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.

10 Kickoff Questions for Managing E-learning Development

What information is critical at the kickoff of an e-Learning project? To help, I suggest you utilize a project kickoff agenda when managing e-Learning development at the beginning of each and every project. I have learned many lessons, (sometimes the hard way), which have contributed to my kickoff agenda. For example, 6 years ago I would never have thought to ask if the course is going to be viewed on an iPad. Or even better, I wouldn’t have thought it important to find out if the course will be viewed on a smart phone. So as technology changes and your experience grows, so will your kickoff agenda.

Here are 10 questions, (most certainly not all), that must be asked when starting your project.

Roles and Responsibilities:

1. Who are the project contributors?

2. What are each project contributor’s distinct responsibilities?

Content:

3. Who are the Subject Matter Experts and what is their availability?

4. Will the course ever need to be translated?

Scope:

5. How big is the course – what is the required seat time?

6. How many knowledge checks/interactions/animations etc.?

Technical:

7. What browser(s) will the audience be using? (Very important for QA purposes)

8. Will the course ever be viewed on an iPad or mobile? (This impacts course design, development, and QA)

Timeline:

9. What are the major milestone dates?

10. Are there any holidays, vacations etc. that will impact our required launch dates?

I would like to hear from you! Tell us what items you feel are critical to know from the very start of your project?