On the Cost of Selling an Enterprise Learning System
Jim Farmer, , January 13, 2006.

A must-read if you are interested in the learning management system (LMS) marketplace. "Using industry-average data, the cost of selling a Blackboard enterprise learning system is estimated to be $259,000 per sale. Analysis of the third-quarter 2005 data estimates this cost at $280,913. Other estimates range as low as $222,386." Via e-Literate.

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Re: On the Cost of Selling an Enterprise Learning System

Anymouse, January 16, 2006

I find this paper suspect for various reasons, first and for most, there is no accurate, real time accounting for the developer cycle and time and expertise it takes to develop, customize, and integrate an open source lms system. The next thing I say in this regard, is what do you do when your chief open source lms architect leaves your organization, who will fix it... The next thing I would say is there are many other enterprise lms products out there. The two picked for the paper are the ones primarily used in the academic space, and not in the commercial space. [Comment] [Permalink] [Previous][Next]

Re: On the Cost of Selling an Enterprise Learning System

Anymouse, January 17, 2006

You are correct, this paper was concerned only with the cost of sales for products preincipally used in higher education. Likely we will extend the analysis to other public companies and domains as well. Josh Bersin, Bersion & Associates, released new data today on the size of the total LMS market including corporate learning and the expected growth. You are also correct that this paper only focused on the costs of sales of a commercial LMS, an estimate of what it be by a commercial firm supporting open source (e.g. Spike Source or Unicon, Inc.), and the cost of the community development per installation of uPortal. This is unrelated to the costs borne by a potential user which you identified. Except users collectively have to bear the cost of sales or community development in addition to their own costs. There are two implicit points. First, what can higher education do to reduce this cost? UK JISC pointed the way with publishers by asking the question "What can we do to lower your costs?" The answer--have one authentication system. Hence Athens and now Shibboleth serving faculty, students, and staff in any UK institution. In the U.S. Reed-Elsevier has to maintain 104 authentication systems for higher education. Perhaps changing procurement practices could lower prices. Second, it brings up the difference in allocation of resources in commercial firms as compared to open source developments--a process not yet understood. The University of Oxford's OSS Watch and now the Mellon Foundation Courant study are focusing on this question. And a personal note, I was surprised at the number. If asked before the analysis I would likely have guessed, from my experience in the software industry, about $30,000 to $50,000 per sale. Thanks for the comment. Jim Farmer [Comment] [Permalink] [Previous][Next]

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