eLearning, e-Learning ROI/ROE

If you start and end all of your learning efforts
by focusing on your organization's goals,
you will never be asked to do an
ROI analysis to justify your budget.
Dan Tobin

Organizational change processes have always had difficulty in justifying their ROI.

	How do you determine the savings from employees that you didn't need to hire because you've increased the productivity of your current employees?
	How do you determine the increase in revenue from clients that stay because of increased service?
	How do you determine the opportunity costs from not attracting quality employees?
	How do you determine the opportunity costs from prospects that didn't become clients?
	How do you determine the lost revenue from clients or prospects who left because they didn't receive the quality or service they expected?
	How do you capture and present the cost of time spent by employees looking for information that they need but can't find? (Texaco has attempted to do this, so have other studies)
	What is the cost of an employee that leaves because they don't have the information to do their job? (See What do They Need?)
	What is the cost of a distributor or marketing partner that cancels because you have ineffective processes?
	What's the profit generated by helping to develop and distribute a service or product to a client - faster, cheaper, with increased quality?

The questions are unending, the answers are few. With current financial systems it's very difficult to track the impact of a change - both positively and negatively. There is some hope for the future with Balanced Scorecord, Intangible Asset tracking and Intellectual Capital valuations but those approaches are not standard.

TRADITIONAL TRAINING ROI

COSTS

BENEFITS

Design and Development costs
  - internal days of design and development
  - costs of external designers and developers
  - other direct design and development costs (purchase of copyrights, travel, expenses, etc.
  - outright purchase of off-the-shelf materials

Promotional costs
  - internal days of promotional activity
  - other direct costs of promotion (posters, brochures, etc.)

Administration costs
  - hours of administration required per student
  - direct administration costs per student (joining materials, registration fees, etc.)
  - evaluation €“ setting baselines and determining performance impacts

Presenter/Facilitator Costs
  - hours of training
  - hours of preparation
  - hours of follow-up
  - travel

Materials
  - training materials (books, manuals, consumables, licenses, etc.)

Facilities
  - training, study rooms
  - equipment used -“ projectors, computers, bandwidth, network

Attendee costs
  - payroll
  - travel
  - opportunity
  - replacement

Labor savings
  - reduced duplication of efforts
  - less time spent correcting mistakes
  - faster access to information

Cost savings (possible areas)
  - fewer machine breakdowns, lower maintenance costs
  - lower staff turnover, lower recruitment and training costs
  - a reduction in bad debts
  - reduce time-to-effectiveness
  - reduce customer support calls - reduce help desk calls
  - reduce supervision costs
  - reduce downtime
  - increase workloads without increasing staff

Income generation
  - increased sales
  - sales referrals made by non-sales staff
  - new product ideas
  - customer satisfaction and retention

Performance Change
  - quality
  - speed
  - quantity
  - safety
  - problem solving

Behavior Change
  - attitude
  - reduce conflict
  - ethics
  - leadership
  - communication
  - motivation

eLEARNING ROI/ROE
For eLearning, there are the above opportunities for positive ROI but there's also more. Think of as a ROE - Return on Expectation. Learners expect to learn and traditional training methods have been unable to consistently and effectively support learning as an embedded organizational process.

	Training Delivery Expenses. This should be the last reason you use to calculate eLearning ROI. Yes, it does reduce employee and/or trainer travel expenses but that's only a small part of how eLearning improves your organizational value.
	Not Doing any Training. Most learners are "sent" to a training class because someone else thinks they "need fixing". Many times it's not the employee that's the problem. Training the wrong people on the wrong topics is very expensive. With eLearning an employee can "test out" of a required module or quickly "drop out" of a presentation that doesn't fit their needs, or access only the module/level that they need. These actions can be tracked and used to prove that the employee isn't the problem, you can "save" organizational resources and refocus them towards defining and resolving the correct problem(s).
	Targeted Learning. A learner doesn't have to sit all day in a class that's too elementary or advanced, they can simply access the content they need, when they need it. All the immense overhead of sending people to the wrong classes is saved. Or, they can drop into a learning module if their circumstance change and they need to learn a topic that wasn't defined in the original needs assessments.
	Managing Printed Material. The need for printing, shipping, inventorying, editing, reprinting, reshipping, version tracking, inventory etc, etc, is almost, or totally eliminated.
	Removing Hidden Costs The hidden cost of learners physically storing and trying to find information in printed training materials is infinitely expensive - as Dilbert says "The training is forgotten but the binder will last forever." The best proof of effective learning processes is not represented by the thickness of a binder, it's in the use, reuse and application of that information.
	Information Efficiency. What are the cost savings of allowing people to have access to a searchable learning environment? TEXACO figures workers spend about 75% of their time just looking for information or trying to find someone who knows the information. Processes that make it easier, better, faster for someone to find the informational resources they need, when they need it will have easier, better. faster ROI.
	Strategic Priorities. eLearning is one component of Performance Support. By structuring eLearning environments to match strategic needs, it is much easier to prove a positive impact on the organization.
	Customer Support. Reusable content means that you can extend your internal content and reuse it to support customers learning more about your product/services. Other "customers" would include your vendors, distributors, suppliers, marketing partners and, sometimes, even your competitors.
	Stop Reinventing the Wheel eLearning processes allow you to access and reuse content, graphics - objects that have already been created by other functional areas. AND it allows them to use objects that you've created for non-training uses such as marketing, customer support, product development, etc. You cut your costs by using other's objects, you increase the value of your objects by allowing other to reuse them.
	Competitive Advantage. Better support for your clients, faster time to market because your employees aren't waiting for a scheduled class to learn how to do their jobs, shortened sales and delivery schedules, increased customer and employee loyalty. Any area where you can support your organization's competitive profile by being quicker, offering better quality, and/or less expensive than their competitors - the more your organization will value your efforts.
	Reduced TTE (Time to Effectiveness) Time is the most precious resource of any individual or organization. By helping employees to become effective quicker, better, faster with targeted learning opportunities, you improve your own organizational value.
	Reducing Development Time. With iterative eLearning development processes, you can integrate the analysis and development into one tangible process. Using prototypes allows people to indicate very quickly and concisely which elements are/are not useful. Using this method you can avoid creating expensive elements that aren't needed and focus on developing effective, cost-efficient elements. By involving different influencers in the development stages, you increase their commitment to the final product.

Return On Impact(ROI) Return On Expectations (ROE)

Return On Impact(ROI)
Return On Expectations (ROE)