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by Brian Westfall,
Market Research Associate
Last Updated: December 2, 2016


If you’re in the market for a cloud-based learning management system (LMS) which is accessible from any Web-enabled device, you’re not alone. A survey conducted by Capterra in 2015 found that 87 percent of LMS users rely on a cloud-based system.

But just because something’s popular doesn’t necessarily mean it’s right for you and your organization. That’s why we’ve created this buyer’s guide to help you understand everything you need to know about cloud-based LMS software.

Here’s what we’ll cover:

What Is Cloud LMS Software?
What Type of Online LMS Buyer Are You?
Pros and Cons of a Cloud-Based LMS
How Much Does Cloud LMS Software Cost?
Common Features of an Online LMS

What Is Cloud LMS Software?

If knowledge is power, then consider LMS software to be the electrical grid that delivers that power to your business or school. These systems allow managers, trainers and teachers to administer more flexible digital e-learning courses through computers or smartphones, using premade or self-created teaching materials.

With an LMS, you can test learner knowledge with customized assessments, track worker certifications, measure learner engagement and more.

Courses in LearnUpon LMS

Courses in LearnUpon LMS

Cloud LMS software, also called Web-based or SaaS (software-as-a-service) LMS software, is software deployed through a Web browser. Unlike on-premise systems, which users host and maintain on their own servers, cloud platforms are hosted and maintained by the software vendor.

Buyers pay a subscription fee—typically monthly or annually—to access cloud-based LMS software. As long as you have a web-enabled device and an Internet connection, you can access your account from anywhere in the world.

Cloud-based products are popular for a few common reasons. First, the subscription pricing that typically accompanies a cloud product offers lower up-front costs to buyers (though that subscription fee does recurr monthly or annually, depending on the contract). Second, because the software is hosted online or "in the cloud," remote access is a breeze. And finally, software updates are pushed out automatically (whereas with an on-premise system, buyers typically have to manually install upgrades themselves).

However, organizations with a large or resource-rich IT department sometimes prefer on-premise solutions so that they can manage the software on their own servers. Additionally, for some businesses, the larger up-front and smaller recurring costs may be appealing. (Either way, the cost of on-premise and cloud-based systems tends to converge over the life of the software.)

What Type of Online LMS Buyer Are You?

Buyers of cloud-based LMS software typically fall into one of two categories:

Education professionals. Schools and universities are increasingly relying on cloud-based LMS platforms to deliver lessons and assignments to students. If you’re considering cloud-based LMS software for your school, some features to look out for include:

  • Social learning functionality, such as class forums and student blogs to increase engagement
  • Responsive design to cater your courses to varying screen sizes on tablets and phones

Corporate trainers. Within the corporate sphere, cloud-based LMSs allow trainers to develop their workforce and also get external groups such as channel partners or customers up to speed.

If you’re a buyer in this category, look for extended enterprise functionality that allows for custom branding to tailor the e-learning experience to different learner audiences, while gamification features such as badges and leaderboards can increase course participation.

Some corporate LMSs also offer integrated content authoring, but there are standalone tools for this as well.

Pros and Cons of a Cloud-Based LMS

Having a cloud-based LMS carries a number of benefits over an on-premise system, but also some drawbacks:

ProsCons
Reduced IT costs

Because the software is hosted on the vendor’s servers, there is no need for buyers to pay for their own servers or IT staff to maintain them. This can be a huge cost-saving measure, especially for small organizations.
Lack of customization

Though cloud systems have some options to customize the solution to individual needs, these pale in comparison to tailored on-premise platforms that can look vastly different from client to client, and which better integrate with proprietary solutions.
Added flexibility

Cloud-based LMS software accessible through a web browser means your learners can choose where and when they can take their e-learning courses, instead of being forced to use the software during operating hours at one location.
Connectivity dependency

If your users have a stable internet connection, your cloud-based LMS is good to go. But if that connection is weak and unstable, or you experience an outage, you won’t be able to access the system. On-premise systems don’t need an internet connection.

How Much Does Cloud LMS Software Cost?

Cloud LMS software is typically priced on a per-user basis, meaning your monthly or annual fee depends on how many users you have in the system. This price can vary widely from $5/user for small organizations to $0.50/user for large ones.

A common misconception is that cloud-based software is cheaper than on-premise options. Although the upfront cost for cloud-based software is certainly less, the cost of both types of systems ends up being around the same over time when you factor in recurring expenses. You can test this out for yourself using our own Total Cost of Ownership Calculator.

Example on-premise vs. SaaS software cost

Example on-premise vs. SaaS software cost

Common Features of an Online LMS

The most common features of LMS software are found universally in both on-premise and cloud-based solutions. These include:

Learning management The core functionality of any LMS helps educational or business organizations create, store, organize and administer learning materials.
Certification / compliance management Tracks and manages compliance training, as well as certification programs that some industries may require for performing certain jobs.
Virtual classrooms
Facilitates live, remote training sessions, typically led via video.
Proficiency reporting / testing Facilitates the administration of tests to gauge users' learning of the course material. Allows for reporting of test scores to identify proficiencies or gaps in learning.
Content authoring Allows users to create or "author" their own course content, which is in turn delivered through the LMS.

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