Hosted LMS vs SaaS LMS: How do they Differ? by@Scarlett Brown

Hosted LMS vs SaaS LMS: How do they Differ?

The corporate elearning market is anticipated to grow at a CAGR of 8% from 2019 to 2025. The market size of mobile learning is expected to reach $80.1 billion by 2027. 40% of Fortune 500 companies use LMS extensively to remain competitive in the market. Both SaaS and Hosted LMS have different security levels, cost of implementation, and availability of the system. The real challenge is to choose the deployment model. Let's understand who would need a self-hosted or cloud-based LMS?
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Scarlett Brown

Tech savvy writer who loves technology, coffee, and writing!

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Technology innovations are immensely impacting every business sector. Whether it is elementary education or delivering complex-level training, all are influenced by technology integration. One of the prominent examples of a technology-based product is a learning management system that has seamlessly transformed the conventional training methods by bringing together academic programs, subject study guides, and training materials in one platform. 

The tradition of custom LMS development integrated with personalized programs is helping organizations to deliver, manage, and define e-learning practices. The continuous evolution of technology has given birth to different segments of the learning management system. A good learning management system delivers next-level efficiency, there are other benefits, such as allowing companies to develop scalable economies while producing & maintaining content seamlessly.

Enhance talent & evaluation personnel training which aids companies to produce more value.

Independently create & design course material and curriculum, method of delivery, and techniques for evaluation.

Because the cloud has become so powerful & easy to work with, SaaS is assertively influencing modern learning solutions. Apparently, many organizations still look forward to reckoning hosted LMS as a scalable solution for business. The continuous evolution of technology has given birth to different segments of the learning management system. 

On that note, this article delves further into a comparison between the two LMS solutions: SaaS LMS versus Hosted LMS. But first, let's look at the LMS market, its adoption, usage, accessibility, and its impact.

LMS Market Trends

A survey observing Fortune 500 companies using LMS found out that 40% of them use LMS extensively to remain competitive in the market. 

It was also observed that the corporate e-learning market is anticipated to grow at a CAGR of 8% from 2019 to 2025. The vital growth driver is enhancing the adoption of digital learning, where the market size of mobile learning is expected to reach $80.1 billion by 2027. 

Talking about advanced technology integration - AR/VR is considered to be the most practical & immersive approach for educating learners to perform activities. Additionally, AI and machine learning have their fair share in academic and corporate learning setups, Bring Your Own Device (BYOD) policy & enterprise mobility.

Educational institutes, as well as the corporate sector, are steadily moving towards the cloud, and the overall spending is expected to be $3.2 billion in 2022. 


$3 billion in revenue is expected to be generated by 2023 in Latin America.

Europe will become the second-highest revenue generator by 2022.

Asia Pacific will see an increase of 34.2% CAGR by 2022.

24% of people in the age group 16 to 24 years old, 16% in 25 to 34 years, and 14% in 35 to 44 years purchase learning material online in Great Britain.

The mobile learning market is valued at $37.60 million in 2020.

25% of educators realize that personalized learning is a promising idea.

80% of the global internet traffic are videos making video-based learning popular. 

38% of mid-sized, 26% of small & 43% of large organizations want to replace their LMS platforms.

Gamification, learning scenarios, and simulation features of LMS can increase employee engagement by 92%.

To improve the digital approach to business learning 90% say that Learner Engagement is important while 82% say that Reporting Analytics is a more important feature.

Regardless of the perceptible benefits of an LMS, the real challenge is to choose the deployment model. Both SaaS and Hosted LMS have different security levels, cost of implementation, and availability of the system. Let's understand who would need a self-hosted LMS instead of a cloud-based LMS? 

Benefits of Self-Hosted LMS

A company using an LMS also owns and controls the hosting server, whether on-premise or elsewhere, which is said to be self-hosted LMS. To make it simpler, a hosted LMS is stored and runs on the organization's servers, giving the organization complete freedom to decide hosting capacities, installation of security updates, and upscaling servers. 


Organizations with invariable architecture across all platforms are the ones that benefit from a self-hosted/hosted LMS. These organizations have the best LMS developers in-house for undertaking crucial improvements and updates. 

Systems with more niche options instead of universal ones can take advantage of a hosted LMS. Additionally, 

Organizations that store confidential and sensitive data in their system are most likely to benefit from hosted LMS.

Organizations with substantial infrastructure and specialists can benefit from hosted LMS.

Organizations looking for a customized, flexible & unique workflow/curriculum are most likely to benefit from the hosted LMS.

Better Flexibility 

On-premise systems do not restrict the organization or user's ability to make changes - it's more of a one size fits all perspective. Your organization will be an exclusive user leveraging you to customize features, third-party integrations, and seamless updates without any disruptions. You will be free to modify your version of LMS as per the requirement. 

Inherent Security

Self-hosted/hosted LMS have stringent security walls that can better protect the product from incidents or attacks. With a hosted LMS, you can seamlessly make your system HIPAA compliant to avoid penalties. 

Hosted LMS also aids companies with vulnerabilities that commonly occur from sharing or working on a shared platform. Modified systems and hosted LMS, without accessing the Internet, can protect you a lot from potential risks.

Better Integrations

Self-hosted/hosted LMS have limitless integration options for companies to personalize and better manage learning paths. Hosted LMS are reliable to connect with software such as CRM, ERP, HRM, and more seamlessly & in less time.

