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Bersin & Associates Releases Major Study of Customer Satisfaction with Learning Management Systems

Research Indicates Continued Market Churn and Frustration: 24% of Respondents Likely to Switch Vendors

Oakland, CA – March 29, 2007 – Bersin & Associates, the only research and advisory firm solely focused on What Works® in enterprise learning and talent management, today released its latest research report, LMS Customer Satisfaction 2007: An Industry Analysis of the Customer Experience with Learning Management Systems. This independently funded, 100-plus page study analyzes input from 516 system administrators, training managers, and executives on 20 satisfaction criteria. Thirteen LMS vendors agreed to participate in the study.

The study, which is based on four months of active research, evaluates a wide range of categories – product functions, technical support, customer service, business partnership, and implementation – all from the customers’ perspective.

The study covers two important areas. First, it analyzes the state of the LMS market by publishing overall satisfaction in each of the 20 areas. The study analyzes the factors that cause high and low satisfaction, including system ease of use, product capabilities, and vendor service and support. This information helps LMS buyers and vendors understand the factors which lead to successful and unsuccessful LMS solutions and identifies the areas of greatest risk.

Second, the study compares customer satisfaction among 13 top LMS vendors, grouped in three different ways: by size and complexity of implementation, by hosted vs. installed systems, and by average annual operating cost. These groupings ensure equitable comparisons and help purchasers focus on the categories that best meet their overall organizational objectives. For each of the three groupings, the study recognizes those vendors which are category leaders (those which achieved the highest ratings) and category outperformers (those which exceeded the category average). The report also highlights the three vendors with top ratings in customer loyalty.

Participating vendors included: Cornerstone OnDemand, GeoLearning, GeoMetrix, KnowledgePlanet, MeridianKSI, RISC, Oracle/PeopleSoft, Outstart, Plateau, Softscape, SumTotal, Technomedia, and VuePoint.

“This study has two important uses,” said Karen O’Leonard, lead analyst for the study. “First, it provides current and prospective LMS customers with valuable information on which solution providers are delivering the highest levels of service and product capabilities. It also provides LMS vendors with information on what service and product attributes are most important to customers, so that they can focus their efforts in the right areas.”

Examples of key research findings include:

  • The LMS market remains in a high state of churn, with relatively low customer loyalty. 24% of respondents said they were “extremely likely” or “somewhat likely” to switch LMS vendors. Only three vendors had fewer than 10% of customer respondents who indicated a likelihood of switching vendors. This churn rate is actually significantly higher than the results obtained in 2005.
  • Almost one out of five companies plan on spending more than $400K on LMS operations and maintenance this year. 25% plan on spending between $100K and $399K; 39% plan on spending less than $100K.
  • Unlike the 2005 study, this year’s results showed that externally hosted LMSs did not necessarily yield higher satisfaction ratings. However, customers with hosted or OnDemand LMSs did have higher satisfaction ratings in ease of upgrading, ease of learner use, and customer satisfaction.
  • Areas with the lowest satisfaction ratings include reporting, ease of customization, rapid return on investment, and out-of-the-box functionality.
  • As in the 2005 study, the results show that a vendor’s service and support are key determinants of customer satisfaction. Vendors that provide outstanding customer service and technical support – and particularly those that act as business partners to their customers – generally have higher levels of customer satisfaction and loyalty.

“While LMSs are rapidly becoming recognized as mission-critical enterprise applications, there is still significant room for improvement,” said Josh Bersin, president and founder. “Vendors and buyers are dealing with significant technology and functionality advancements in areas such as content integration, reporting, performance management, and systems integration. The message to buyers is to be careful: while LMS systems are very powerful, organizations must select and implement the right solution for their particular needs.

“For vendors, the message is consistent with findings from the 2005 study. While features and functions are important, the most important factor in customer satisfaction continues to be service and support. Vendors should not focus on R&D and growth at the expense of current customer success. The increased rate of churn tells us that many vendors continue to focus too heavily on acquiring new customers and not heavily enough on making their current customers successful.”

Bersin and O’Leonard will present research highlights in two upcoming webinars. To register for the webinar scheduled for April 13, 2:00 p.m. ET, go to http://events.interwise.com/?p=500920&t=7&s=bersin. To register for the webinar scheduled for April 27, 2:00 p.m. ET, go to http://events.interwise.com/?p=500921&t=7&s=bersin.

The complete report is available to Bersin & Associates research members and can be purchased for $1,495. For more details, including a table of contents, go to http://www.bersin.com/lmssat.

About Bersin & Associates
Bersin & Associates is the only research and advisory consulting firm focused solely on research in enterprise learning and talent management. Bersin & Associates’ WhatWorks® research and research-based services are designed to deliver actionable direction and to help improve operational effectiveness and business impact.

Bersin & Associates research members gain access to a comprehensive library of best practices, case studies, benchmarks, and in-depth market analyses designed to guide professionals in making fast and confident decisions. Research areas include planning and strategy, learning programs and delivery, talent management, technology and infrastructure, and measurement and analytics. Member benefits include in-depth advisory services, access to proprietary webcasts, on-site analyst visits, and strategic workshops. For more information, go to www.bersin.com or call 561 455 0622. 

Press Contacts
Apollo Associates LLC
Linda Galloway, 203/790-1591
lgalloway@apolloassociates.com

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