Understanding Learning and Certification Management Vendors

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1 Learning Management Systems (LMS) Help Improve Channel Performance The LMS industry is large and crowded. While there has been consolidation recently, there are still many different large and small vendors that target corporate customers. The traditional players in the market continue to pursue a product-based strategy, developing an LMS as part of a larger human capital management offering that integrates the LMS and certification management with other HR functions. Another segment of the market pursues a service-based strategy, where the LMS is only a small part of a larger training outsourcing offering. These companies address the needs of channel training and certification in varying degrees. The knowledge-intensive channel in the extended enterprise presents unique barriers to effective technical training. Buyers with these types of channels need to select the combination of learning management and certification products and services that will meet the dynamics of their industry and their organization s performance objectives. Understanding Learning and Certification Management Vendors Vendors of all types are taking steps to become more service-driven. These services range from implementation support of a product to managed learning services to full outsourcing of the training function. The trend in the market appears to be in the managed services direction. Those companies that offer a fuller range of services are doing well financially, while the traditional LMS product companies struggle. Eight key areas can help buyers understand these companies and what they offer as part of their solution. Must have: technical workforce features and functionality. Technical feature requirements can be grouped into two areas. Core functionality that any LMS should have includes a course catalog, enroll in courses, design training paths, and launch e-learning. Channel functionality identifies features that are designed for the training needs of a technical extended enterprise workforce. Some of these features include cascading certifications, targeted training distribution, set-and-forget enrollment, and departmental and organizational planning tools. See Appendix A: Extended Enterprise LMS Feature. Must have: scalability. For an extended enterprise with a large number of channel partners, scalability is crucial to deliver online learning management and content to users within acceptable performance limits. In a channel with tens or hundreds of thousands of users, the system must be able to process thousands of concurrent transactions. In addition to the underlying design of the learning management software, the vendor s hosting services and the system s hardware configuration affect the solution s scalability and ability to handle a large number of users. Must have: system integration. Large-scale system integration at several points must occur for a successful implementation of an extended enterprise learning and certification management system. The system must integrate with an HR system to include corporate users and field personnel as administrators and users. To facilitate distance and blended learning, the system will need to integrate with your organization s software tool for online instructor-led courses. To link training with business results, the system should also integrate with a performance tracking scorecard or performance management system. Must have: content delivery. The LMS must be able to launch e-learning content to facilitate just-in-time and distance learning with geographically distributed channel partners. Most LMSs are SCORM-compliant and can launch any online course content that also complies with the SCORM 1 9/26/2006

2 standard. Many managed learning services and training outsourcing vendors also offer content management and authoring systems as well as instructional design. Some vendors deliver these value-added services with internal resources and others partner with firms that specialize in learning content. From the buyer perspective, it is less important who is delivering the services and more important that the vendor be a single point of contact managing these services with content delivery. Should have: analytical expertise. Analytical expertise is now a critical factor for many buyers, as an increasing number of buyers must provide training ROI to secure a training budget and to evaluate the effectiveness of training programs. When integrated with performance data, analytical expertise can be applied to continually improve channel training and certification programs and align those programs with corporate business objectives. Should have: industry and channel experience. Some vendors position their offerings for specific industry and business solutions. While many aspects of learning and certification management are essentially the same, each industry and business problems presents its own challenges. Managing learning and certification in a knowledge-intensive channel is no different. To the extent that a vendor has past experience in your industry, the vendor can bring additional expertise to understanding the learning requirements of your organization s channel and configuring their system accordingly. A vendor that has channel experience in your industry is also more likely to have a system that has required technical features and functionality (see ). Nice to have: data management expertise. Having data management expertise outside learning management systems can greatly help with system integration. Value can be added in other areas as well. The vendor can help use data warehousing techniques to consolidate performance, learning, and other types of data in a centralized location that can be leveraged by many different corporate users. Nice to have: web portal expertise. Similar to data management expertise, web portal expertise can help with system integration. In a channel management environment, an organization may already use a web portal to communicate with partners and perform transactions that cross corporate boundaries. Web portal expertise means the learning management system can be integrated with the existing portal more easily. 2 9/26/2006

