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Introduction
Every CEO has heard the claim that implementing
learning and performance management technologies will
significantly reduce training costs and improve performance. While
eLearning is in use at many leading corporations and learning management
systems are helping track learning activities and leverage the Internet
for delivery of learning content, the fact is that these projects
rarely produce a Return On Investment (ROI). The reasons
for this is three-fold;
- The full cost of
learning and performance management system technology can be significantly higher
that the returns it can provide
- The cost of eLearning development is very high
- The lifecycle cost of learning and
performance management system technology and maintenance of eLearning materials is rarely
considered in the return estimate
“Nearly
75 percent of corporate learning professionals indicated that reducing
education and training costs was their main driver for launching an
e-learning initiative. Corporate learning practitioners indicated
they saved less than 20 percent in training-related expenses by delivering
programs via eLearning.”
Corporate
University Xchange's Pillars of e-Learning Success
Learning and Performance Technology
Platform Expenses
Many Learning Management Systems cost companies in excess of $750K per
year for license, maintenance and student access fees. Some
corporations are paying more for their learning management technology than they are for
the content they deliver. Learning management technology is not worth more than the
inventory (documentation, eLearning and other training programs) it contains, delivers
and helps manage.
| One of the most
revealing questions from the 2008 Learning and Talent
Management Technology Survey asked respondents to indicate
what technologies their organizations were using and what
technologies were still needed. While over 85% of the
respondents indicated that their organizations possessed
eLearning authoring tools, 26% of these organizations
reported only limited use of these tools. Over 37% of the
respondents indicated a need for examination/testing
development and delivery technology. We also noted that
even with all of the recent advocacy regarding talent
management technologies, that only 38% of the organizations
responding had made an investment in this technology area.
Which of the following
technologies does your organization use or need?
It is amazing that
organizations planning to procure technology and
services to improve employee and organization
performance fail to review the performance of the
companies they are buying from. Dozens of learning
technology vendors have failed, merged or been
acquired in the past two years, resulting in the
emergence of two large public companies that are
losing millions. In prior years, technologies from
Pathlore, Centra, Docent, Click2Learn, NETg,
Macromedia and Thinq all rated their own pie slice.
Today these companies are either gone or part of
another company as the result of merger or
acquisition
KMSI is profitable, cash positive and growing.
Recent industry surveys confirm that our clients
have a higher satisfaction with our KMx software
that that of any other leading learning technology
supplier.
Learn.com, Saba,
Centra, SumTotal, Pathlore, Toolbook, Adobe,
Macromedia, Plateau Systems, Outstart, Geolearning
and Generation21, are trademarks of their respective
companies. |
Which
vendor currently provides your organization
with learning or talent management technology?
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"it has been a dirty little secret of the software
industry that the maintenance part of the business
is the largest part of vendors’ revenues, and is
really where vendors meet profitability (if not
“money for the caviar,” meaning their profits exceed
original profit margins"
P.J. Jakovljevic - Technology
Evaluation Centers |
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Our competitors charge a software
license fee coupled with annual "per-user" license
fees, maintenance fees, upgrade fees, integration
fees and per-user hosting fees.
As illustrated, the initial acquisition cost for
our competitor's offering can be well in excess of
$500K with continuing annual fees of $200K or more
based on the end-user population and hosting
considerations.
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"Pricing usually depends on the number
of people taking the training courses, with most companies offering a
variety of licensing options, hosting services, volume discounts,
subscription-based ASP services, and off-the-shelf and custom
courseware. Providers of enterprise-level learning management systems,
such as Click2learn, Docent, IBM, Saba Software, and Sun Microsystems,
do not publish pricing, since each engagement is customized. To train
ten of thousands of employees, you can expect to pay hundreds of
thousands of dollars."
PC Magazine, An Introduction to E-Learning Providers
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With KMx, there are no user fees, no
maintenance fees and no upgrade fees. Our
standards-based approach significantly lowers the
cost of integration and shortens the implementation
schedule to weeks, vice months.
