Software as a service systems are slowly replacing many software functions in both large and small organizations.
SaaS and cloud applications have many benefits: fast implementations, easy access, no hardware to buy or maintain and low startup costs. But there are some disadvantages. SaaS enterprise systems, such as learning management systems, may not be viable for every organization.
Phil Cazella, director of business development for LMS company Pillar Training Solutions, said both SaaS and installed products have advantages and disadvantages, and each still has a place. “Before you decide which LMS model to implement, you need to carefully weigh your needs against the costs associated with both starting up a new application and running it,” he said.
Cloud applications can be great for many organizations, but continuous monthly fees can add up over time, whereas with installed software the upfront costs are usually the largest because of licensing and implementation. Maintaining the system gets less expensive over time, however, and the longer the system is in place, the cheaper it is.
Elsie Lum, director of the Alameda County Training & Education Center in California, said her organization discovered the disadvantages of SaaS when purchasing a learning management system. She said initially the county wanted an SaaS learning management system, but one that could meet diverse needs and still be accessible through the Internet to launch online and informal learning. Her department, which provides training and development services to the community as well as county employees, chose an installed LMS with an online feature largely because of cost.
“It was cheaper for us in the long term to own software than to pay an ongoing subscription to SaaS, since we are a large organization with 8,000-plus employees. Also, we can customize the software’s functionality to meet our diverse departmental needs,” she said.
Alameda County also had concerns about data security and integration. Its law enforcement roles make protecting confidentiality important, for instance. Lum said she also questioned SaaS software’s ability to integrate with other databases. “We want to reduce data entry and share people profiles or training history across several databases.”
Omar Muhammad, an e-learning specialist based in California who consults for government organizations similar to Alameda County, said his top two concerns with SaaS applications are security and functionality.
Muhammad said that while he has observed significant improvement in how customers can configure SaaS systems, generally, cloud applications must be designed to meet the needs of the many. “This can be a major issue if your business requirements often change, and the customization you require may not benefit other customers,” he said. “I have seen many times where an organization will get caught in the trap of purchasing a vanilla SaaS system that is designed to meet the general needs of customers. Customers with specific requirements must build and integrate side systems to meet those needs.”
Some organizations Muhammad has worked with are subject to compliance regulations such as personally identifiable information. “These organizations are mandated to protect all employee and customer PII. Because of these mandates, they are very cautious when it comes to data security. It is difficult, even with well-written data security agreements, to trust outside vendors with sensitive data. From my experience, clients are more reassured when the sensitive data stays in house.”
Seattle Children’s Hospital also had concerns about SaaS systems. With 250 beds, the health care facility serves as the pediatric and adolescent academic medical referral center for Washington, Alaska, Montana and Idaho — the largest region of any children’s hospital in the U.S.
Mary Alida Brisk, the organization’s director of learning and organizational effectiveness, said requirements for the hospital’s LMS stemmed from a continuous performance improvement, or CPI, model.
“Seattle Children’s was one of the first medical centers in the country to apply the methods and scientific rigor of the Toyota Production System to health care,” she said. “This improvement program is a transformative way to remove waste from systems and processes, thereby improving quality and safety to deliver the best health care to patients and families. Importantly, when we improve quality and safety, we reduce costs. This also applies to how we look at what training is offered and how we track those requirements.”
The hospital was willing to consider all types of LMS products and engaged key representatives from the groups with the highest usage of the previous system. It also conducted user testing, using principles from the Usability Professionals’ Association, which resulted in a design that met end users’ needs.
Ultimately, the team determined an in-house product best met its needs. “The main benefit of using the installed LMS for Seattle Children’s has been to take an out-of-the-box solution, customize the application to meet our current needs while at the same time looking to the future as we need an application that can grow with us,” Brisk said.
She said bringing the application in house has several upsides, one of which is single sign-on. When people log in and are ready to work, they can quickly open the LMS application without needing to go to another site and remember separate password and login information. Because employees requested more development opportunities through the organization’s annual workplace survey, it helps that Brisk and her team can spend more time connecting them with the learning they want.