3 Data Management Expertise Analytical Expertise System Integration Content Delivery Features and Functionality Scalability Industry and Channel Experience Web Portal Expertise Must Have Should Have Nice to Have Figure 1. Channel Learning and Certification Management Requirements. Learning Management Industry Highlights The learning management system market continues to be fragmented. More consolidation can be expected in the future. In 2005, LMSs represented a $500 million market (CLO magazine). The six largest LMS product companies constitute approximately 43% of the market. In addition to the remaining smaller LMS product vendors, training outsourcing firms, enterprise resource planning vendors, and consulting firms all compete for part of the learning management market. LMS buyers less satisfied than a year ago. According 2005 and 2006 surveys by ASTD, respondents that were very unsatisfied with an LMS purchase doubled and those that were very satisfied decreased by 25%. The number that were very satisfied or satisfied edged over 50%. (About 30% were somewhat satisfied.) Nearly one quarter of respondents intended to purchase a new LMS or outsource their LMS functionality over the next 12 months. Channel learning is underserved. For many buyers channel learning is not their number one priority, according to a survey by TrainingOutsourcing.com. Often there is a disconnect when the HR department oversees training and development initiatives, where the focus is consolidating LMS systems inside traditional corporate boundaries. Software technology companies are at the front end of this curve, placing higher priority on channel training. As a result many vendors have not responded to the needs of channel learning beyond market positioning statements. 3 9/26/2006

4 Vendors trying to differentiate on services. Even traditional LMS product vendors are adding services, promising to manage post-implementation administration of the LMS. For many vendors, the LMS is only one component of an overall service strategy. Sumtotal Saba Plateau Systems Learn.com Knowledge Planet Geolearning Others 0% 10% 20% 30% 40% 50% 60% Figure 2 Fragmented LMS Landscape Questions to Ask In the relatively new LMS market, vendors range from new entrants to those that have been in the market for the past decade. With the wide range and number of companies, developing a short list of vendors to evaluate can be difficult. To help get to this shortlist quickly, Latitude recommends that buyers ask the following questions when evaluating vendors. 1. Can the vendor meet my technical requirements? There are many drivers to scale and complexity, including: number of learners, number of partners, channel management structure, number of learning experiences, volume of online course content, active and concurrent users, and number of concurrent end-users. The vendor should be able to identify clients whose systems demonstrate scalability. If you intend to outsource the hosting of the application to the vendor, the hosting facilities and hardware dedicated to your application must be able to handle the system load. Of course, system requirements will be influenced by what page loading and transaction times you expect from the LMS. 2. Can the vendor meet my functional requirements? There are many barriers to managing a knowledge-intensive channel effectively. In addition to the technical requirements mandated by a large user population, the learning and certification management system must meet functional criteria that can address overcome these barriers (distributed workforce, not directly controlled by corporate management) so that a technical workforce gets the training they need when they need it. See Appendix A: Extended Enterprise LMS Feature for more information on functional requirements that overcome channel training and certification barriers. 3. What are the vendors areas of expertise? Consider all aspects of channel performance and what expertise the vendor has that can help improve that performance. Some vendors will do much more than install or host and manage a learning platform. They can manage a wide range of technical and nontechnical learning services. It may make sense to outsource other aspects of the channel training, like 4 9/26/2006

5 instructional design or the development of online content. In addition to the LMS, the vendor may have expertise in other web-based applications and databases that enhances LMS integration with channel and performance management systems. 4. What is the vendor s vision and ability to make a strategic contribution? Some vendors are better positioned to offer value beyond the nuts-and-bolts of implementation and support of a learning and certification management system and providing other related services. If the vendor provides thought leadership in the learning and performance markets, innovation will be reflected in the design of their products as well as the services they provide. Most importantly, a vendor with vision, can bring all the pieces together technical infrastructure, corporate and channel governance, content delivery, integration with other systems, scalability, learning and performance philosophies together in a framework that helps the organization meet its business objectives. 5. What analytic and metric products or services does the vendor offer? Most buyers continue to struggle with training and ROI, and vendors continue to struggle in how analytics and metrics can be used to demonstrate ROI. One dimension that analytic and metric offerings should be evaluated on is the degree that statistical techniques are used to validate assumptions on how training and performance are linked. Another important dimension is how that information is presented to both corporate and channel partner users. Users should be able to clearly and easily see how channel performance outcomes can be affected by specific training paths or certifications. 6. Does the vendor have experience or capabilities specific to my industry s channel? Buyers can test claims of industry expertise by checking references. GeoLearning has been particularly successful in landing government contracts. Many other vendors have corporate experience in a diverse range of industries with little focus on a particular industry. Many of these vendors are also trying to position themselves broadly across the extended enterprise space. 7. Can the vendor deliver value in my price range? Most vendors offer a few different pricing models. Purchasing the LMS outright is the more expensive option, but if you require customization to meet the unique learning requirements of your organization s channel, it might be the best option. If you have less specialized requirements, an ASP model may be the more cost-effective option. Under an ASP model, little, if any customization is possible, but the licensing and setup fees are minimal when compared to a client hosted solution. 8. What is my tolerance for small suppliers? Large vendors have a brand name reputation and recognition, and smaller providers can more easily become swamped by an influx of new business. However, the smaller vendors can be more innovative and willing to meet the needs of a single client. Being a vendor s largest customer can offer some advantages. Smaller vendors are also more likely to pursue a niche-based marketing strategy, which often brings highly specialized domain expertise. 5 9/26/2006

