Seats, it is a common term, and in the e-learning world, it means something that will cost you more later on, if you do not realize the true essence of how it works. The solutions you see it most often are: LMS/LCMS, web conferencing, off the shelf courseware (3rd party courses).
99% of all LMS/LCMS (and for this topic, I will just call them ‘LMS’), use a format called seats when it comes to placing your audience, end users, learners, employees, whatever into the system.
The 1% are open source such as Moodle, or your own built. There are a couple of vendors out there that use variances, such as an e-commerce mode : whereas they get paid based upon people buying courses (a percentile cut), or another component based on set negotiations, but tied into some derivative of stated above.
Excluding them, lets discuss “SEATS”.
Here is how the typical conversation goes:
You want a LMS, have identified the vendor, and asked for the quote. The quote comes back and you see the price of the system and then a price for your users. Your eyeballs nearly fly out of your head. True? Every happened to you?
When you identify your LMS, you MUST find out the costs of the seats, which is separate from the cost of the LMS. The LMS is just the infrastructure. It comes with this and that.. but the seats are an extra cost.
And how do you define seats?
One user name, one password = 1 seat.
That’s it. 1 person = 1 seat. Simple. Regardless, if they are going to access the system 5 times or 5 million times in the course of a year, it is one user name, one password = 1 seat. Again, notice the key terms here: Seat, Year, User Name, Password.
So, if you have 250 users, then you purchase 250 seats. Ahh, but what if you plan to only have 50 users at a time say quarterly go into the system or have some other formula you plan to implement. Doesn’t matter. You still pay for the seats, and honestly, it is better for you to pay for the seats upfront, rather than buy in chunks afterwords. But you must do due diligence and project the number of users that will use the system.
Now, you may say, “Well, what if we just purchase 100 seats and then share the user name and password with everyone to lower costs?”
Yeah, you can do that, but here is the catch.
1. Say goodbye to your tracking capability. Which for the investment of the system, is something you most likely will want to do. See, if Bob and Frank share the same user name and password, how will you know who – Bob or Frank – was actually in the system at that time, taking that course, assessment, learning path, whatever? You won’t. You will only see the user name with that data. That is a big negative of “sharing”.
If you do not care about the tracking capabilities, then sure, save on costs and share user names and passwords – but I would not let the LMS vendor know this – as they are not really hip on that game plan. See, they lose money when you go that route. Seats is big business.
“What if Accounting is only going to use the system 10 times, then Admin..and we only want them to use those seats for the quarter, then change out?”
It doesn’t matter. You can come up with all the ways to try to save costs when it comes to purchasing seats, but if you use an example like the above – where x only gets it for y time and then they no longer can and blah blah..here is what it is going to cost you:
a. The administrator of the system will have to de-activate the end users who currently have those user names and passwords, so they cant use the system, then activate the end users who will have user names and passwords.
Oh, BTW, they will also have to either upload all the information (if your system has that capability for a .csv file – data upload) OR manually have to enter in that information for those new users. Then, you get to repeat the process the following quarter or however you choose to do it. What is the cost then? What about productivity wise? Add that cost in there as well.
The best way to handle it is simple: Project the number of seats you will need for each year. Even if you do not use the seats, you have them — but be realistic on the number of seats you need. Unless it is mandatory that everyone in the workplace has to use the LMS, do not believe that once you get it..everyone will be running to it..it will not happen. So, forecasting is THE KEY. Be honest.
After you purchase the seats, track the data…I cannot stress this enough…track the data..how often are they being used…just because x,y, z has them are they using them? This will enable you to monitor your seat forecast, and adjust accordingly.
I have been involved with e-learning since 1998 and rolled out numerous LMSs while working at different companies and I can honestly tell you, seat forecasting and seat purchasing is important! My philosophy is simple: I always create projections over three years.
Always drive the seat projections and never let the LMS provider do it for you
Again, unless using the LMS is mandatory and you have unlimited funds or an enormous budget, then costs are going to play into this and trust me, while your salesperson may be the nicest person on the planet, their company’s goal is to generate revenue. Never forget that. Seats = Revenue.
Always find out what are the breakout – number of seats per bundle (25, 50, 100) and what the cost is per bundle. Discuss this, even before you sign that contract. This is different then buying your original amount of seats. But, you will want to know the cost(s) per bundle – in case you need to purchase additional seats. So, you just can’t buy two seats. You purchase in a bundle. Find out the costs ahead of time and Negotiate.
Cost per Seat
I love this one. The number is always some arbitrary figure, that of course, they can fully explain, but really, how can you say to someone oh, 1-10 seats cost $45 per seat (i.e. one user name, one id – 1 person), 11-20 costs $35 and so on. Right. Always negotiate. What they are pitching is the “Street” cost. I never accept it. If you are getting in to your final selections, those seat pricing costs are going lower, end of story. I’ve walked before and even though my salesperson refused to budge, amazingly a few days later, they have budged. WOW!!! : )
Let’s review Seats for a LMS
a. A seat = 1 person. A user name, a password.
b. If you share seats = tracking bye bye – oh it still works, but you will not be able to figure out a lot of the data. I share only if I have no desire to track my end users – as in Bob and his learning path, required courses, etc. – rather, I just want Bob to enjoy and hopefully utilize this training benefit as part of our company.
c. The cost of the LMS does not include the costs of seats – 99% of the time.
d. Never let the LMS provider drive the number of seats you need – You Drive. If you plan to “Share” seats, do not tell the LMS provider. Don’t worry, that they are hosting it and you think big brother is watching. There not.
e. Seats = Revenue
f. Always use projections and forecasts with a LMS and include seat forecasts. I recommend 3 years. Be realistic on your seat forecasts and overall projections. Understand the bundle component and Cost per Seat angle.
g. If you are using Open Source – or build your own through another mechanism – database whatever, then the seats angle does not come into play. You have in essence unlimited seats. Well, until it comes to purchasing “off the shelf” content.
UPDATE: A very slow trickle of vendors are moving to an active/inactive model, whereas those who have taken or assigned a course (depends on how the vendor identifies) or reads content (many vendors do not follow this, but some do), then they are an active user.
If the user is placed into the system and has not yet taken a course in the LMS or been assigned a course (again, depends on the vendor’s methodology), you are not being charged for that person.
We are SERIOUSLY thinking of pricing our LMS by bandwidth only based on all the reasons you list in this post. Lately, we are getting many clients saying, “we don’t know how many users/ customers we’ll get, can you charge by usage?” We blogged about this dilemna here: http://www.feathercap.net/41811/
I think the per seat/ license will end soon regardless.
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