LMS Content War: Is In-house or Third Party Content Best?

A learning management system (LMS) is a great tool for administering, managing and tracking employee training courses. However, these systems are only as effective as the training content they include.

To find out what LMS content is most successful for training employees, Software Advice surveyed corporate LMS administrators on their use of third-party versus in-house training materials.

This report will help corporate LMS users decide whether to invest in in-house or third-party training content for optimal training results.

Key Findings

  1. Most LMS users (73 percent) employ a mix of both in-house and third-party training content. This combination is also the most effective way for employees to retain information.
  2. Video is the most popular format for training content: 82 percent of respondents create videos in house, while 85 percent obtain video from third-party sources.
  3. In-house content is used primarily when training materials need to be company-specific, while third-party content is most often used for generic or compliance-based training.

Introduction

As evidenced by the corporate LMS market’s 21 percent growth in 2014, companies are seeking better ways to train their employees. But while LMSs can help companies organize, present and test employees on training content, this software can’t create content out of thin air.

“If you don’t have great content, you can’t improve employee performance one iota,” explains Chris Osborn, vice president of marketing at LMS vendor and training content provider BizLibrary.

“Content is ultimately what drives improved performance.”

Fortunately, companies have options when it comes to what training content they use. They can create it in-house, using a variety of content authoring tools.

These can be as basic as Microsoft PowerPoint, for simple slideshows, or as comprehensive as Lectora, which can be used to create fully interactive e-learning courses and assessments.

Alternatively, companies can use pre-made content obtained from a number of third-party sources, including blogs, articles or videos from YouTube.

But creating or finding training content comes at a steadily rising cost. According to the Association for Talent Development, the average direct learning cost per employee rose by $168 over the past eight years (it currently stands at $1,208).

Clearly, it is only becoming more important to find ways to reduce training costs.

To learn how companies can get the most bang for their training buck, Software Advice surveyed LMS users who have a hand in creating or choosing their company’s training content. The results of this survey will help other LMS users decide what types of content their business should invest in.

Using Both In-House and Third-Party Content Is Most Popular and Effective

We first asked respondents if they use only content created in-house, only content created by a third party or a combination of both for their LMS training courses. The vast majority (73 percent) say they use both in-house and third-party content for employee training.

Only 14 percent use in-house content exclusively, while 13 percent use only third-party content.

Type of LMS Training Content Used
Type of LMS Training Content Used
We also asked respondents to rate how well employees retain seven different types of training information (if the respondent said they use LMS software for that training purpose).

Respondents using a combination of in-house and third-party training content are most likely to say trainees retain information in an “extremely effective” manner.

By Content Type: Training Information Employees Retain Extremely Effectively
By Content Type: Training Information Employees Retain Extremely Effectively
Using a mix of in-house and third-party content is “a best practice,” Osborn says, because each type of content has its pros and cons. In-house content allows for more creative control, and content creators can easily incorporate company branding, goals and ideals into training materials.

In-house content can also be sold on e-learning marketplaces, such as OpenSesame. These are essentially libraries of training content—sometimes housed within LMS platforms—where organizations can post the content they’ve created. By licensing their content to others, companies can actually make money off of training.

However, creating quality training materials requires both time and resources—two things smaller companies in particular may not have much of, especially when onboarding new employees.

According to Sarah Bright, communications director at LMS vendor DigitalChalk, this is a huge issue in the corporate training space.

“I think our clients’ biggest challenge is creating the content and getting it uploaded, because they don’t have the time to do it or they don’t have the help to create the content,” Bright says.

Third-party content, on the other hand, can be obtained for free or at a low cost from any number of sources. Companies can pick and choose the pre-made content that works best, which both saves time and brings in a fresh perspective.

There are downsides to this approach, however. Companies can rarely tweak third-party content to their liking, so what they find is what they get. This presents a challenge for companies that need very specific training (e.g., safety training for a niche chemicals company).

For such companies, it might be hard or even impossible to find suitable pre-made content.

Pros and Cons of In-House vs. Third-Party LMS Training Content 
Pros and Cons of In-House vs. Third-Party LMS Training Content
As most of our respondents report, using a mix of in-house and third-party content is a strategy that allows companies to maximize the benefits of using each content type.

Video Is Most Popular Format for Training Content

Next, we asked respondents which formats of training content they use for in-house and third party materials.

The most popular in-house content types are videos and slideshows (82 percent each), while video and text-based materials is most popular for third-party training content (85 and 65 percent, respectively).

Our data shows that less resource-exhaustive content types (e.g., text or slideshows) are usually created internally, as they typically only require the efforts of a few people.

Conversely, games or simulations, which can take teams of people months or years to create, are usually obtained from third-party sources rather than created in-house.

Most Common Training Content Formats, by Content Type
Most Common Training Content Formats, by Content Type
Of all the content types, however, Osborn says short-form video is the “most effective way to deliver high-impact content.” Our respondents clearly agree, as they use video more often than any other format.

