The Leading elearning Company

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The Leading e-learning Company
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Making Learning Count
Return on investment (ROI) of e-learning and
blended solutions
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How is training normally evaluated?
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Calculating tangible benefits

• Review evaluation data on (Level 1-4) as a
  benchmark
• Evaluate blended or e-learning programmes
  using organisational performance records,
  questionnaires, follow-up interviews or focus
  groups with learners and their supervisors,
  observation on the job and reviewing
  subsequent appraisal and self development plans
• Attempt to isolate the effects of training using
  control groups, trend line analysis,
  participants/supervisors/customers/experts
  or managements own opinions of impact

The Leading e-learning Company
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Converting data to monetary benefits

• Each benefit must then be converted to monetary
  values
• Hard Data - Output, Time, Costs and
  Qualitye.g. applications processed, speed of
  typical activity completion, number of errors
  made, work backlog
• Soft Data - Work Habits, New Skills, Work
  Climate, Development/Advancement, Attitudes and
  Initiativee.g. absenteeism, complaints, number
  of new ideas generated, problems solved, job
  satisfaction

The Leading e-learning Company
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Likely intangible benefits
The ones we do not dare to speculate in monetary
terms .. especially if the ROI is already
convincinge.g. improved leadership, more
positive attitude to learning and IR generally,
more control of working time, stress reduction,
reduced number of employee grievances
The Leading e-learning Company
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The benefits of e-learning
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Learner benefits

• Learner-centric delivery
• Online diagnosis
• Prepare by pre-tests
• Identify learning needs

• Self-paced learning
• Self-reflection
• Self-directed learning
• Self-styled learning

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Learner benefits

• Consistent learning
• Little and often
• Reinforcement and retention
• Quicker learning

• Participation increases retention
• Chunking
• Intelligent tutoring
• Re-entry problems

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Management benefits

• Managing learners
• Managing the managers of learners
• Managing through mentors

• Peer to peer learning
• Knowledge bases
• Online assessment

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Financial benefits

• Savings in student costs
• Savings in delivery costs
• Productivity benefits
• Return on investment

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Business case leads to prioritising
Nice to have
Added value
Must have
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Evaluation Hurdle
Good Professional Practice
Training Administrator
TrainingManagement
Business/ Consultant Role
Business Partner
Running a menu of courses
Working to defined training needs
Running a menu of courses professionally
Analysing business focussed training needs
Moving towards a learning organisation
(adapted from Paul Kearns ,Personnel Works)
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What examples are there for effective ROI models
in e-learning?
The Leading e-learning Company
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Case studies

• UK Department of Social Security
• Getting started on the intranet and using Outlook
  2000 for email
• 54,000 students
• 4 hour programme 2 day classroom for mentors
• Highest satisfaction rating ever
• 4m savings - 400K in costs
• ROI of 101

The Leading e-learning Company
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Case studies

• ntl
• Data Protection Act
• 1 hour e-learning module
• 22,000 users
• Average cost per user 3
• delivered within one month
• 86 reduction in complaints
• savings compared with classroom of nearly 1m

The Leading e-learning Company
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Case studies

• Sun Microsystems
• in 1995, it took 12 months to get a Sun Sales Rep
  up to full sales productivity
• by 1998, this had been reduced to 6 months
• additional revenue generated by 1440 reps
  retained in this period is 3.6 billion (nearly
  15 of all revenues)
• If training is responsible for just 5 of this
  improvement, the ROI is nearly 91

The Leading e-learning Company
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Case studies

• The Royal Bank of Scotland
• 15,000 staff
• reduction in workshop time
• broader range of skills
• improved productivity
• reduced staff turnover/recruitment costs-
  training now 7th reason for leaving not the 1st
• ROI 700

The Leading e-learning Company
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So, how do you calculate the ROI?
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What is ROI?

• Figure Benefits - Costs
• Ratio Benefits Costs
• Percentage (Benefits-Costs/Costs)
  x 100
• Payback period

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Calculating the benefits in a ROI analysis

• Productivity increases
• Cost savings
• Generation of revenue

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Development costs

• In-house 15-30K per hour of content
• Out-source 25-45K per hour
• Off the shelf - customised 1 per user
  10K?

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E-learning infrastructure

• LMS - basic 30-100K - HR system
  based 300K - build your own 1-2m - LMS
  lite 90 per user - LMS heavy 150 per
  user - hosted 13K p/annum

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Calculating the costs

• Development costs
• Administration and Support costs
• Delivery costs
• Online licence costs
• Learner costs
• Promotional costs
• ROI costs

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Benefits calculation
Productivity through increased knowledge
10,000 Productivity through
increased skills
Productivity through attitudinal change
5,000 PRODUCTIVITY TOTAL Cost savings through
increased knowledge
30,000 Cost savings through increased skills
Cost savings through attitudinal change COST
SAVINGS TOTAL Increased revenue through
increased knowledge
40,000 Increased revenue through increased
skills Increased revenue through attitudinal
change 20,000 BENEFITS TOTAL

105,000
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Costs calculation

• Development costs
  45,000
• Administration costs
  6,000
• Delivery costs
  
• License costs
  1,500
• Learner costs
  25,000
• Promotional costs
  4,500
• ROI costs
  900
• COSTS TOTAL 82,900

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The ROI?

• 22,100
• 1.261
• 26

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Subjects suitable for ROI

• Sales and product knowledge
• IT
• Process and production
• Health and Safety
• Compliance and qualifications

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More challenging subject areas

• Customer care?
• Soft skills?
• Can always show cost savings...

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Practical session . Lets do a quick ROI now
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Case Study

• Define the right blend
• Define the benefits of your blend
• Calculate the costs of your blend
• Compare costs of 2 day (14 hour) course to your
  blend
• Calculate the ROI of your blend
• How are you going to evaluate the programme on
  ROI terms (i.e Level 5)?

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Building an ROI analysis for individual projects
The Leading e-learning Company
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ROI Case Study

• Non salesforce
• All managers in Admin/Clerical departments (each
  with average of 10 staff)
• Target audience 500
• Costs of each staff per day 150
• Accommodation for delegates per night 120
• Travel cost per course per delegate 50
• Cost of trainer per day 200
• travel 100
• Cost of training room per day 100
• Average number of delegates per course 10
• Design cost of f2f per day 10k
• Cost of e-learning per hour 40k