The high-impact learning organization can be vitally linked to the management system that serves as its foundation. However, there are some pitfalls to successful implementation. Learn more about choosing an enterprise LMS.
by Josh Bersin
October 28, 2005
Which comes first – the successful implementation of an enterprise-wide learning management system or the success of the corporate learning organization? LMS technology and the learning organization itself have both evolved at a rapid pace. As new research now shows, their success is vitally linked. A high-impact, corporate learning organization – one that maximizes efficiency and effectiveness – is directly related to the successful deployment of an enterprise LMS.
With an enterprise LMS, a learning organization can move beyond delivering tactical training projects to initiate learning programs aligned to strategic corporate goals. When successfully implemented, an LMS is transformed from a training application to a critical corporate system. In fact, the LMS might be the only system (other than e-mail) with the potential to be used by all employees, as well as by customers and partners.
Moving to true enterprise learning management system is a major business change – much akin to implementing a supply chain or CRM system. The transition requires significant monetary and resource investments, dedicated IT support and major organizational and process change. Those companies that succeed reap big benefits. Bersin & Associates estimates that approximately 35 percent of large companies (those with more than 25,000 employees) now have enterprise LMS implementations.
However, many companies get caught in transitional quagmires, characterized by runaway budgets, missed deadlines, organizational feuds and unmet expectations. Common root causes of unsuccessful or painful implementations are inadequate planning, too much focus on technology and the inability or unwillingness to invest in the overall change management process.
What Is an Enterprise Learning Management System?
At its most basic, an enterprise learning management system is a single application used throughout the enterprise system to manage corporate training programs. However, given the maturation of corporate learning, the increasing sophistication of learning programs and the growing interest in associating learning and development with talent management, the definition of an enterprise LMS must encompass much more. Today, the enterprise LMS is expected to handle e-learning, blended and instructor-led programs, and compliance and certification management. It serves as the corporate repository for skills and competencies, and stores detailed training and assessment histories for all employees and customers. The system must also handle e-commerce, advanced approval processing and a myriad of reports and analysis.
Yet even with this expanded definition, there is no definitive list of enterprise LMS vendors. Nor is there a laundry list of technical features that can guarantee a sound selection. A medium-sized, U.S.-based specialized manufacturer would have different enterprise training needs than a global, highly decentralized financial services organization.
It’s important to note that adopting an enterprise LMS is not the right decision for every organization. An enterprise LMS would be overkill for companies that are just making a commitment to corporate training, those in early adoption stages for e-learning or those with a relatively weak or inexperienced learning organization. Every potential advantage offered by an enterprise LMS is offset by a disadvantage. (See Figure 1.)
Drivers Behind the Enterprise Approach
Bersin & Associates research shows a clear trend in the adoption of enterprise LMSs. Interviews and surveys conducted over the past year show that more than 45 percent of large organizations (those with more than 25,000 employees) are either planning or involved in moving to enterprise-wide systems.
One major driver for the trend is the maturity of corporate learning organizations. As organizations evolve their e-learning strategies and start to build out custom content, blended and certification programs, and expand corporate universities, the role of the LMS becomes elevated. Organizations demand increased functionality, as well as the ability to integrate with HR and other corporate systems, accommodate wide ranges of content and provide the measurements and analysis that can assess impact and guide investment. In fact, true integration and alignment of learning with HR and the corporate strategy can’t happen unless an enterprise LMS is in place.
Other drivers are economic. An aging and retiring workforce is creating more emphasis on skill development and competency management. Widely distributed workforces, increased merger and acquisition activity, and pressures to quickly capitalize on business changes and new products are fueling the need for talent management, which requires an enterprise-wide learning platform as its foundation.
How do you know if your organization is ready to consider an enterprise LMS? These are some indicators that the time might be right:
- Learning investments throughout the enterprise are out of control. Business units are duplicating investments and negotiating major contracts with vendors already under contract by other units. Total training spending throughout the company cannot be quantified.
- E-learning has become mainstream, with independent development and deployment occurring throughout the company. The company recognizes a need to consolidate the programs, standards, tools and systems.
- Executives are talking about the need for a talent management strategy. Skill development, knowledge transfer and succession planning have become very important to the organization.
- Current learning systems are hard to use. Complaints about the use of disparate learning systems are making their way up the executive ladder. These could be related to content access, performance or resources required for support.
- As a result of compliance requirements or a major business event, the company recognizes a need to consistently train and support a large employee population.
The Business Case
Even if you’ve checked off more than one of the indicators above, the decision to move to an enterprise LMS may not be automatic. The investment is large: Enterprise LMSs cost five to 10 times more than departmental systems in software alone. A winning business case for an enterprise LMS must go far beyond cost savings in system and contract consolidation. It must include a clear understanding of how enterprise-wide learning, compliance and talent management is more effective and efficient than it is today.
As you’re developing the business case, you also must consider organizational structures and resources required to support the implementation and ongoing needs of the system. A successful enterprise LMS requires centralized and dedicated IT resources. These resources may not currently exist. The HRIS team, if your company has one, is typically not ready for the complexity of e-learning and learning management. And any enterprise LMS implementation requires buyoff from an already-busy IT organization. Also critical are shared services for custom reports, program administration, content integration, system upgrades and end-user support. In some cases, outsourcing may be able to answer these needs.