As illustrated in the chart, KMx provides flat
annual pricing, regardless of the number of
end-users and has an initial acquisition cost that
is hundreds of thousands of dollars less than our
competitors. |
Significant Buyers Remorse
The chart below speaks for
itself, with over 50% of the 2008 Learning and Talent
Management Technology Survey respondents indicating that
they are "not satisfied" with the technologies that their
organization uses. We analyzed the responses to these
questions on a vendor-by-vendor basis and determined the
following:
- Large (>5,000 employee)
organizations are far more likely to be dissatisfied
with their current technologies
- Technologies from three
of the nine providers included in our survey represent
50% of the "not satisfied" responses
- The amount an
organization paid for their learning and talent
management technology had no relationship to their
overall satisfaction
- 92% of our clients
responded as being satisfied or very satisfied with our
KMx technology
Rate your
satisfaction with the following technologies that your
organization uses:
"E-learning systems, cited in a recent study as yielding great returns on investment, may not be so great after all.
Learning officers at two Fortune 500 companies last week pointed out a "gotcha" that can negate the returns cited in the September report: vendors' insistence on applying per-seat licensing contracts to companies with large numbers of potential end users."
Costs negate e-learning
ROI - ComputerWorld
| The Hidden Cost of Success
Per-user license fees and the
newly coined "on-demand" usage fees have resulted in
organizations limiting the access to learning and
performance management technology. With the shift to ASP (vice
installed software) technologies, organizations are
generally paying less for their overall learning and
performance management solution. Even with these lowered expenses, the
trend to restrict usage to avoid paying "on-demand" usage
fees is increasing. Several of the organizations we
interviewed have abandoned the use of eLearning for employee
job qualification, shifting to on-the-job training methods.
Nearly every executive we have
interviewed despises the industry practice of
software vendors charging these anomalous fees, yet
they are still to this day being charged by our
competitors.
Our discussions with executives at
numerous Fortune 500 companies disclosed that many
of the technologies purchased never really get fully
implemented. A dizzying array of issues, primarily
stemming from learning management data systems that
were so poorly designed that the integration with
true enterprise human resource management systems
and other enterprise resource planning software
ultimately proved futile. This research revealed
implementations that had cost clients triple their
original estimates and have taken years to achieve
any productivity. |
2009
Industry Survey
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What is the availability of your
organizations learning and
talent management technology offerings for the following
individuals:
It is important to note that
none of the organizations using our KMx platform have
restricted access to learning and performance management
offerings because of expense. With KMx, there are no user
fees, no maintenance fees and no upgrade fees.
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The Promise of Returns
Studies have proven that training, eLearning and Knowledge Management
implementations can increase productivity and improve performance. Many companies focus on everything except the
training that can provide these returns. The majority of eLearning content
available at corporate universities is regulatory compliance, HR, soft
skills or information technology related material.
The eLearning programs that
can significantly increase revenues and decrease costs are the ones
focused selling and delivering the company's offerings.
“Less
than 18% of corporate e-learning courses are on topics specifically
related to an e-learner's job. Only 23% of corporate learning
organizations target their programs to external customers. Only 13 % of
corporate learning organizations target their programs to suppliers.”
Corporate
University Xchange's Pillars of e-Learning Success
It should be obvious that
focusing eLearning investments on improving the skills of the sales force,
customer support personnel and channel partners will increase both
revenues and customer loyalty. So
why don’t corporate learning organizations invest heavily on these types
of programs? It appears that
increasing
overall course count ("over 500 courses at our corporate
university") became important to the
managers of these company institutions at some point.
The investment in large libraries from IT and HR eLearning publishers reduced
the ability of corporations to invest in programs geared towards increasing
revenues and decreasing the cost of goods sold. The same issue seems to have impacted the investment in supplier,
agent and partner training programs.
It is a fact that the vast majority of the training being
provided to employees, suppliers, agents and partners using learning and
performance management technologies is not
related to their jobs.
