LMS – SaaS Vs Owned

Software as a Service (SaaS) has fast emerged as a huge value proposition for people using software. Not only does it drastically cut down upfront capital expenditure for customers, it also takes away lot of headache related to maintaining the software and hardware resources.

We at G-Cube are experiencing a definite shift from ‘owned’ software to SaaS model first hand as more and more of our customers demand the learning system to be hosted and managed by us. Here is some insight on how Wizdom Learning Suite’s implementations have been distributed between two models in this fiscal year (1st April 08 onwards) –

Some observations & deductions based on the graph shared above and historic data available for last year –

1. Last year only 10% of Wizdom implementations were in SaaS model, which has now increased to 33%. There is thus a definite shift towards SaaS that is only going to increase in coming years.
2. As of now only SME’s are going in for SaaS model, whereas large organizations still prefer to host the system on their own infrastructure that is managed by their IT teams. However, I must point out that in some of our upcoming implementations even large organizations are seriously considering SaaS, and I believe this graph would look very different by end of the year.
3. I believe with e-learning entering into ‘Early Majority’ phase in most geographies, more and more small & medium organizations (along with larger organizations ofcourse) would start using e-learning to train their staff and to build new businesses around e-learning. This would lead to further growth of SaaS model in future.

So why are SME’s opting for SaaS and why are large organizations not so inclined towards the same? Here are some factors that play a key role in decision making process –

S. No.	Factors	SaaS	Owned
1	LMS License	Pay as you Go	Usually Upfront
2	IT Infrastructure (Hardware, Software Licenses, Firewall, Load Balancer etc.)	Not Required – Provided & Managed by service provider	Requires upfront capital expenditure
3	Customization	Generally limited to Branding & UI Customizations	Fully Customizable as per customer requirements
4	Integration	Possible to integrate with HRMS/ERP systems only if they are accessible over Web	Seamlessly integrates with various systems inside firewalls/over Intranets
5	Supported User Base	Suitable for small to medium sized implementations (25 – 30k users)	Expandable to tens of thousands of users
6	IT Support Staff	Not required	Required
7	Security	Risk perception is relatively higher as content is available on Internet	More secure as the system can run on Intranet without any exposure to outside networks

As is evident from the table given above, SaaS model is particularly suitable for organizations/businesses who wish to start quickly with minimal investment, don’t want to setup their own IT team, and who don’t have too many customization or integration requirements.

On the other hand ‘Owned’ model is preferred by organizations who have IT infrastructure and support system already in place, who wish to get the learning system tightly integrated with their existing software systems so that data can seamlessly flow between different systems, and who may like to have the flexibility to modify the learning system to suit their process flows rather than making a huge workforce adapt to the laid down structure of the LMS.

Both SaaS & Owned models have their own pros and cons, but for me odds seem to be stacked in favour of SaaS model for the simple reason that it gives you the agility to move fast and the flexibility to change the underlying system with minimal cost impact.

I’ll be interested in finding out what has been the experience of other LMS providers, and what people think in general about this topic…

(Mr. Manish Gupta is Head – Business Development at G-Cube)