Another hugely important consideration is the current organizational structure of your company’s learning. An enterprise LMS requires new management, support and government structures for successful implementation and operation. For instance:
- A shared governance structure must be created in order to give business units and geographic regions the ability to administer unique programs. Processes have to be in place to ensure that decisions about user interfaces, workflows, reporting and e-commerce address the needs of these groups.
- Some kind of defined budgeting process must be in place. In addition to determining how to finance the original investment, a company must determine how to fund the ongoing maintenance costs, which can be considerable, and new, add-on purchases and enhancements.
- While a CLO isn’t an absolute requirement (although recent research demonstrates that organizations that have such a position are more effective), some kind of executive position must be created to assume overall responsibility of the system.
- A focused team is required to establish requirements, and select and implement the system. This process takes months (or years) to complete. Similarly, an identified team must exist with responsibility for final system selection, change management, training and user feedback.
A Word About Organizational Structure
The success of an enterprise LMS strategy is highly dependent upon the organization of the learning function and the organizational structure of the company. A recent Bersin & Associates study of the management, governance and organization of training found that corporate training tends to fall into two broad organization models.
According to the research, 37 percent of companies have a centralized learning organization. In this model, training budgets, most programs, staff and the LMS infrastructure are centralized and managed by a corporate group. The smaller and more centralized the enterprise, the more likely this model is to be used. However, this model doesn’t necessarily preclude business unit involvement. For instance, the most successful centralized learning organizations typically assign performance and training consultants to work with specific business units to ensure their needs are met. A strong, centralized training organization will likely find it easier to implement an enterprise LMS. However, it may find it harder to gain widespread use of the system.
In a federated organization, many training functions are distributed and “owned” by the business units. In most cases – but not all – a small, centralized training organization also exists, with varying amounts of authority. Approximately 55 percent of companies use this model – it’s especially common with large, distributed and global companies. Many companies that have adopted the federated model have multiple LMSs, purchased at different times by different business units. Business units may have already made considerable investments in content and supporting tools. Not surprisingly, it is harder to implement an enterprise LMS in companies with federated training models.
Requirements Definition: The Critical Step
Once the decision has been made to adopt an enterprise LMS, the next and most critical step is requirements definition. This process, which can take many months, involves meeting with all major learning groups in the company to explore questions such as:
- What critical programs are currently in place?
- How often do these programs change?
- What e-learning and blended learning strategies are in place?
- How do groups handle registrations, enrollments, approvals, fees and support?
- What are the assessment and reporting requirements?
- What suppliers and outsourced providers are used?
- What systems and tools are in use today?
- What are the integration points?
- What are the data requirements?
This important phase is not about selecting features. Rather, its goal is to understand the complex and varied nature of training programs in your particular organization and to gain buy-in from various stakeholders. The information you uncover will guide system selection, customization requirements, development of support services and even the system rollout.
If your company is currently running one or more LMSs, the requirements phase should still be conducted objectively, without the assumption that any of the current systems in place would fit the bill. Remember that when you are implementing an enterprise LMS, you are not selecting a software product. You are designing and implementing an enterprise-wide approach to learning and talent management.
Benchmarking your company against others of similar size, organization and learning maturity also can be helpful in this process. Finding a company within your vertical niche may not be possible, given competitive issues. And indeed, it’s not necessary. A comparison can help you set expectations for implementation and ongoing operation.
Success Yields Significant Benefits
Those companies that can overcome the challenges reap enormous benefits. The Bersin & Associates 2005 study “The High-Impact Learning Organization” analyzed the efficiency and effectiveness of 350 training organizations across 12 measures of efficiency and effectiveness.
Those companies with enterprise LMSs scored higher than averages in all categories and overall scored 14 percent higher in effectiveness and 11 percent higher in efficiency than other organizations. Companies with an enterprise LMS have a much higher ability to deliver innovative learning programs. The research also shows that these companies are very strong in reporting and analysis, delivery of cost-effective training and meeting compliance training requirements.
The research does not prove that an enterprise LMS is the cause of these improvements. In fact, it is more likely the discipline and tools required to manage training in an environment with an enterprise LMS that are the drivers of these results.
While the benefits are compelling, an enterprise LMS is not right for every organization. Many companies do not yet have the leadership or focus to build the business case for such large investments. Others may not be ready to set up the shared support and services structures.
Even those companies that can justify enterprise LMSs should not leap headlong into the decision before careful consideration and planning. Mistakes can be expensive in dollars, wasted resources and lost political capital.
The good news is that the body of best practices for enterprise LMS implementation is rapidly growing – and many vendors offer proven products ready for global, enterprise-wide deployment. When implemented well, an enterprise learning management system can drive dramatic results and increase the success and business impact of corporate learning.
Josh Bersin is the principal and founder of Bersin & Associates, and has more than 25 years of experience in corporate solutions, training and e-learning. He can be reached at firstname.lastname@example.org.