LMS users looking for third-party videos have a number of resources, such as YouTube and online learning course website Lynda.com. Smartphone and tablet recording and video editing capabilities have also made it relatively easy for the average business user to create high-quality videos.

Video editing software, such as Final Cut Pro X, and screen-capturing platforms, such as Adobe Captivate, are popular tools for putting together in-house videos.

However, Bright says these are “not necessarily the most affordable” tools, and recommends programs like ScreenFlow and Camtasia as less-costly alternatives.

Before rushing off to record, though, LMS users should remember that software can only do so much: They must also have a variety of other necessary resources in order to create effective training videos.

“There’s this culture that we’ve built up in the industry that says, ‘you can do your own e-learning,’” Osborn says.

“What the tools don’t provide is the script writing, the instructional design and all of the skills necessary to deliver the goods on high-quality, effective training. That’s the challenge.”

If users have minor issues with video, such as trouble editing footage together or uploading to their LMS, some vendors offer production services as part of their platform. Indeed, whatever content formats are used, most LMS systems make it easy to upload and combine training materials.

Once content is uploaded, the LMS categorizes each piece of content as a “learning object” or “learning element.” Users can then organize these objects or elements in whatever sequence they want to create a complete lesson or course.

Absorb LMS

Adding a learning object in Absorb LMS

In-House Content for Specificity, Third-Party Content for Generic Training

To explore LMS administrators’ reasons for using different types of content, we asked those who create training content in-house why they choose to do so, instead of using third party content. We also asked the same of those who use third-party over in-house content.

A majority of those who create content in-house (53 percent) say that it allows the training to be more company-specific. Meanwhile, the highest percentage of those using third-party training content (26 percent) say it fulfills a basic or generic training need.

Top Reasons for Creating In-House Training Content
Top Reasons for Using Third-Party Training Content
Most Common Purposes of Training Content

We also asked respondents about the purposes served by in-house versus third party content. Similar to the previous question, most respondents say they create in-house content for job-specific training (79 percent) and new-hire orientation purposes (70 percent), where training needs rely on internal knowledge.

On the other hand, respondents say they use third-party content most often for compliance training (58 percent): a basic training need that can be met by outside sources.

The biggest discrepancy in favor of using in-house content is for job-specific training (79 percent versus 40 percent). On the flip side, the biggest discrepancy in favor of third-party content is for technology training, but to a much lesser extent (49 percent versus 44 percent).

As job responsibilities can vary wildly from company to company, and each organization has its own practices and processes to teach, it makes sense that most companies want to create job-specific training in-house.

On the other hand, since companies typically aren’t the creators of the technology their employees use (e.g., computers, phones and software), third-party content can be a good fit for training employees on these tools.

For those companies that have trouble finding third-party training material, but don’t have the resources to create it in-house, there are additional options. Dan Medakovic, vice president of learning solutions for LMS vendor Absorb LMS, says there are niche content vendors that may have exactly what a company needs.

In this case, users should contact their LMS vendor, which may be able to help them find the right content vendor.

Conclusions

With training costs on the rise, companies can’t afford to put employees through ineffective training courses. Here are a few best practices for curating the most effective LMS training content:

Use a mix of in-house and third-party content. A combination of internally created and pre-made training materials allows companies to take advantage of the benefits of each type. In-house content allows for greater flexibility and control over the company brand and message, while third-party content is cheap, widely available and provides outside expertise. According to our data, using a mix of both types is also the most effective way to ensure employees retain information.

Video training is most effective. Short-form video is the most popular and effective format to present training in. Affordable editing and screen-capturing tools make it easy to create videos, while online content libraries offer a large number of video resources to pull from.

Create company-specific information; use third-parties for the rest. As a general rule, it’s best to create in-house content for training that requires specific internal company knowledge and information. Third-party content is ideal for more basic needs, such as compliance, certification or technology training.

Demographics

Most respondents in our survey work in the business services sector, while the size of company by number of employees and annual revenue varies.

Respondents by Industry
By Annual Revenue: Respondents’ Company Size
By Number of Employees: Respondents’ Company Size

Methodology
To collect the data in this report, we conducted a seven-day online survey of 16 questions, and gathered 150 responses from random full-time employees in North America. We screened our sample to only include respondents who work at companies that use LMS platforms and have some hand in creating, managing or approving training content. Software Advice performed and funded this research independently.

Results are representative of our survey sample, not necessarily the population as a whole. Sources attributed and products referenced in this article may or may not represent client vendors of Software Advice, but vendor status is never used as a basis for selection. Expert commentary solely represents the views of the individual. Chart values are rounded to the nearest whole number.

If you have comments or would like to obtain access to any of the charts above, please contact brianwestfall@softwareadvice.com.

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