Should you outsource your e-learning infrastructure?
By David Wilson (April 2004 Issue)
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Talk to the organisations that have kept their facilities and they argue it is a bit of both. For them, there is a function of scale that can justify their own facilities economically. This typically comes down to utilisation and cost, but sometimes specialist needs also come into play. Hiring classrooms may be fairly simple, but hiring and setting up specialist training equipment is a whole different ball game.
Training fashion does come into play, with a seemingly never-ending cycle of in-and-outsourcing affecting the way training and training facilities are perceived. Our research with large corporate training groups shows that over the last couple of years, infrastructure has definitely been out of fashion. Organisations want to minimise their fixed costs and overheads to reduce their overall costs, but also to increase the flexibility of training delivery. If we need more, we hire it. If we need less, great, we’ve saved money!
What has all this got to do with e-learning? If the fashion and economics of traditional training say minimise your fixed infrastructure, why is the e-learning industry frantically trying to sell you the opposite message? LMS and e-learning technology vendors want to sell you software. Content companies want to sell you a catalogue of content. The message is clear: buy it and own it is the order of the day. But what if I just want to use someone else’s infrastructure and pay as I go?
I have previously talked about the relevance of hosting options to many organisations, a fact confirmed by the continued rise of hosted business within the major e-learning technology vendors. Running your LMS or virtual classroom on someone else’s IT infrastructure can sound a great way around your internal IT constraints, but is that all hosting is – a way of avoiding internal IT barriers and constraints? And what of managed services or outsourcing?
Yes, the IT issue is a real one. All companies have constraints on their systems and networks, and on their internal IT resources. Given the lack of IT priority supporting training and development historically, it is unsurprising that by-passing IT is attractive to many training directors. But outsourcing e-learning infrastructure is more than just IT avoidance; it is an acceptance that owning the infrastructure is not always appropriate, just like traditional training infrastructure. Buying and owning your own e-learning infrastructure is effectively about building a fixed cost model, or deciding that your requirements are so unique that you cannot source them externally.
While the latter might be true for some organisations, in my experience it is not true for many. Our research shows that while large organisations like to go their own route in defining and purchasing e-learning technology, functionally most are looking for the same things and have similar unknowns. They are talking to the same vendors, too. Although the e-learning technology market is still very fragmented, this is mainly due to the fragmented nature of the buying process historically. As organisations get more experienced and more strategic in their purchasing of e-learning, the same supplier names will appear again and again.
What about the fixed cost issue? There are parallels with traditional training here too, and some important differences. A fixed infrastructure and cost can give economies of scale, if – and it’s a big if – it has high utilisation. Many organisations have justified their e-learning acquisitions on the basis of scale that has not materialised, or that has not been sustained over time. This can be particularly true with e-learning content catalogues, where usage can decline significantly. If they had thought this was likely up-front, many would have taken a different path, with extended use of a tactical external infrastructure first.
Outsourcing the e-learning infrastructure can avoid some of your IT constraints; more importantly, it significantly changes the dynamics of variability of cost, scale and flexibility. If this can be achieved in ways that are less limiting and less expensive, that sounds attractive to me. Outsourcing can also significantly accelerate an e-learning strategy, but please remember that if flexibility is important, tying yourself into a massive fixed outsource contract is not the answer either.
David Wilson is managing director of eLearnity, a leading independent e-learning consultancy, which he founded in 1996. David can be contacted on +44 (0) 20 7917 1870 or at DavidW@elearnity.com
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