Analyzing the Cost of eLearning
Corporations are paying as much as $85K per hour of instruction to
outside contractors for development of eLearning materials. It takes
a lot of return to pay for an investment of this magnitude.
Development of a one-week course of instruction could cost as much as
$3.4M.
In general, these contractors bring two things to the table:
- Knowledge of instructional
design and development processes
- Experience with technology
(usually from third-parties) to generate eLearning materials
The costs are high because of the amount of labor that is expended
generating analysis and design information, developing course objectives,
testing materials and instructional content using manual processes and
difficult authoring tools. Some
estimates of eLearning development consume as much as 450 hours of labor
to produce a single hour of instruction.
Conversion of existing instructor-led training to eLearning should,
in theory, require less instructional design since the learning
objectives, testing materials and content are available for re-use.
These figures do not include the time for internal subject
area experts required to support the development of instructional content.
eLearning development contractors are not unfairly overcharging for
the services they provide. The
manual processes and difficult development tools are the real culprits.
"KMSI is
revolutionizing e-learning and is positioned to be the leader in the
corporate e-learning space through delivering superior technology with
measurable, high return on investment for its clients"
Duke Essiam - IPA Advisory &
Intermediary Services
It is extremely unlikely that an eLearning development contractor knows
enough about your business to develop new materials without support from
your expert personnel. These internal experts could develop or
convert instructor-led materials into high quality eLearning if:
- Technology could automate the instructional development process and;
- The desktop applications that these experts are already familiar with
could be used to generate the eLearning content.
Once an outside
contractor has developed your eLearning content it is almost certain that
any maintenance or updates to these materials will have to be contracted
as well. The internal experts required to communicate these
revisions to an outside contractor could, with the right tools, perform
the maintenance without contractor support.
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Conclusion Our solution is a
technology platform called KMx. This platform, our
associated pricing model and implementation processes
have forever solved the key pitfalls that have plagued
the learning and performance management technology industry.
KMx is sold for one low price, regardless of the
purchasing organization's size. KMx can be installed and
integrated in a matter of days, not months or years like
many of our competitors. KMx provides the tools required
to develop eLearning materials without the need for
programmers or complex development software. KMx
realizes the vision of the SCORM standards through its
ability to produce truly shareable, highly granular, and
reusable content. Our sales process is premised on one
simple theme "try KMx and become a believer in
e-learning and learning technology, again".
"After almost 2 years of research and exhaustive
evaluations, TVPPA is convinced that KMx will quickly
become the standard by which all other systems are
measured"
Doug Peters -
TVPPA Education & Training Director
We recognize that many
organizations have already licensed learning management
system technology. We also recognize that many of these
solutions have provided a minimal return on investment
or have been unable to meet client expectations.
Organizations that have incurred the significant expense
and time required to implement the offerings of our
competitors are sometimes reluctant to consider
alternative solutions, fearing additional expense and
delays. In order to counter these reservations, KMSI
offers a solution specifically designed for
organizations that have already licensed learning
management technology. Our solution will provide your
organization with the ability to: ·
- Deliver training to an expanded
group of employees, customer and/or suppliers
without incurring per-user fees.
- Quickly and easily convert
existing instructional materials to standards
conformant on-demand e-learning for delivery.
- Provide virtual classroom
training without incurring per-user fees. ·
- Create and manage a reusable
learning content object library to expedite
development efforts and provide just-in-time
training and performance support.
The satisfaction that our clients
achieve with our solution quickly overcomes any
hesitations that they may have had when considering
abandoning the use of the learning management technology
that they have licensed from our competitors. |
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"I
have had the opportunity to work with many learning management systems and
training development platforms, most of which have fallen short of meeting
expectations of the development staff and training management. KMSI
has designed a platform that is practical to use, addresses the key needs
of the training manager and meets the requirements for reuse of content
for both training and human performance support. This platform integrates
proven instructional design principles, documentation and job-performance
support strategies, with current available technology to produce an
extremely effective training development and delivery tool."
Bob
Danna, Executive Management Consultant
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