LMS Hosting: Cloud or In-house deployment?

In my last post, I had discussed about points and facts involved in decision making while finalizing either an Open Source or a Proprietary Learning management System (LMS). Another equally important decision making point which haunts Senior L&D management team in any organization? Whether to go for cloud based LMS or In-house server based model?

As usual, there are pros and cons of both the models. Apart from additional parameters involved such as size and geographical spread of an organization. Also it includes short term versus long term goals, available budgets allocated for learning infrastructure. Primarily it depends upon the number of users and courses planned, scalability needed over time, etc. It may be a daunting task to compare TCO (Total cost of ownership) over stipulated years for both the models. It is better for the internal team to consider all the facts involved to arrive at the balanced decision for their organization.

LMS on Cloud:

This is usually under a subscription model by your LMS vendor. You are not involved in installing, updating and managing servers, software, etc. A Cloud may be a good solution for most basic LMS needs. Except that you may not have total flexibility and the ability to make changes. It is needed for the modification of e-learning environment (limited customizability based on vendor policies). Selecting a cloud based LMS simplifies many aspects. Most of the complex technical work is handled by your vendor. So you won’t need to worry about installing hardware. It is taken care by allocating resources to manage it and the initial costs involved therein.

In case of LMS hosted in-house, your IT team will need to take care of servers, databases, load balancers, etc.; implying additional resources and budgets to be allocated. But, you may have to ensure that the decisions made by vendors in architecting their learning platform follow recognized best practices for system uptime, scalability, security, and integration ability with other applications. With cloud-based technology, even a 50 -100 person company can have their LMS to be used without the initial big budget commitment and risk involved.

If your company policy may not allow hosting learning modules with a third party infrastructure (sensitive data), then you may prefer an In-house solution. Also, there may be cloud data storage risks and higher total cost of ownership over longer period (3 to 5 years) for some big companies who already have established IT systems. They have necessary resources to be deployed for another system like LMS to be added in the existing infrastructure.

In-house LMS hosting:

LMS is installed as a licensed product from a vendor, which you may maintain on your own server. Based on the vendor’s licensing policy, you may have control over all aspects of the LMS operation. If your IT department needs to have total control over system performance, data management, integration with other internal IT systems like HRMS, etc.; then this model may be your best choice. It involves internal resources necessary to optimize, administer, and effectively service the user population.

System acquisition may represent only a fraction of the TCO. But enough budgetary provision is needed to keep the systems live and in 24×7 running condition in the future. In case your company may have external learner audience. For example your customers, suppliers, franchisees, affiliates and partners, etc., you may have a far greater challenge. It is now to enable a secured system extended to all such external stake holders to run your learning modules on their local devices. In such cases, cloud based solution may be preferred. Another disadvantage of this model is that the LMS will likely not be updated automatically. Hence, users can experience down time when updates take place.

So, in summary,

In which cases you may choose Cloud based LMS?
  • a) Medium and small size companies (or even a few big companies) who may not possess required internal resources (both hardware and staff) to implement LMS.
  • b) If your company is not sure of the final eLearning path for future (but wants to take the first positive step) and doesn’t want to invest a lot of money up-front on higher capital intensive resources in the beginning itself.
In which cases you may choose In-house LMS?
  • a) Big companies having internal resources for LMS implementation, maintenance and having significant security policies for storing sensitive data, such as in case of companies in BFSI, Healthcare, Pharmaceutical, and other domains.
  • b) Big companies already hosting IT systems for Talent management, HR, etc. for whom implementing one more system may not be so difficult.
  • c) Big companies expanding rapidly in terms of employee numbers. In-house LMS, though it does involve significant initial costs (license fees, customization /integration, hosting, people training, etc.), may be more economical option considered over a longer period of 5 years.

-by Anand Thakar

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