No matter how people call it — dollars, pounds, yens, euros, rubles, crowns — money comes with power. That’s why everyone strives to get a piece of it. It takes a lot of knowledge and sound common sense to make money and manage it.
With so many variables and risks, it can be hard to make a decision on how to spend the currency that we work so hard to get. Individuals face this conundrum; and companies face it exponentially. That’s why managers need an extended research and as much data as possible in order to make an informed decision on how to spend precious company dollars (or pounds, yens, euros, rubles, crowns).
The decision of choosing the right learning management system makes no exception. If you’re involved in getting a new LMS for your company, read on to learn about some of the most common hidden costs that usually — but not always — creep into the acquisition process.
Hidden costs of getting an LMS
Remember, a full-featured LMS that can respond to all your organizational learning needs comes at a certain official price. The point of this article is to shed some light over a few extra expenses that can come along that official price.
Why does this happen? Why don’t LMS vendors list every single cost related to their product?
Well, because sometimes they are simply not responsible for those costs. They promise to give you a product that will make your life easier. But their product — that LMS — is only a cog in the whole system. You are the one who needs to be on top of the system and identify the other cogs and how they might affect you.
Without further ado, let’s jump to the most common hidden costs that can arise when selecting a business LMS:
Implementation / Set-up fees. You need the LMS up and running before users can access it and do their learning, the same way you need a browser if you want to access the internet. Some vendors charge an extra fee for setting up your system, others don’t. If they do, they should mention it. If they don’t mention it, you should ask about it.
Licensing fees. It’s hard these days to work with Internet Explorer 8 or even with the 2003 Microsoft package. Yet there are plenty of employees who still do this, because their organizations don’t want to pay for the 2010 Microsoft license, or the latest one of other software that doesn’t need IE8 to work best. The same can happen in the case of an LMS. Some vendors give a license for a limited period of time — 6 months, one year — and demand a recurring fee after that. You need to pay attention if this fee exists, why it does, and how much it affects the overall cost.
Upgrade fees. In case your company grows (and who doesn’t want that?), you need to make sure the LMS you’re buying now can handle that future growth — scalability. If you need to upgrade to a superior plan, or on the contrary, downgrade, you should be able to do that without an extra fee. Unfortunately, some vendors still demand it.
Customization fees. Let’s say you can customize your learning portal with a number of color themes. But these are generic and neither one matches your brand. If you want to add your exact brand’s color theme to the LMS, you might need a custom CSS file. Supposing you know how to create that file, you might not be able to add it without paying a fee to your vendor beforehand. The same can happen with certain features or add-ons. That’s why you should get into as many details as possible before signing any contract.
Excessive fees. It can be very hard to foresee the exact number of LMS users in a month: maybe some don’t need to attend any course, or maybe there are more employees due to company growth. Usually, users are counted — and paid for — in buckets of 20 or 25. What happens when you exceed that number with 2 or 3 users? Pay for another bucket? Pay for the exact excess number? Pay for the settled number of users, as the system can be set to limit the access once that number is reached?
Maintenance fees. Who will be responsible of keeping the up-time of the system as close as possible to 100%? Who will do any data migration, updates, and the testing and bug fixing that come along? If it’s your vendor, they might charge a fee for this. If it’s your company, you have to pay your IT team, or even send them to training. Either way, money will be spent on maintaining an LMS.
Mandatory training. All users will need some time to learn how to use an LMS, whether it’s simple and intuitive, or comes with all the bells and whistles. However, you need to make the difference between training that your company actually needs, and mandatory training that might exceed those needs, and pay accordingly.
Support. From guides and how-to videos, to email forums and phone calls, you will definitely need some sort of support during the use of an LMS. Some resources are free, other can be included in the official price, but others can be the subject of an extra fee. Make sure to know exactly which is which.
L&D staff. If you want to make the most of your new company LMS, it has to be the core of training courses and support employees’ learning process. You need a professional team to handle this: instructional designers, subject matter experts, the HR department, team leaders, and so on. If you don’t have an L&D team already, you should plan some budget for it as well.
Should all hidden costs of an LMS be a turn-off?
Not necessarily. Some hidden costs, like set-up fees, licensing fees, or upgrading fees, could easily go to the turn-off category. But in the end, it all depends. What matters most is transparency and the meaning behind each fee. Sometimes, it’s better to pay a fee and forget about the issue, than to try to deal with it yourself, only to get into bigger trouble.
As someone responsible with acquiring a new company LMS, you should ask as many questions as possible: to your management, to vendors, to your colleagues, to all e-learning professionals you meet. The more you know, the better.
PS: There’s a cat hidden in the main picture. Did you spot it? Get a closer look then:
Graham is the CEO and Founder of CYPHER LEARNING and MATRIX. He is a serial entrepreneur, e-learning enthusiast, published author, and educator.