS when their e-learning initiatives are spread outacross the organization.

American General, a wholly owned subsidiary of AIG, a Houston-based insuranceand financial services organization, invested in an LMS hosted by Thinq LearningSolutions, Inc., in Billerica, Massachusetts, to manage about 500 online coursesranging from finance to new technology for 10,000 employees.

The key to making a decision on an LMS is this, says technology futuristElliott Masie: "Know your needs."

Workforce, November 2002, pp. 54 -- Subscribe Now!