The installed program also allowed Seattle Children’s Hospital to control the implementation process. “Our CPI philosophy helped us PDCA, or plan, do, check and act, and go slow to go fast. We did this by implementing in two phases to complete the organizational rollout,” Brisk said. “The first phase focused on core functionality and usage. The second phase introduced more automation and complexity. In both of these phases, Children’s continued to refine and align its processes to maximize the system’s structure and usage.”
If an organization needs the functionality, security or customizability of an installed system, there are ways to mitigate upfront costs. First, buy only what the organization needs, Cazella said. If a company only needs learning management, don’t buy a full talent management suite with onboarding and compensation. Many systems are modular and allow customers to purchase the modules they want.
But don’t skimp either. Be sure the LMS does what is desired. Vendors who have been around for a few years often offer more features and functionality than new companies because software takes time to build. “You can still find installed software that isn’t going to break the bank, but you might need to look past the big vendors. Typically, their solutions are going to be very pricey,” Cazella said.
He also said to look at implementation expenditures before committing. Find a vendor with low implementation costs, and again, it may be necessary to look outside the top sellers for this. “Just because the software is installed doesn’t mean it needs to take two years and $2 million to implement.”
Cazella said for those who want a cloud LMS, don’t give up hope — an alternative solution could be on the horizon. “Ultimately, the primary reason for not moving into the cloud, or moving out of the cloud, is the existence of a business requirement that cannot be met.”
If the challenge is functionality, security or inability to integrate with other enterprise systems, he said single-tenant hosting of an installed system can be a good compromise for those who need an installed program but want the ease of an SaaS application. The hardware is stored off-premises and maintained by someone else.
Alameda County chose an external hosting product. The LMS resides in a single-tenant implementation at a third-party service provider. The software and database are dedicated to the county alone, so there is no sharing of services with other users. The county retains complete control of functionality and access without internal resources having to maintain the hardware and database.
If a company chooses to implement an installed LMS in-house vs. SaaS, there may be challenges. For instance, e-learning specialist Muhammad said it can be tough to develop in-house expertise to maintain and troubleshoot system issues. “If a cloud solution was used, turnaround time for customizations and configuration would be much shorter,” he said. “This would also apply to installing system updates.”
For in-house system maintenance, he said customers can use a team approach to bridge the knowledge gap. “I create a plan where they have two to four system administrators — IT staff and technical trainers — working together to solve and troubleshoot. These staff members are relying on each other’s expertise and an online repository to record and track issues. This gives them a collective knowledge base to find and develop solutions.”
Because Alameda County’s system is hosted, Lum said the challenges related to the installed system over SaaS are service and upgrades. “We’d expect more responsive service from an SaaS provider, because the consequence is that we don’t renew our subscription. Also, there would be less need to upgrade software unless other users of our version have similar concerns or issues.” To deal with these challenges, she said the county has become more proactive in working with its vendor to meet and anticipate needs, pushing for necessary upgrades or fixes.
As with all technology, SaaS systems improve daily, but there is a perception that as a shared platform, a cloud application has less functionality, and concerns over integration with other databases persist.
If these issues are familiar, but a move to the cloud is still desirable, Cazella said to use an application program interface to help bridge the gap with an SaaS application. “APIs can allow third-party integration as well as some level of data manipulation, but not all vendors offer APIs. The challenge for SaaS providers is to allow customers to modify their systems both in presentation and functionality without affecting the core applications.”
Muhammad said cloud applications are viable options for various organizations, especially if they lack the staff and resources to maintain such services in-house. “Even though many of my clients prefer the control we gain by using installed software, we must keep an optimistic eye on SaaS and cloud services over the next few years and re-evaluate what they bring to the table.”
K.M. Lowe is a writer and corporate communicator based in Victoria, British Columbia. She can be reached at editor@CLOmedia.com.
