One of the things that I’ve noticed
when working with companies selecting e-learning technology
over the years is that many do not have a well-structured
approach to making critical vendor decisions.
The more structured the process for selecting technology,
the more successful the projects.
Recently I had the opportunity to interview 10 large corporations
to understand What Works™ when selecting an LMS.
The companies I spoke with were large, well run organizations
-- and included Fedex, Honeywell, Kinko's, Vanguard, and
others.
Since LMS systems are early in the market
(IDC believes that at least 55% of companies do not even
have an LMS) -- and there are still dozens of vendors, I
decided to develop and document a structured process which
will help you avoid the pitfalls which many companies fall
into.
Why the LMS Selection Decision is So Important
A LMS is one of the most important IT projects that companies
undertake for the simple reason that the system will touch
potentially every employee in the company –
so, needless to say, it has a high profile. Every
employee -- from the CEO on down -- will potentially use
the system (and could potentially become your enemy if the
system is hard to use)!.
The second thing to consider is that an LMS will cost you
between $50-200 per employee to purchase and implement.
(This includes the cost of software, hardware, implementation,
and training and support). When you multiply this
by the total number of employees in your company, it will
become a large amount of money.
The third issue is that an LMS will become a very "embedded"
application. Unlike financial or marketing applications,
which are largely similar from company to company, LMS systems
tend to grow and morph into the management and training
business processes of YOUR company. Training and management
process vary WIDELY from company to company -- so the LMS
you purchase will become YOUR LMS within a few years --
and it will be very difficult to replace.
Lets
walk through the 7 step process:
Step 1. Developing and Communicating the Business
Case
Before proceeding with product selection it’s important
to justify the initiative to the organization. Why
is this project important? What strategic goals will
it address? And when will it provide a return on investment
(ROI)? These are all questions that need to be answered
early in the process.
When you have the answers to these questions you are able
to evangelize the LMS to others in the company in order
to secure their support throughout the procurement and deployment
process. In my discussions with those that have implemented
successful projects, the theme of communication came up
over and over. They recommended that the need for
the project be well understood and communicated to executives,
stakeholders, and the rest of the employees – in that
order.
The business case should identify the strategic corporate
objectives being addressed and provide specifics on how
this project will contribute to the objectives. If
improving customer satisfaction is a strategic objective,
for example, then providing better training to customer
service staff will help achieve that objective. The
LMS is a means to this end: it is required to administer
and track staff compliance with training standards.
You must also define the applications you need. To
understand the 10 major corporate applications for learning
management systems, read our study: The
10 Corporate Learning Applications.
Once the business goals are identified, an ROI analysis
should be conducted to justify the purchase to the organization.
All the costs and potential savings for the project
need to be identified. Companies have many different
standards for what can be considered cost savings and what
type of financial model should be used to calculate ROI.
The following cost savings are sometimes used to
justify on-line training projects in an ROI calculation.
Once you’ve documented the goals and ROI for the project
you’ll need to present your findings to the executives
that can help fund and support your project. Again,
don’t hesitate to over-communicate. You
are going to need their support during the acquisition and
implementation process.
Step 2. Defining Requirements
Now that you’ve secured support for the project,
you’ll need to identify, very specifically, what you
want the system to do for your company. Taking control
of this step will help you ensure that you get a solution
that will truly solve your training challenges and reduce
your chances of being the victim of an aggressive sales
job by a vendor.
First you’ll need to assemble a team of stakeholders
to help you identify the requirements. The team should
include representatives from all affected groups.
The IT group should be at the top of your list since you
need their help to implement the system. If you are
training customer service agents then the Director of Customer
Service may be on your list of stakeholders. By including
all affected groups you will not only get a better list
of requirements but you will get better support when the
time comes to implement the system. You can interview
the stakeholders or ask them to prepare a list of requirements
from a structured document.
The requirements document itself should include as much
detail as you need to communicate what you need the system
to do. Also be sure to indicate if a particular feature
is mandatory, desired, or a “nice to have”.
This will help you prioritize when vendor selection
time comes around.
Also remember that requirements may also include things
that you don’t consider product features but are required
for the success of your project such as price, adherence
to certain IT standards, and implementation within a certain
time frame.
Step 3. Identifying Potential Vendors
Now that you’ve done your homework you are ready
to research the market to identify potential vendors.
There are still many vendors providing capabilities that
fall under the umbrella of Learning Management. Keep
in mind, however, that today more so than in recent history
vendor viability is a key consideration for most
companies. Vendors that are not considered financially
viable may not be a good solution for you (your purchasing
department can provide criteria for financial viability).
Information about potential vendors is available on-line,
at industry conferences and from industry analysts such
as Gartner Group, Meta, and for free from ASTD. You
can also hire consultants like us -- who work with these
vendors every day. At this stage you should identify
all the vendors that you suspect might be able to provide
a solution for your company.
