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ROI & Costs

Overview

When elearning first gained momentum, many colleges and university established separate for-profit entities to capitalize on this new market. For many higher education institutions, the vision of elearning was glittering with dollar signs. Many corporations eagerly embraced elearning as a means to reduce costs and increase profitability...million dollar projects were initiated.

Somewhere in the last several years, however, a significant shift has occurred. For-profit schools closed their doors and dismal corporate results (ROI) placed greater scrutiny on elearning projects. Many managers and administrators now demand a cost/benefit evaluation of elearning before implementation.

What I find most surprising about this initial rush to embrace elearning, and the subsequent recoil, is the lack of strategic focus in using elearning organizationally. The investment (and any value derived) from elearning has to be aligned to critical goals. A successful elearning program cannot be strictly valued in terms of ROI (though some consultants rant that it can be done). Evaluating ROI of elearning is secondary to evaluating achievement of strategic organizational goals.

Elearning impacts various areas of an organization. Performing a simple ROI is possible, but often ignores how elearning contributes to the more strategic goals of an organization. It is possible to state that "this online course was taken by 'X' number of people, compared to taking it in a different city (travel and accommodation), we saved 'X' dollars."

This, however, is a very short-sighted view of elearning. Does the elearning program make you more responsive to your customers? Is your organization able to innovate more effectively? Do those who need information have greater access to it? Is the organization able to achieve core functions more effectively?


Resources

Elearning Analytics
"For decades companies have struggled with the real costs, benefits, and return-on-investment of training. Now that e-learning and blended learning has become a major new initiative, even more investment is needed in the training organization. Using new tools and technology now available, is it finally time for companies to truly apply business analytics to understand the activity, effectiveness, and impact of e-learning and training? The answer is, of course, yes. Enter analytics. Here’s what leading companies and suppliers are doing to make training analytics a reality."

Assessing the ROI of Training
"The evaluation of training, like motherhood and apple pie, is inherently a good thing. But, because short term priorities always crowd out their longer term competitors, it's typically something we plan to do better next year - after all, we've got away with it so far, so another year won't hurt!"

Metrics for elearning
"To ensure success, all organizational initiatives need to continually gauge their progress in achieving their objectives. Given the complex and dynamic nature of modern organizations, there is no guarantee that plans and strategies will succeed no matter how well considered and formulated. But a well-designed metrics process will provide invaluable insight into how the eLearning project is performing for the organization's people, business processes, and programs."

ROI & Learning Measurement
Links to two articles on calculating ROI for learning.

Cost Metric for Different Forms of Learning
From Stephen's Web. One of the more useful articles on cost evaluation.

A Fresh Look at ROI
"Training return-on-investment meets the information age.
Ask me, I'll tell you: Return-on-investment isn't what it used to be.
This traditional financial measure, developed by DuPont and once credited with making General Motors manageable, hasn't kept pace with the times. The R is no longer the famous bottom line and the I is more likely a subscription fee than a one-time payment."
By Jay Cross of Internettime.

Measuring success
"People often ask me what the return on investment (ROI) of e-learning is. I tell them it's 43 percent. How did I come up with that figure? Truth be told, I made it up. That's because knowing the ROI of e-learning is sort of like knowing that the average depth of the ocean is 2.5 miles. Interesting, but not very helpful to a ship's captain."

Elearnings Bottom Line
Excellent. From Web Tools.

ROI for Learning Program
Excellent resource. Very thorough, lots of great links. From Learnativity.

Elearning ROI
"For a more accurate look at e-learning's ROI, think speed and efficiency."

ROI Bibliography
Worth a read.

ROI Calculator
Training cost calculator

Cost Estimators
"mark steiner, inc. has developed the following tools to help determine breakeven points between eLearning and traditional instructor-led training and to estimate costs of eLearning design and development.
It should be noted that each situation is different and requires application of expertise and common sense."
Good resource to begin evaluating costs and ROI...Some of the calculators, however, focus strictly on costs of class vs. elearning - not necessarily a completely accurate comparison (as I stated in the overview - strategic alignment is more important.)

Determining Cost of Online Courses
Neat concept (though somewhat simplistic)...worth the visit.

   

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