A large financial institution wanted to license a learning management system. This organization required a simple e-learning portal that would provide online courses to its 10,000 learners. In addition, the company needed a system that could manage classroom-based training. Members of the selection committee had read that the average three-year cumulative price for a locally installed LMS managing 10,000 users is approximately $357,000, and they were hoping they could find a solution for less.

The organization assembled an LMS selection committee to identify a list of functionalities needed in the system. As is often the case, the committee ran amok, adding all kinds of business and technical requirements. By the end of the process, they had specified that all content must run on a Palm Pilot. They also required 360-degree evaluation, even though they already used a 360-degree evaluation program with their HR system. The committee decided they also required advanced learning object technology, although their primary plan was to create a small number of courses. Finally, they wanted telephone registration for courses automatically linked to the database, although no one was quite sure how they would ever use this.

Once the committee had identified the institution’s requirements, they drafted a request for proposal and sent it to the most popular names in the LMS industry, without first checking to see if the vendors could match their needs. A few weeks later, the vendors’ proposals arrived. The cost of the proposed systems ranged from $1.2 million to $2.3 million. The LMS selection committee couldn’t understand why the prices seemed so high.

The financial institution contacted us to help explain what went wrong. Our analysts identified the problem: feature scope creep nearly ate them alive. This happens in far too many projects.

Would You Buy a Car this Way?

For many years, automobile manufacturers marketed their cars’ basic characteristics such as the strength of the engines, smoothness of the suspension, elegance of the chassis and upholstery, and exemplary safety record. In the last decade, however, manufacturers realized that the number of cup holders in a model car seemed to influence the purchasing decision of some new car buyers more than just about anything else. For these customers, the more cup holders, the better. The vehicle may be noisy, the seats less than comfortable, and the construction unreliable, but as long as the driver and every passenger has a plethora of cup holders hidden away within easy reach – ready to provide constant hydration – the car stands a good chance of leaving the showroom floor.

The cup holder discovery helped spawn a new wave of features in the automobile industry. There are now automobiles with integrated tents that expand when the back hatch is opened. There are automobiles that automatically lower their windows just a crack when the door is closed so the inside pressure remains constant and passengers don’t experience the discomfort of having their ears pop. There are cars with built-in compasses, cars with a port to dock a laptop computer, cars that talk, cars with built-in flower vases. Cars with television monitors. The list goes on and on.

These aren’t useless features. For someone who loves camping, a car with a tent high above the wet ground might be a great feature. And yet, few of us pick a car by sitting down and writing a wish list that looks like this:

• Cup holders
• Keyless entry
• Wind direction indicator
• Flower vase

Most of us still select a car based on key requirements such as reliability, safety, size, fuel economy, and price. For the most part, feature scope creep doesn’t play a large part in car selection. It may make us select the deluxe model with tinted windows and a CD player over a standard version of the same model, but we generally focus on key functionalities when choosing among various car vendors.

This is often not the case when choosing a learning management system. Many organizations become convinced during the selection process that they require as many features as possible. Although their learners could register for a course using a browser, doing so using a telephone is just too appealing to ignore. Although the organization doesn’t have a mobile workforce, using personal digital assistants (PDAs) such as Palm Pilots and Pocket PCs becomes a must-have requirement.

Just as the tent is a valid feature for drivers who often go camping, LMS features such as the ability to view e-learning content on a Palm Pilot are valid requirements for some organizations. In the medical field, for instance, a growing number of medical practitioners have begun using PDAs to access training and performance support information while visiting patients. These organizations are willing to pay a premium for such a feature because it is a key business requirement. For most organizations, though, good basic LMS features are all that are required.

We’re Part of the Problem

In some ways, brandon-hall.com has played a part in creating the problem of feature scope creep, although we didn’t do it intentionally. We study many LMS products, large and small, and catalog the laundry list of features available in these systems. In our LMS reports, we often include the full list of features available across many systems. This list includes many features unique to specific systems as well as features that are common to most, if not all.

The real intent of the feature list is to help companies identify their needs. In addition, we hope these lists of features help our readers get a sense of what is available off-the-shelf, as opposed to features that would require costly custom development to acquire. However, human nature causes us to want everything. The result is that when organizations create RFPs to license an LMS, they too often cut and paste the entire list into their RFP. Vendors then price the development of each feature their LMS doesn’t have into the cost of their proposal, thus inflating the price considerably.

Our 2005 LMS KnowledgeBase includes a Web-based, database-driven LMS Selection Tool. The tool can greatly reduce the time required to create a personalized short list of systems that fulfill your business and technical requirements. You simply enter requirements and specifications that are important to your organization, and the LMS Selection Tool returns a list of products that might fit your needs.

However, if you use our LMS Selection Tool and choose “Yes” for all features, the system will return a message saying that no LMS matches the search criteria. That’s because no single learning management system contains every feature. In fact, it’s possible to select “Yes” to even a small number of criteria and have the system respond that no LMS matches the search criteria. For instance, if your organization is looking for an LMS to run on your Linux server that supports the Mandarin Chinese language and tracks e-learning content on mobile devices, you’re out of luck. You’ll need to work with an LMS vendor to custom build at least some of the features you require.

Just as the LMS Selection Tool cannot find a learning management system with numerous or unusual combinations of features, neither can your RFP produce a list of affordable systems if you have asked for too many features, or have asked for combinations of uncommon features. Although systems have many common functions, they also have their own areas of strength and innovative technologies.

Why Companies Sometimes Build Their Own LMS

Because of the high, enterprise-level pricing of many 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 number one 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.

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 expected.

Some companies build their own LMS 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, 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 and dealing directly with the system designer and a programming team. Before writing a single line of programming code, the organization has prioritized its most critical needs and focused on those.

There’s an important lesson to be learned from organizations that build their own LMS: If we, as potential LMS buyers, learn how to prioritize our needs, we’d be on the right track for choosing the most appropriate low-cost solution. We’d also probably end up with an LMS with more functionality than we’d ever use.

The Final Verdict

You should be able to find an appropriate LMS, even with a relatively small budget. The first key to getting there is to avoid feature scope creep. For most organizations, basic LMS features are all that are required. Think long and hard about what your true business requirements are. If you really need a feature, make sure you include that in your search criterion. But, steer yourself away from the cup holders.