Step 4. Creating a Request for Information (RFI)
Developing and submitting an RFI to this select group of
vendors is your next step. The purpose of the RFI
is to get enough information from the vendor for you to
determine if you should spend any more time with them.
Select the top ten capabilities and/or vendor characteristics
that you cannot live without and ask the vendors to respond
to how they would fulfill each one of your needs.
You may need to qualify the vendors on things other than
product features. For example, perhaps your budget
is very limited and you suspect that only a few vendors
will be able to meet your price (although remember that
vendors are very flexible on price these days). In
the RFI you should ask for some approximate pricing.
Or there may be a specific product feature that automatically
removes a vendor from further consideration if they can’t
provide that capability. For example, some industries
must comply with very strict federal laws on how training
records must be maintained and how quickly they can be accessed.
If this applies to you then not having this feature
is a “show stopper” for proceeding further with
that vendor.
The RFI will help minimize the time you spend with vendors
that won’t meet your needs. You should not submit
the RFI to any more than 10 vendors. By the way, if
you skip this step, your RFP process could become a nightmare.
The RFI process will give you the information to narrow
down the list to a few (ideally 2 or 3) vendors for the
RFP. Sending out an RFP to a dozen vendors is a frustrating
and very time-consuming process -- for you as well as for
the vendors themselves.
5. Creating a Request for Proposal (RFP)
Once you’ve received responses back from the RFI
you can determine which vendors are suitable for further
discussion. You should select no more than 3-4 vendors,
at most, to take to the next step – the RFP.
The RFP document is derived directly from the requirements
you gathered from your stakeholders in step 2. The
RFP consists of an explanation of your project and a form
for the vendor to indicate if and how they meet your requirements.
It’s helpful to ask vendors when they will
support a certain feature if it’s not currently available
in the product. Submit the RFP to the vendors you
qualified from the RFI phase.
6. Conducting On-site Meetings and Demos
Once you’ve received the RFP responses, you are ready
to invite the vendors in for an on-site meeting. The purpose
of the meetings is for the team of stakeholders to clarify
items of interest in the RFP response, see the product firsthand,
ask questions about how it works, and clarify any other
outstanding concerns. The meetings should be very
structured and conducted by whoever is in charge of the
selection process (you!).
The stakeholders should be asked to identify the requirements
that are of the utmost important to them and rate each vendor
according to how they measure up. A standard scale
(e.g. 1 to 5) should be applied to each feature to enable
a fair comparison of final scores once the meetings are
all conducted. Make sure the stakeholders attend the
demo.
By the way, a critical issue to evaluate is "how
easy will it be to use this system?" Remember
that the users of an LMS are not IT or financial people
-- they are salespeople, managers, service agents, maybe
even bus-drivers and other hourly workers.
7. Selecting the Vendor - Check References
You now have all the information you need to make a final
product selection. Based on the RFP responses and
the on-site meetings with the stakeholder team, you should
be able to narrow your choice of vendors. If you discover
that more than one vendor will meet your needs, then you
will be in a good position to select the vendor that will
give you the best price.
Of course, your decision should not be made on price alone.
Nor should product functionality be the only criteria.
You must check vendor references.
When checking references, be sure to ask tough questions.
The vendor will most likely give you the names of
satisfied customers so you’ll need to dig a bit deeper
to get a true reflection of how satisfying the experience
has been for the customers.
Examples of tough questions: What was your biggest
disappointment about having selected the vendor? Would
you select this vendor again if you were to move to another
company? Can you provide an example of something that
did not go well with the implementation and indicate what
the vendor did to resolve the problem? Prepare 10
to 20 good questions in advance of the reference calls and
document the responses.
Other factors in making the decision could include such
things as price, the implementation time frame for the product,
the resources that the company can make available for the
implementation, the company location, the enthusiasm of
the staff, etc.
Ultimately, you’ll need to consider some or all of
these factors before you make a final product decision.
This Process, although complex, Does Work
This is not a process which we made up. We have worked
with dozens of companies and helped them through this process
-- and this is what works. If you are in a hurry you
may try to skip some of these steps -- but in fact you will
probably find that you go back and do them later.
Keep in mind that you need not perform all of these steps
in a specific order. You may, for example, begin vendor
research before conducting an internal needs analysis.
While this is OK, you don’t want vendor capabilities
to dictate your needs. Only you know what you really
need for the business problems you are trying to solve.
Develop a Methodology and Make it a Team Approach
The most important thing to keep in mind is that you have
some type of methodology for determining what you need and
which vendor can provide the best solution.
Call
Us
We have been through this process more times
than we can count. If you have any questions about
this process or how to get started -- or if you want to
outsource the whole thing -- we would love to help.
Having been involved in the development and implementation
of many LMS systems, we actually enjoy this process very
much. You can reach us at (510) 654-8500 or email
to info@bersin.com.
