Ryan Moore at the UncannyOwl.com recently published an article titled "11 Reasons Hosting Your Own LMS Beats the Cloud". The article raises several important aspects that need to be considered when selecting an LMS. Many LMS purchasers focus on LMS features and don't consider these important areas. By factoring these items into your LMS selection you will be able to select a training platform that is best for you. Generally, I recommend a cloud LMS because it is the most cost effective option. I would only recommend implementing a hosted LMS if you have a security, data residency, or other overriding concern that justifies the increased cost of a hosted LMS.

The article can be found at: http://www.uncannyowl.com/11-reasons-hosting-your-own-lms-beats-the-cloud/. A full reprint of the article can be found at the bottom of this article. Below please find my take on his 11 reasons.

Jeff's take on the 11 reasons

1. Your Rules. The vast majority of cloud LMS vendors will not implement client-specific customizations.  However, at Latitude we specifically architected our cloud LMS, LatitudeLearning.com, to enable client-specific customizations. It's one of main reason clients select our LMS.

2. You Data. If you don't take precautions, you will lose your cloud data if your vendor unexpectedly disappears and your haven't been backing up your LMS data. On the other hand, you will lose you hosted data if your hard drives crash and you haven't been backing up your LMS data. The bottom line is you need to regularly back up your LMS data. The key data most LMS clients care about the most about are course transcripts. Many LMSes include reports that allow you to export course transcripts in an excel spreadsheet. This is a very low cost, easy way to back up cloud LMS data. Some LMS vendors offer daily database export services. Generally most clients prefer to use the course transcript report to periodically backup course transcripts and only a handful are willing to pay for full database exports.

3. Your Security Standards. With a cloud solution, you must live with the vendor's security standards. You should know your security requirements and ask the LMS vendor about their security protocols. Are they SAS 70, SSAE 16 and SOC 2 compliant? Do you need PCI or HIPAA compliant hosting? Although some cloud-vendors are hosted in sub-standard facilities, most are hosted in first class facilities. However, if your security requirements differ from a vendor's security protocol, there's usually little the vendor can do to accommodate client-specific security requirements. This is one of the primary reasons hosted clients select a hosted LMS versus a cloud LMS.

4. Lower Total Cost of Ownership. Cloud LMSes should always have a lower total cost of ownership than hosted LMSes. This includes both setup and ongoing costs. Hosted solutions can appear cheaper because the costs of internal resources (i.e. your staff and infrastructure) tend to be hidden. By the way don't forget to include the cost of development and testing environments for your hosted LMS. When these internal costs are fully accounted for hosted LMSes usually cost more than cloud LMSes. The only exception I've seen is when the pricing model of the cloud LMS doesn't match the usage patterns of the client. For example, many LMS vendors only offer user-based pricing. This is a great pricing model if you're training employees but not a good pricing model if you're a training firm selling training to clients. For training firms an enrollment-based pricing model aligns better with their usage patterns.

5. Nothing Disappears Tomorrow. Like data, if you don't take precautions, you will lose your platform if your vendor unexpectedly disappears. The primary strategy to address this issue is escrowing the vendor's source code. Most cloud vendors are unwilling to do this, however a few vendors, like Latitude, offer this service. That said, the vast majority of clients forgo this option for cost reasons. While the cost of the escrow is small, to make the option effective your staff must be trained on how to implement the escrowed software in advance and few clients are willing to make this relatively large investment.  

6. More Development Support. More development support is available, if and only if, the LMS vendor gives you the source code. However, most hosted LMS vendors will not give you the source code, so you're support options are limited to the vendor. A few LMS vendors, access to the LMS' source code. A few vendors, like Latitude, and open source LMSes will give you access to the source code and therefore you can support your LMS.

7. Your Systems. Most cloud LMS vendors can integrate your LMS to a user management system (often your HRIS). Additionally, several cloud LMS vendors support single sign-on (SAML 2, Active Directory, etc.) and other types of integration. Make sure you know your integration needs when selecting an LMS vendor so you don't get stuck with an organization that can't support your future integration needs.

8. Better Performance. Usually cloud-based solutions offer better performance for two reasons. First, the cloud LMS can instantaneously meet demand spikes.  The larger infrastructure foot print of a cloud solution means that the cloud LMS has instantaneous access to more peak computing power than hosted LMSes and therefore provides better performance during demand spikes. Second, cloud vendors usually have dedicated staff and tools that monitor and adjust LMS performance. Hosted LMSes tend be one of many applications in-house staff supports and usually don't receive the dedicated focus cloud LMSes receive.

9. Unlimited Storage. If you host the LMS, you most purchase and install the hard drive. And while many cloud LMS vendors limit user content storage, most will increase your content storage limits for a modest fee. FYI, Latitude doesn't place a storage limit on user content.

10. Scalable. Cloud-based LMSes are generally more scalable because they are architected to scale (that's what the whole cloud software business model is based on). For example, at Latitude our cloud LMS hosts over 6,000 LMSes some of which have over 1 million users.

11. Predictable. This one goes to the hosted LMS. By hosting the LMS you control when it gets updated, where as the vendor controls when a cloud LMS gets updated. The flip side is that every time you implement a new update on your hosted LMS, it's an incremental cost. Whereas there's no incremental cost when the vendor updates the cloud.