Independent Vendors

With on-premise/hosted LMS, you will never have to kiss their systems goodbye. There are multiple options to ensure that despite LMS vendors going out of business, companies can continue to scale uninterruptedly. For instance - offering continues to offer an open-source LMS version. 

Software Considerations

Domain Name

For a self-hosting/hosting/on-premise LMS, you might want to use your own domain name. Users are most likely to trust top-level domains, such as .com, .net, .org, .gov, .edu, .uk, or .au. With a specific domain name, you give access to LMS to potential users. With the help of a reliable & professional LMS developer, you can integrate advanced features into the domain names in your network.

Dedicated IT Team

Businesses of any size looking for a self-hosted LMS must instigate a technician or developer and a manager who ensures that the product runs smoothly & the server is being maintained with requisite updates while resolving flags.

Data Storage

Since security and proximity are the priority for some organizations, and on-premise hosting LMS offers better shielding. It is also beneficial for the localized workforce with patchy internet access, offering reliable internet access and scalable bandwidth.

Note: In order to maintain the level of security and flexibility, you might want to consider the costs of upgrading the hardware every few years and round-the-clock monitoring to deter security breaches, overheating, and outages.

Accessibility and Connectivity

Innovation is to sustainable development. Understanding the current needs of the users will help you create and deliver better content seamlessly. To drive the business forward and not limit the accessibility, you might want to consider devices, browsers, and OS your LMS needs. Other preferences, such as Internet Explorer, Chrome, Safari, Firefox, or Edge and platforms - desktops, laptops, or mobiles must be easily manageable.

What Makes SaaS LMS Popular?

SaaS LMS is a successor of hosted LMS much, like iCloud, Google Cloud, or Verizon Cloud that hosts a service through the cloud. SaaS LMS has become pivotal these days as it is integrated with modern solutions, whether it is extending enterprise, employee training, onboarding, or corporate training. 


A SaaS LMS offers lesser headaches, such as no need for software installation or server maintenance over time. Additionally,

SaaS LMS offers a straightforward implementation & quick deployment with dedicated support that helps throughout the process.

Organizations can store their data and find materials easily in a unified location.

SaaS LMS is a cloud-based offering a simpler and more convenient way to learn. 

Low Cost Of Ownership

One of the biggest advantages for most small and mid-sized organizations to prefer SaaS LMS is affordable prices or low implementation costs. No need for dedicated infrastructure, upgradation, bandwidth maintenance, or more.

No Expertise Needed

Usability becomes a piece of cake with SaaS LMS. You can enjoy and maintain user engagement while controlling learning platforms, learners, and admins without any supervision. You can integrate authoring tools for users to easily access training material while real-time automatic upgrades with new modules across all instances.


Growing your learning paths accentuates revenue and ensures that companies have to comply with different training needs. SaaS LMS is a platform that lets you entertain every user hassle-free. 

Companies can simply scale up or down the concurrent users or change the subscription as they see fit. This also helps in conducting large-scale training without spending exorbitantly on infrastructure or resources.

Any Device Accessibility

One of the advantages without the need for IT support is that SaaS LMS is multi-platform responsive to avoid unnecessary delays. An LMS is a cloud that provides trainers and employees/students/learners real-time access to the content, including video content hosting, despite their location.

Modern Features

From rudimentary to self-directed learning, a cloud-based SaaS LMS can be configured as per organizational needs. SaaS LMS lets you seamlessly create and manage a unique training environment through PORTALS, while automation and reporting features can seamlessly reduce admin workloads while letting you cater to specific training requirements. 

Cons of Hosted LMS

Hosted LMS

Higher Upfront Cost

You will need a considerable initial investment, inclusive of a domain name, hardware, IT team, perpetual license. However, the long-term cost of ownership becomes reasonable.

Issues Updating

Only after paying the amount and requesting the IT team, you can receive an upgrade for your product else you will have to remain without any updates.


In order to maintain and host your LMS, you will have to invest time along with the money. You will have to take care of the uptime, security, and maintenance of the LMS round the clock to provide an uninterrupted experience. 


Limited Integration 

Regardless of course creation & management tools, SaaS LMS lacks affiliate programs, eCommerce management, or email marketing tools, and integration of 3rd party tools are onerous. 

Limited Customization

Some of the cloud-based LMS may restrict customization that you want to add to your product, such as being unable to put the logo on pages, link back to the main home page, or more. Upgrading to a better plan can leverage you to use better & advanced features.

Limited Control

Lack of customization and not owning a database can restrict you from making the most fundamental changes, such as implementing new policies, adding new customization, or reporting a failure or more. SaaS LMS does not give you complete control of the performance hence, it is essential to choose cloud LMS with complete control.

In a Nutshell

The accelerating technology changes are being rapidly accepted to enhance user engagement and encourage better experience leading to scalability and profitable business. When it comes to educating employees/learners, a robust and secure LMS is essential to integrate. Hosted as being more preferred for a large organization, SaaS LMS is preferred for small & mid-sized organizations. 

With SaaS LMS, learning becomes free from restrictions while Hosted delivers robust and uninterrupted bandwidth. Where you get device freedom & no technological jargon with SaaS LMS, hosted LMS delivers better flexibility & security. Many organizations are still using hosting LMS while many have moved to the modern and agile SaaS LMS. You can also reap benefits by choosing the one that suits your business needs.

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