e-Learning Articles

Return-on-Investment (ROI) from e-Learning, CBT and WBT

by Ron Kurtus (revised 12 October 2002)

Company management wants to see a measurable return from the money spent on producing and delivering e-Learning, CBT or WBT. They also may want to see a comparison of the ROI for the e-Learning compared with that for standard classroom training.

The ROI is calculated by comparing the development cost of the e-Learning with a measurement of increased productivity or contribution to the company bottom-line.

Questions you may have include:

• What is cost of creating e-Learning?
• What is the ROI advantage of e-Learning over training?
• How do you calculate the ROI for e-Learning?

Example of ROI Calculations

Assuming a traditional classroom training plan that includes 500 trainees who each experience a week of training, travel for half of them (250 employees), the time constraint of a 3 month roll-out (5 trainers, 10 locations)-all compared to an equivalent e-Learning scenario using very conservative assumptions, including an opportunity cost rate of $400 per day.

These figures indicate that the e-Learning approach, given conservative assumptions, saves approximately 20% in the first year of implementation. In the second and later years when development costs are not a factor for this course, the savings for e-Learning grows to nearly 50%. In addition, the CBT or WBT can be rolled out in half the time, once developed.

Source: http://www.school-for-champions.com/elearning/roi.htm

How E-Learning Can Increase ROI for Training

By THINQ's Research Department

E-Learning Minimizes Travel Costs

For years corporate America realized that travel and entertainment (T&E) made up the bulk of their training costs. As corporations become more global, the cost of moving and housing employees can only increase. But there is hope. Numerous studies have shown that e-learning can cut the travel and entertainment cost associated with training by at least 50% ( Hall 1997). Other studies have shown that if implemented properly these costs can be reduced by at least 80% (Hemphill 1997).

E-Learning Minimizes Time Away from Work:

As stated above, Fletcher (1990) found that computer-based training yielded time savings of 35-45% over traditional classroom instruction In addition, Hall’s 1997 case study review found that computer-based training required significantly less time than instructor-lead training. His review indicated that the reduction in time ranged form 20-80% with 40-60% being the most common time saved. In fact compression of training time has the most visible impact on ROI by not only providing savings in wages spent on training but also a savings in opportunity costs... READ MORE

12 Truths about e-Learning: Facing the Hard Realities

“In the haste to “get it out there,” organizations are ignoring some basic realities about technology and learning, and about today’s learners.”

Overview

In 2004, IDC predicted that only 35% of corporate training will take place in traditional settings. The majority of training now makes use of some form of technology and distance learning techniques. As designers develop these new learning systems, they are faced with the challenge of creating:

• Training that people actually take
• Training that changes behavior
• Training that managers can leverage
• Training that can be easily managed
• Training that can be quickly developed
• Training that can be rapidly deployed
• Training that is cost-effective

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Return on Investment

"Choosing and Implementing an e-Learning Solution,"
A No Nonsense Guide From Wide Learning, pp. 8-9

"One of the key reasons for implementing an e-learning solution is that it provides a measurable return on the investment and a measurable impact on the organisational bottom line. However, in order to demonstrate this, the implementing organisation needs to take three steps.

The first is to fully and adequately cost delivering the same learning outcomes using traditional classroom training methods. The costs that need to be taken into account are the direct costs of such training (hiring a trainer, hiring external training premises and associated costs, hotels and other costs of trainee attendance, etc) and the indirect costs (administration costs of setting up and managing the training programme, and the indirect costs of internal trainers deployed as part of the solution – this is particularly important for professional services firms that might deploy a fee owner (who is not a trained trainer) to provide training), the lost productivity (consequent upon staff being out of the office for a specified period of time) and the problems associated with dealing with those who were unable to attend at the designated time, with the need for training new starters, the uncertainty as to the real value of the training and the absence of any hard evidence that trainees have actually acquired the skills and/or knowledge required. This data provides a point of comparison for considering the cost effectiveness of an e-learning solution.

The second is to accurately measure the base skill/knowledge level of the universe of trainees as well as the level of skill/knowledge achieved as a consequence of the e-learning. This can only be done where the e-learning programmes come with a built in pre- and post-training test and a reporting system that enables the employer to track progress on an employee by employee basis as they complete the training.

The third is to accurately cost the indirect cost of deploying the e-learning solution. These costs tend to be low but, when they are added to the clearly stated costs of the external e-learning solution, a complete cost for the project can be established.

It is then possible to be clear about the specific skill improvements that have been achieved, and the cost of doing so. This data forms the basis of further cost benefit improvements for the organisation." 

More ideas on the Future of e-Learning

"Obviously nobody has the exact answer to this question, but it is an important one to consider.  To start out, it is important to look at many of the trends related to learning that are already taking hold in our world.

Knowledge is expanding at a tremendous rate.  The class graduating H.S. in the year 2000 will be exposed to more new information in one year then their grandparents were in a lifetime.  Memorizing facts will have a much lower value, while utilizing information for analysis and decisions will be a critical skill.

The typical worker will have many distinct careers in his or her lifetime.  Each of these careers will require new knowledge and skills.  Lifelong learning will be something that any successful person must do to compete.  It will no longer be worthwhile to learn something with the hope that it will be useful at some time.  Just-In-Time learning that meets the needs of individuals as they occur, makes learning more meaningful and effective.

The companies and careers of the future will utilize technologies that have not even been conceived of today.  These technologies will require a whole new set of skills from the workforce.  Learning to use the new technology will be important, and so will using those technologies to learn.

The world is shrinking rapidly.  The Internet has brought the world together in ways that nobody would have expected.  You can now attend a college half way around the world, with students from any country with Internet access.  People will telecommute to their jobs more in the future, while their companies compete globally.

So what might learning look like in the future?"     READ MORE

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