eLearning Return on Investment

By David Shaw

Classroom-based training is still effective for many types of skills that do not transfer well to computer-mediated learning. For other types classroom training has a high cost for instructors, facilities, travel and lodging, and lost time on the job.

Because of the high cost, training is often not done. This has a hidden counter cost for the organization in lost gains in productivity from a lack of skills training, and often an increase in risk and liability when the training is required by legislation or regulation.

As an example, one client was given 60 days by a regulatory authority to deliver mandatory training on violence in the workplace to 2903 employees. To take people off the job and cycle them through classrooms had an estimated cost of $379,100 ($131/employee) including an impact on service delivery. The eLearning cost using an approved off-the-shelf course was $151,200 ($52/employee). One savings was in not having to pay 900 people overtime to backstop those away in class while still maintaining service delivery.

Online learning has come a long way from the early days of computer-based training. Today other benefits of eLearning include peer-to-peer support and collaboration, 24/7 asynchronous availability, onlne resources and web links not feasible in the classroom.

Some of the possible benefits include:

• Improved productivity by increasing skills
• Improved productivity from less time away from the job for training
• Increased efficiency through the  convenience of availability 24-hours a day, 7 days a week
• Increased effectiveness through just-in-time training opportunities
• Centralized knowledge management.
• Built-in trainee enrollment and course management.
• Management of compliance and recertification.
• Increased effectiveness through consistent content, context and interpretation.
• Reduced cost though condensed delivery (e.g., eLearning can take ~50% less time).
• Elimination of travel and living expenses.
• Measurement of employee knowledge retention with pre- and post-assessments.
• Courses can be retaken any time to refresh knowledge.
• Reduced liability.

If you do any significant level of training, eLearning should show a good return on investment (ROI). There are numerous examples of ROI calculators on the web. (Actually most of them are break-even calculators. True ROI requires an NPV or IRR calculation.)

Some of the data you will need is given in this table:

Item	Classroom	eLearning
Number of training cycles per year
Number of trainees per cycle
Trainee Average Hourly Wage
Number of days per training cycle
Classroom cost per day		0
Classroom equipment cost per day		0
Travel and living cost per trainee		0
Material cost per trainee		0
Instructors’ annual salaries		0
Instructors’ travel and living cost per training cycle		0
Cost of back-stopping employees
Number of unique courses per year
Average cost of developing each course
Annual LMS cost	0
Other