Learning Management Systems
BuyerView | 2015
Every year, hundreds of buyers contact Software Advice in search of new learning management system (LMS) software. Interacting with these prospective buyers provides us with valuable insight into the LMS market and the emerging trends within it.
We recently analyzed a random sample of these interactions over the past year to better understand who these potential buyers are, what systems they are using and why they are looking for new LMS software. This report will help guide the purchases of those looking to implement a LMS platform of their own.
Effective corporate training can bring a myriad of benefits to a business, including increased employee loyalty and engagement—which, in turn, can lead to greater firm productivity and profit growth. But actually implementing a good training program is easier said than done. Developing training content, administering it to hundreds or thousands of employees and tracking results can be a time- and resource-intensive process, especially for those still relying on in-person training sessions and paper files.
Luckily, technology in the form of LMS software has emerged to make corporate training easier than ever, and companies are responding in stride: the LMS market grew by over 21 percent last year. So, what is driving buyers to consider software, and what do they seek most in new systems? Software Advice decided to find out.
According to our findings, 80 percent of potential buyers are considering LMS software for the first time. Fifty-nine percent of buyers sampled currently rely on manual methods, such as paper files, in-person trainings and general-purpose software (such as Microsoft Excel and SharePoint) to administer and track employee training. Only 20 percent of buyers currently use commercial LMS software.
While the use of technology in employee training is growing, it still hasn’t reached full adoption. According to the Association for Talent Development’s annual “State of the Industry” report, only 38 percent of companies deliver training via technology.
Digging deeper, buyers’ manual methods generally fall into three groups:
Those completely relying on non-software methods for training. These buyers often describe corporate training as you would imagine it historically: in a classroom with an instructor, using paper documents, files and quizzes.
Those using multiple non-human resources (HR) and non-LMS software platforms to handle training needs. This group typically has one system in place to create content (PowerPoint, SharePoint) and another to track trainees (Excel, paper files).
Those with dedicated HR software in place for other processes, but not for employee training. For example, one buyer in this group mentions using a human resources information system (HRIS) for general HR purposes, but is still manually tracking instructor-led trainings.
Although these buyers are in different stages of adopting technology for their HR and training needs, each could still benefit from having a single, unified system where content creation, training administration, tracking and reporting can happen simultaneously.
The reasons buyers are looking for new LMS software vary, depending on whether they currently use a LMS or not. Those that have a LMS platform most often want new software because they desire more functionality (31 percent), or because their current LMS is broken or hard to use (23 percent).
Those buying a LMS for the first time, on the other hand, want to improve training efficiency (27 percent) and organization (25 percent), or want improve the tracking of training information (24 percent).
Intuitively, this makes sense. Non-LMS users that still rely on in-person training sessions and classrooms may find it incredibly inefficient to administer training this way, especially if a business has employees at multiple locations.
Even if a company uses custom-made training websites or a main digital hub, such as Google Drive, through which trainees can access materials, users may be doing double-entry to keep track of employee information and training performance on various systems.
On the other hand, those who have a LMS are already realizing the efficiency and organization gains of specialized software. These buyers are looking for a new system because their current software isn’t meeting their needs, either through missing functionality or a system that is broken or user-unfriendly.
In terms of the specific functionality buyers are seeking, those in our sample most often want to upload and store training content (61 percent) with their new LMS. The ability to track training and reporting capabilities (each requested by 45 percent) are also important functions for these buyers.
As we learned in a recent Software Advice report on LMS users, employing a mix of training content created in-house and created by third-party sources is optimal to get the best results. Whatever content type businesses decide on, LMS platforms offer a centralized location to store and reuse it as necessary. Many platforms also offer functionality to turn training materials into eLearning SCORM content—a popular technical standard used to track training progress in LMS systems requested by 7 percent of buyers.
Functionalities for tracking training and for reporting go hand-in-hand towards a goal that many buyers in our sample say they are hoping to accomplish with their new platform: to better understand the effectiveness of their training program.
In a recent study by the American Management Association (AMA; a professional association), HR professionals said they most often rely on opinion-based metrics, including employee feedback (70 percent) and manager evaluations (40 percent), to measure training effectiveness. Only half of these respondents said they employ measurable performance results, such as training course test scores or comparing job performance before and after training, to measure effectiveness.
Because of this reliance on non-measurable techniques, the AMA says, “the return-on-training-investment remains elusive in most organizations.” Implementing an LMS to gain advanced metrics on what training courses employees are taking and what information they are retaining, based on quizzes and assessments, gives businesses more quantitative data to measure this return on investment.
Looking at training community eLearning Industry’s “Top LMS Trends for 2014” for comparison presents interesting insight, as well. Some of the trends cited in this report by author and thought leader Christopher Pappas—such as the shift to cloud-based software, content reusability, talent management functionality and emphasis on user experience—align with our buyers’ requested functionality and pain points.
However, there are some notable differences: Mobile learning, social learning and gamification functionality, while touted as growing trends in the LMS space in this report, are only requested by 5 percent, 2 percent and 1 percent of buyers in our sample, respectively—sizes so small they were omitted from the chart above.
The LMS market is booming—and by looking at interactions with prospective buyers, it’s easy to see why. A majority of them still rely on non-technological means or basic software to create content, administer training and track results. These buyers are eager to improve training organization and efficiency, and an LMS platform offers a central hub for them to do so. Eighty percent of buyers are evaluating LMS systems for the first time, and the other 20 percent are looking for a new system that has more functionality or is easier to use.
While technology usage differs among buyers, requested functionality does not. The LMS industry is quick to promote new trends, such as mobile learning, social learning and gamification functionality. Buyers in our sample, however, just want the basics: the ability to upload and store training content and to track and report on training progress and results.
Quantifying the return on investment in employee training can be a difficult task, but advanced metrics from LMS platforms on course completion, information retention and effect on job performance give users better insight into how effective their training programs really are. Once companies implement effective employee training, the benefits to engagement and the bottom line will likely follow.
LMS buyers in our sample most often come from highly regulated business segments, such as manufacturing (14 percent) and health care (11 percent). However, a wide variety of other segments are represented, as well.
In terms of size, buyers most often come from small to midsize companies with 251 to 500 employees (22 percent) and $26 to $50 million in annual revenue (30 percent). Unsurprisingly, buyers are looking to train a lot of employees at once: 75 percent of buyers expect to have more than 100 users.
Our advisors regularly speak with buyers who contact Software Advice seeking new LMS software. The data used to create this report was collected by our advisors during those interactions for business purposes rather than for market research. We randomly selected 200 interactions from the United States over the past year to analyze for this report.
These findings exclusively represent those buyers who contacted Software Advice for guidance on software selection, and may not be indicative of the market as a whole. Expert commentary solely represents the views of the individual. Chart values are rounded to the nearest whole number.
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