ROI: Should You Host The LMS or Let the Vendor

There always seems to be a debate about whether or not an organization should host a Learning Management System (LMS) application internally or externally. There are arguments on both sides. An informed client needs to consider costs as well as some questions about the ability to host internally. I have to admit, I lean toward having a vendor host the solution. Here are the list of questions to consider.

What internal resources will be dedicated to the LMS and at what level?

Often times an Information Technology (IT) department within an organization is overloaded with requirements to keep the mission critical software up and running. In fact, one major insurance carrier estimated that for every minute a mission critical application was down, the company would loose $1 million dollars.

As an individual in a training or compliance department, what kind of resources do you have at your disposal or within your department to keep your training servers up and running? What level commitment will the IT department provide to you when course scores are not being properly reported? IT department typically must prioritize requests because they don’t have the time to do everything. You need to determine where on the list of priorities the LMS will reside. If it is high, internal hosting might be the answer, if it is low, you may want to consider external hosting.


What money do you have in your budget for server upgrades?

Software and hardware upgrades to a server are not trivial. For example, updating just the software on a server can cost upwards of $10,000 a year. This does not include the price of new memory, new hard drives or other hardware that is required to keep servers functioning on a regular basis. If you are able to secure in your budget money for software and hardware upgrades (not directly related to the LMS) you may want to host internally. If you IT department takes care of upgrades, make sure their budget includes periodic maintenance and improvement of the LMS server. Sometimes it can get ignored because of a low priority (see question above).


Can you quickly scale up your internally hosted solution?

Organizations are not static entities they are constantly changing. A new division may be created, a competitor purchased, a plant oversees acquired. What resources are available to determine long term and short term needs in terms of purchasing new hardware or software to support more learners than expected? How quickly can you requisition the needed dollars to add more hard drive space or software licenses to accommodate new learners? If you have a fast, effective purchasing process, you may be able to consider internal hosting. If you have to go through many channels for new software or hardware, you may be a candidate for external hosting.


What level of security to you require?

This is an interesting question because you need to know how secure your own internal network may be. Many organizations automatically assume that internal networks are more secure and, typically, that is not the case. Since externally hosted solutions are under a great deal of scrutiny by potential clients and since a security breach can be catastrophic to a vendor who host external solutions, the security is often times much higher than internal network security. In fact, a major bank in the Northeast hosts all of it software applications, mission critical and LMS externally for increased security and reduce costs. Many vendors have 128 bit or higher SSL encryption.

What is your core competency?

If your core competency is training or compliance it is very difficult for you to now learn an entire new “language” of servers and server technology. The hours spent learning how to administer the server, optimize performance and troubleshoot can easily be saved through the use of an externally provided solution.

How many channels are you willing to pursue to get a problem addressed?

If there is a problem with an internally hosted solution, you need to contact the internal IT person assigned to your group, that person must either solve the problem or contact the hardware or software vendor. Often there is a conflict between the actual source of the problem. The hardware vendor will tell you it is not their problem, it is a software problem and the software vendor will tell you the exact opposite. Meanwhile the internal resource is trying to sort out the issue and report to you on status. With an externally provided solution, typically there is one call to the vendor who is responsible for solving the problem and then returning a solution without involving you with the back and forth that occurs between software and hardware vendors.

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