One of the biggest challenges that ELearning professionals experience is demonstrating the return on investment (ROI) of their training programs. In order to attract project sponsors and to justify resources invested in the development of ELearning, projects need to prove that they deliver real benefit to an organization. This article discusses considerations that need to be factored in when calculating ELearning ROI.
Assessing Return on Investment (ROI) of ELearning
How to Measure ELearning ROI?
ELearning has revolutionized how individuals (personally as well as in corporate settings) learn. There are a number of reasons why businesses and individuals gravitate towards ELearning programs, including:
- Cost effectiveness
- …just to name a few.
However, as with any business venture, ELearning projects need to show that they deliver real benefit to an organization. If they cannot demonstrate such value, then they are likely to not attract champions and sponsors within the company and without a strong champion, the program is not likely to take off.
Measuring ELearning success
The benefit of an ELearning program for any organization is measured in terms of the Return On Investment (ROI) that it delivers. As the name suggests, it is a measurable unit that represents an excess of value received (Return) over the cost (Investment) incurred for the program. A successful program will deliver greater returns than costs.
The question however is, how does one go about measuring ELearning ROI?
A few key factors must be taken into consideration when calculating ELearning ROI.
The Investment (or Cost): This component of the ROI calculation seeks to address the question “What will it cost me to put ELearning in place?”, In addition, here, the term “cost” includes:
Calculate the cost of people (both internal and external consultants) that will be needed to build the program. Personnel costs may seem straightforward to identify and track, but sometimes they tend to be obfuscated, especially when existing staff are pulled into an ELearning team while also playing other (non-ELearning) roles. Project direction, development, management, and administration costs also need to be factored into the equation.
ELearning is largely a technology driven initiative. When calculating the cost for technology, organizations must consider what new technologies (Application tools, Virtual Classrooms, Learning Management Systems, Remote Learning infrastructure etc.) are needed, as well as the cost of changing any existing technology (existing desktops, networking systems, replacing existing laptops/tablet devices) that may not support the new system. Often, organizations need to tailor newly acquired technology to assimilate it into the company’s existing IT infrastructure. While such configuration is normally part of acquisition cost, there may be a sizable cost associated with it that is not covered under the initial acquisition.
Major costs should also include content development (in case unique content needs to be created), or off-the-shelf content acquisition costs. Additionally, where pre-packaged ELearning content does not easily integrate into an organization’s existing learning environment, additional costs to modify or customize them may be required.
There are always costs associated with transitioning from an existing (conventional) learning environment into an ELearning model. Personnel disruptions, resource reallocations, existing project deferrals, (short term) team realignments, all of these costs are not readily visible. ELearning entails making a cultural change within an organization, and since (by our very nature!) human beings are “change resistant creatures,” there is bound to be hidden costs associated with managing those changes.
The Return (or Benefit): This component of the ROI calculation seeks to address the question “How will embracing ELearning help me?”. In addition, here, the term “benefit” includes:
ELearning offers individuals and groups of learners the flexibility to learn anywhere and anytime. That means there is less likelihood that learners will shun away from embracing a learning opportunity, since they now have the option to learn at their own convenience. The benefit of flexibility can be measured in terms of a cost: For instance: How many employees don’t learn (how to follow a new process, or how to operate a new tool) because of a rigid learning schedule, and what does it cost the company as a result.
Along with this flexibility comes the promise of minimum disruption to an organization’s “routine.” Any disruption to an organization’s standard operating procedures has a cost associated with it. For instance, orders might be delayed, schedules may be changed, inventory might not be updated – all because staff are in training. Companies could hire extra staff to pick up the slack, or pay employees overtime to complete their usual tasks after hours. That, however, adds to costs too. If courses can be delivered with little or no disruption to an employee’s regular work schedule – for instance learning via mobile devices, or while at a gym or on a train – then it will reduce the disruptive cost of learning.
Even within classrooms of apparently homogenous learning groups, there will be “outliers” who impede the learning pace of the entire group. Such interruptions do have a cost – even though it is hard to quantify exactly. With ELearning, individuals can learn at their own speed, thereby making personalized learning more efficient in delivering content effectively.
Training-related travel costs are the biggest reason large corporations embrace ELearning. These costs are a major component of any ROI calculation. ELearning can dramatically reduce such costs thereby delivering additional returns.
In conclusion, it is important to understand that all ELearning programs must be measured in terms of ROI. Not only that ELearning specialist should consider the investments such as personnel, technology, content, and hidden costs, but they should look at benefits associated with ELearning such as flexibility and reduction of travel costs. By accurately calculating the cost of a training program, ELearning professionals will be able to easily justify the investment in the program and decide if ELearning is ultimately a viable solution.