Learning Management Systems: Building vs. Buying

The average cost of building a custom LMS - is it worth it?

Because of the high, enterprise-level pricing of some LMS solutions, many companies choose to build their own LMS from scratch rather than purchase a system. In fact, the use of "proprietary systems" is still #1 in market share when compared with even the most popular LMS solutions. Dismayed by the high cost of systems, your organization may be considering the same strategy. Is it worth it?

On average, it will take between $200,000 to $500,000 and about 18 months to build an LMS with moderate functionality. For some very large organizations, that may be a cost savings over purchasing a commercial solution. However, what people seem to forget is that it also requires full-time staff who might be better assigned to items more aligned with company objectives. So, the cost may actually be higher than reported.

Some companies build their own LMSs because they need only a fraction of the functionality of commercial systems. Whereas organizations looking to buy an LMS often succumb to "feature scope creep" (the tendency to broaden perceived business needs too far), organizations that build their own LMSs tend to remain focused on key functionalities. The cost of features is much more apparent when developing an in-house solution. You're dealing directly with the system designer and a programming team, as opposed to an LMS vendor's experienced sales team. Before writing a single line of programming code, the organization that is planning to build has prioritized its most critical needs and focused on those.

There's an important lesson to be learned from organizations that build their own LMSs: If potential LMS buyers learn how to prioritize their needs, they'll be on the right track for choosing the most appropriate-and low-cost-solution. Organizations that do this will also probably end up with an LMS with more functionality than they'll ever use. If you're planning to buy and not build - or if you're still on the fence - follow these two, simple rules:

1. Be diligent and define your organization's true business requirements.
2. Consider only those LMSs that match your true business requirements.

While these rules may sound like common sense, countless organizations get caught up in the technological possibilities of their future LMS and stray from the path that will lead them to the right LMS for their organization. If you are to be the person that ultimately makes the decision, imagine that someone five years from now will be hired to replace you (after your promotion, of course). How will that person look back on your decision? The key to success in these kinds of purchases is usually diligence.

If your organization is considering an LMS or wishes to find out more about how to get from considering to purchasing and beyond, check out our LMS 2003 report. It contains everything you need to find the right LMS for your organization.

If you want to build a comprehensive LMS research library, you can purchase all 70+ LMS profiles for $1,490 with our "Reviews & Profiles" option. It's over 1,500 pages of data on LMS products and services that can't be found in one package anywhere else. Learn more about the LMS 2003 report at:

http://www.brandonhall.com/public/publications/LMS2003/index.htm