Assessing Return on Investment (ROI) of E-learning

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:

  • Flexibility
  • Cost effectiveness
  • Standardization
  • Repeatability
  • Convenience
  • …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:

Personnel

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 Technology

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.

ELearning Content

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.

Hidden costs

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:

Flexibility

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.

Less disruptive

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.

Personalized 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.

Travel

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.

Four Keys to a No-fail Needs Analysis

When working with new clients, custom training providers are tasked with learning about the client’s background, vision, and goals, and then connecting that information to the right training solution. It is critical to establish credibility and build trusted relationships quickly with clients, and that starts with an effective needs analysis strategy.

There are four fundamental components in a strong needs analysis strategy, which allow a custom training provider to swiftly build the client relationship, understand their business need, and provide a successful training solution:

Authentic relationship: Each client’s relationship need is different, and the training provider must determine up front where he or she stands on that continuum, from transactional to strategic. One of the keys to building relationships is meeting the other person where they are — this means matching their energy, taking their lead on social interest (for instance, how much time to use at the top of the call catching up about your weekend), and taking an interest in their personal investments and strengths in the project. Mutual trust is essential.

Organizational design: The stakeholders of the solution go beyond the learning leader who collaborates with a training provider. It is important to know who the key players are in the client’s business. By identifying stakeholders, you are not just looking for the participants in the training solution. It is important to canvas both operational and executive leaders to understand the client’s organizational goals and to identify other teams, departments, and even customers that may be impacted by the training solution. You also need to understand the decision makers, both the supporters and detractors who could influence the training outcome or effectiveness.

The mind map of all of these stakeholders provides the client’s big picture: to see what’s been done before and how it was accepted, to understand how employees generally share with and learn from each other, and to piece together elements of the client’s organizational culture. This helps the training provider to focus questions and to stay relevant, and adds credibility to the solution by aligning it with other learning and change initiatives the client may be implementing.

Business need: It may sound like a no-brainer, but often talking through the business need with multiple stakeholders uncovers a lot of valuable insight about performance goals and performance gaps. What data is available that supports the need for this training? How success is defined? What will be measured?, and what should the business look like after training? What policies, business models, or management theories has the client adopted that will reinforce the training? It is important to know what the business problem is., how it is measured, and how the training solution will solve it.

Transparency: This is the client’s business. If there are any surprises from the training provider, trust can be lost. The client should know who the training provider is talking with and what questions are being asked throughout the process. One idea is to make all transcripts and recordings of interviews and focus groups available to the client, and to provide a detailed summary when the data collection is complete. This helps to clarify expectations, gain buy-in, and serve as a reference once development is underway.

Getting each of these components right can lead to a more productive and sustainable training solution for the client ─ and can make the difference between being a vendor and being a business partner. By approaching each needs analysis with this discipline, the training provider will be focused on the client’s goals and can deliver a solution tailored specifically for their unique culture and needs.

Becoming an Instructional Designer (ID)

In the past few months, I’ve been thinking on what an instructional designer does and how to get into the field. The growing field of instructional design presents a plethora of job opportunities for those looking to break into the field. I love instructional design because it is a field where I am constantly learning and I have a great variety in what I do. I use so many different skills—writing, web design, graphics, collaboration, planning, plus of course how people learn. I thought it would be useful to collect all the information and post it here.

The first step can be to get more instructional design experience at your current job, if possible. For example, if you’re offered the technical writing part of a project, you might ask about other training and support materials that the project requires and what the larger business need for the project is, and suggest that you could design those other materials to meet that need.

My job was a combination of support, technical writing, and training, so I was in a good position to identify ways to improve the organization’s performance. By volunteering to improve processes and create training and support materials beyond my official job description, I created items for my portfolio and eventually transitioned into a more “pure” instructional design role.

Another approach is to politely offer to overhaul an existing course or other learning intervention that isn’t working or that people complain about, even if has nothing to do with your job description. That way you can show what you can do, save your colleagues from suffering, and learn how to redo others’ work without stepping on toes, which is a valuable skill in our field.

Hopefully you can do this sort of thing while still employed and build a portfolio, which will be your key to getting ID work.

If you want to do instructional design and not just e-learning development, be sure to explain the instructional decisions you made for each sample in the portfolio. The most common mistake is to simply show the material without discussing the strategy behind it or linking it to any larger need in the organization. IDs with that sort of portfolio give the impression that they view their job as putting information online, which is unlikely to lead to fulfilling work.

If you just do design and not development, put your design ideas in the portfolio. For example, describe the performance problem and the solution that you designed, explaining your reasoning and describing the results.

Learn the theory

If you aren’t doing it already, I’d recommend that you also do some independent reading to get the vocabulary and basic theoretical background that’s expected of IDs. Cammy Bean lists a lot of recommended books and sites that traditional IDs use. I got the most help from Michael Allen’s Guide to E-Learning, Ruth Clark’s research-based books, David Merrill’s First Principles of Instruction, the research-into-practice info from Will Thalheimer’s site.

Since many people in our field like to discuss theory, it’s good to be able to talk about Bloom’s taxonomy, Gagne, constructivism, etc., much of which is described for free online. However, I think it’s equally important to remember that most of it is just theory, and that experiments that seem to support a theory were likely done on students in school, not adults in the business world.

Consider a degree

Compared to other instructional designers, I seem to be less enthusiastic about degrees. I worked with several recent graduates of ID degree programs and usually found that they learned a lot of theory but had little knowledge of business needs and no experience applying the theory to real-world situations with tight deadlines. So if you want a degree, I’d recommend that you consider programs that give you real-world projects in addition to the theory.

Decide: design or development, or both?

As you get more experience, identify what gives you the most satisfaction. Do you love analyzing a performance problem, figuring out a solution to it, and outlining a training program that you know will be effective? Or do you love to create the media for content that already exists, making it more interesting and interactive?

Most jobs that I hear about seem to require both sets of skills, which mean neither gets the time it deserves. If you like both the instructional design and the media creation, there are jobs out there that will give you the chance to do both, keeping in mind that you probably won’t have time to do your best work. The number one complaint I hear from solo instructional designers is that they’re not given enough time for strategic instructional design and are expected to just put existing information online.

If you prefer strategy and design over production, look for a position in an organization that’s big enough to have a separate production team or that outsources the production. Also make sure that your possible employer will view you as a performance consultant included in training strategy and not just as someone who converts information into a course.