6 Appendix A: Extended Enterprise LMS Feature Scorecard The following scorecard lists corporate and extended enterprise LMS functionality. Corporate functionality includes basic and advanced functionality that applies to departmental-, corporate-, and extended enterprise-wide. The extended enterprise features set applies to learning management in knowledge-intensive partner channels. To complete the scorecard, rate the LMS on how well it meets each feature requirement. An LMS that doesn t meet a requirement is penalized one point. An LMS that exceeds a requirement is given one bonus point. To be suitable for an extended enterprise implementation, an LMS should score at least 20 on both metrics. When comparing two LMSs that both have at least 20 on the corporate metric, use the highest scoring extended enterprise metric as a tiebreaker. 6 9/26/2006

7 Feature Requirement 0 Doesn t Meet +1 Meets +2 Exceeds Notes Corporate LMS Functionality Easily customizable user interface (by the user, not the developer) Student messaging and notifications Can integrate with specialized applications and administrative systems Ability to name administrator, instructor, aides, observers, and student course roles and dynamically define and adjust their privileges as needed. Assessment/testing capable of handling student pre/post testing Easy-access to data for business intelligence reporting Basic instructional management Manage users, roles, courses, instructors, and facilities and generate reports. Course Calendar Access to scores and transcripts Grading of coursework and roster processing Waitlist processing Prerequisite/equivalency for course enrollment Support for complex Boolean expressions for prerequisites and equivalencies Incorporation of various data points (training, certification and other) as prerequisites or equivalencies 7 9/26/2006

8 Feature Requirement 0 Doesn t Meet +1 Meets +2 Exceeds Notes Web-based course delivery SCORM 2004 and Global Shared Objectives Incorporated course shell for navigation and progress tracking Supports multimedia capabilities (i.e. streaming audio/video) Supports secure transactions Advanced instructional calendar management Configurable reminder notifications Graphical calendar for instructors and students Outlook integration Auto-enrollment Support for various modes of training SCORM/AICC Web Based Training (WBT) Traditional Instructor-Led Training (ILT) CD-ROM Based Training (CBT) Online Virtual Classroom Training Corporate Functionality Subtotals Total 8 9/26/2006

9 Feature Requirement 0 Doesn t Meet +1 Meets +2 Exceeds Notes Extended Enterprise Functionality Blend multiple course delivery modes together E-commerce functionality with multiple billing modes Integration with performance tracking and management systems (analytics, balanced scorecards) Scalability to thousands of concurrent users Departmental skills planning Planning tools to analyze skill gaps at a departmental and individual level View department from a skills perspective to identify gaps and ensure proper coverage Management can set training and certification goals for individual students Supports extended enterprise organizational structure Training "locales" for targeted distribution of learning according to local requirements Define demographic units (region, product line, business size, etc.) Assign corporate and channel employees to multiple position codes at multiple demographic units 9 9/26/2006

10 Feature Requirement 0 Doesn t Meet +1 Meets +2 Exceeds Notes Flexible, cascading certification structures Curriculum, required and elective training requirements at an individual and organizational level Capture interrelated technical curriculum requirements Organizational training/certification objectives as certification requirements for managers Certification progress tracking capabilities tied to incentive plans Structured and individualized programs Set-and-Forget Planning Manager enrollment and approval Interest lists linked to auto-enrollment/notification processing Interest lists directly linked to certification or technical curriculum Extended Enterprise Subtotals Total 10 9/26/2006

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