Maximizing the Return on Investment (ROI) from eLearning

Maximizing the Return on
Investment (ROI) from
eLearning
www.aimsdigital.com

eLearning Defined
• Using electronic systems to deliver training and support
• Managing Instructor Led Training
• Tracking Results
• Reporting on Results
• Setting Goals for Organizational Learning
Copyright Aims Digital Services Pvt. Ltd. 2

Calculating ROI
• Costs ( Investment)
 Software Costs
 Human Costs ( Training rather than working)
 Travel & Living Investment
• Returns
 Better trained more effective employees
 Regulatory compliance

Maximizing ROI
• The principal goal of T & D is to maximize the business return from the
training process
 More effective Employees
 Increased Retention of employees
 Reduced exposure to regulatory/legal issues
 Better trained / more loyal customers

Measuring ROI
• Holy Grail of Training
• Very difficult to do in real terms
• Some situations provide great metrics
 Call centers – Call length
 Manufacturing –Units per hour / Accidents per year
• Some situations provide metrics which are affected by
outside factors
 Sales Training
 Legal Training

Step One - Measure ROI
• Critical First Step
• How effective is our training program?
• What is it doing for us today?
• Are we making or losing money on training?
• What changes do we see in our employees based on our training
program?
• What’s the value of these changes?

A method for determining current ROI
• Need a starting point
• Calculate training costs
 T & D staffing costs
 Employees lost work costs
 Cost of purchased Materials
 Travel/Living/Facility Costs
• Calculate training benefits
 Number of trained employees X number of trained areas
 Ay metrics that are more valuable
– Call center Time

A method for determining current ROI
(cont.)
• We’ve got a cost and a number representing either trained
employee units or another metric
• Determine your cost per unit of these metrics

ROI Example
• Company X has 42 employees
 42 trained in Area A
 30 trained in Area B
 12 Trained in Area C
• Total trained units are (42 + 30 + 12) = 84
• Total Cost of Training Program
 T & D Salary and benefits - $300,000
 Lost workers hours 110 X $100 = $110,000
 Travel/Living/Materials/Facilities = $45,000
• So Company X is spending (300,000 + 110,000 + 45,000) =$455K for 84
“Training Units” or $5400 per training unit

Advantages and disadvantages of the
method
• Advantages
 Simple
 Easily Quantified
 Understandable by management
• Disadvantages
 Assumes T & D is worth exactly what it costs
 Ignores the employees actual production in many cases

Considerations looking forward
• What’s the impact on our ROI if we made a change to it?
• 100% e-learning or blended approach?
• Would our new approach be more or less effective than our current
situation?

Calculating the Cost of eLearning
Adoption
• Software Costs
• Content Creation or Purchase Costs
• Training of T & D staff
• Changes in Travel/Facilities costs
• Changes in number of employee hours spent training

Calculating the financial benefits of an
eLearning Solution
• Reduced hours training
 Study show e-learning reduces in-seat time by about 50%
• Reduced Travel/ Facilities Costs
• Reduced costs for instructors and trainers
 Job becomes creating content not delivering it
• Benefits for management
 Increased business intelligence

Method for calculating the costs and
benefits of eLearning solution
• Envision the company AFTER a successful e-learning initiative
• Use a 3 year window
 Many of the costs are incurred at startup
• Things to include
 Software Costs
 IT Costs
 Training for T & D staff
 Purchased training material

What’s our Goal?
• TO DO BETTER
 Whatever method we take to calculate ROI , what we’re trying to
understand is if we should make a change
 Assume you don’t know everything
– Be conservative with estimates ( guess high) for things
like T & D training
 Collect hard numbers where you can
– LMS/Hosting/Content Purchases
 Our goal is to show a minimum 2x increase in ROI
– Sometimes can be less , but always assume 20-40% in what you
don’t know you don’t know

Increase ROI for eLearning program
• Minimize the costs spent on infrastructure
 LMS
 Content Creation Tools
 Network
• Don’t spend money on courses which are of low impact
• Use a blended approach

Strategies to increase ROI
• Careful Selection of content to be developed in-house
 Almost always cheaper to buy than build
 Organization specific content must be built
• LMS and Hosting costs
 Shop around – Wide variations in price
• Blended Approach
 Consider using current models where the number of trainees is smaller
• Coherent vision of success
 Do all of our initiatives tie in to our long-term goals
• Management buy-in

Envisioning the future
• How does my organization operate differently after a successful
implementation?
 Less travel to Training?
 Reduced number of hours per worker to achieve proficiency?
 Reduced number of hours spent preparing Regulatory reports?
 What’s all this worth?

Contact Information
• Aims Digital LLC
 Steve case
 steve.case@aimsdigital.com
 603-292-3935

Next Free Webinar
Next Free Webinar
The 10 most important things to know before Creating an eLearning course
Oct. 9 2014 2 PM eastern US
Registration link
http://www.instantpresenter.com/PIID=ED53D680814C

Maximizing the Return on Investment (ROI) from eLearning

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