Original Article

11 Reasons Hosting Your Own LMS Beats the Cloud

by Ryan Moore, August 10, 2014
Uncannyowl.com

Businesses that need easy, out-of-the-box systems to deliver training online are increasingly turning to Learning Management Systems in the cloud. Startup costs are low, they’re scalable, they can be deployed quickly, and many of them provide a great learner experience. For small audiences, infrequent learning or when simplicity is paramount, a cloud LMS is likely the right solution. But they’re not right for every situation, and for many organizations, hosting their own LMS is an overlooked—yet potentially better—solution to learning. We put together a list of 11 reasons to explain why we set many of our clients up with their own LMS (typically WordPress-driven) rather than rely on a cloud solution.

1. Your Rules

With a cloud LMS you’re stuck with what’s offered. Customization is generally limited to branding and some basic options, which may or may not include the functionality you really want. Want to mix facilitated sessions with self-directed modules? Maybe integrate event planning, webinars, ecommerce and social sharing? What about custom automated emails and reporting? With your own WordPress-based LMS, like the ones we offer our clients, you’re only limited by your imagination. Choose from thousands of widely-tested plugins to add capabilities or dig into the code and make the system do whatever you want it to.

2. Your Data

What happens when a cloud LMS vendor disappears, has a catastrophic failure, you outgrow it or new policies require it to be hosted externally? What if your data privacy rules mean storing data in specific countries? You’re out of luck with a cloud solution. With your own LMS you own the database—and the data. Whether it’s for custom reporting, data portability, easy batch changes or something else, direct access to the learner database means more flexibility and less reliance on a third party.

3. Your Security Standards

I’ve already written about the security practices of cloud LMS vendors before. They’re generally lacking. With your own system, you can apply as much or as little security as you need. Restrict access to specific IP blocks, build in 2-factor authentication, put the system behind your firewall—there are no restrictions on how you secure your own learning systems.

4. Lower Total Cost of Ownership

Yes, getting started with a cloud LMS system is very inexpensive. But then you keep paying forever, potentially spending thousands of dollars monthly as your learning programs grow in popularity. Once that happens, it can be very difficult to migrate away from a cloud provider to a solution that’s more cost-effective. Yes, setting up your own LMS costs significantly more initially, but the ongoing costs—regardless of the number of users—can be as low as $0 if you can leverage existing infrastructure.

5. Nothing Disappears Tomorrow

If a cloud LMS vendor disappears, so do your courses and data. When was their last backup, and do you have a copy of your data? With your own LMS, your platform can’t disappear tomorrow because you own it (and take the necessary steps to keep it safe). Sure, there’s a risk that the creator of the tools you use could stop supporting them, but you never risk losing your platform and data. And you’ll have plenty of developers and access to the code to lend a hand if you need it.

6. More Development Support

Need extended support or customization for a cloud product? Chances are you’re locked into using the vendor. With your own solution, like one based on WordPress, there are thousands of developers ready to help out and many active development communities. You’re not tied to one company and competition means better pricing and expertise when you need assistance.

7. Your Systems

Maybe you’d like to use Single Sign On access for your LMS so your staff don’t need yet another password to remember. Or maybe you’d like tight integration with your website to maintain the same look & feel and maybe even the same user profiles. With a cloud service, integrations with your existing systems are often difficult or even impossible. After all, you’re limited to whatever capabilities they want to offer.

8. Better Performance

Simply put, you can’t control the performance of cloud LMS services. The near-universal U.S. hosting may not be ideal for your users in other regions, and without very expensive packages you’ll be sharing the server with other customers. With your own LMS you can build platforms that fit the exact needs of your audience and optimize them to deliver the best possible experience.

9. Unlimited Storage

Every cloud LMS plan is targeted at the generic customer and their expected needs. Have a lot of multimedia to store? You’ll probably be paying for more users than you need then. With your own LMS your courses can be as big or as little as you want—it’s defined by your infrastructure and needs, not someone else’s. This is even more important when you want to start benefiting from user-generated content.

10. Scalable

Cloud solutions say they’re scalable, but what happens if you get really big or decide the LMS suddenly needs to be hosted internally? A basic dedicated server is about as far as a cloud solution can take you. And if you ever need to get the records out, you could be in trouble—plus there’s the significant expense of recreating the programs on another platform. With your own LMS, you can put the data wherever you want, toss in additional servers and load balancing as they’re required, and never worry about hitting a ceiling.

11. Predictable

Predictability is extremely important for businesses. What happens when a cloud LMS vendor rolls out an update that changes the user experience or your reporting unexpectedly? You probably have no time to prepare and the learner/customer impact could be catastrophic. With your LMS, you control the experience and the timing of updates. Want to test them first? Throw up another instance and test things out before they go out to your audience. With a cloud solution you’re at the mercy of a vendor who controls everything, from application changes to features to data. It’s a big risk for companies that rely on a Learning Management System.

Even with all of these considerations, of course, going with an in-house LMS isn’t the right solution for everyone. But with all of the attention on cloud platforms, many companies should reconsider whether or not it’s the right solution for both their learners and their organizations. And even if it is today, what about tomorrow?