ROI of e-learning: closing in; as companies look to e-learning to help meet their strategic goals, they're seeking ROI analysis. Some of the most valuable measurements can be hard to capture, but we're closing in

T+D, Feb, 2003 by Paul Harris

In most departments within a corporation, determining the return on a given investment is a straightforward accounting exercise that produces a factual and typically uncontested result. But when it comes to e-learning, computing ROI suddenly becomes a complicated procedure requiring thoughtful chin-stroking, serious seminar time, and earnest input from consultants and vendors.

Why is that?

There are reasons aplenty. Among them are that the acquisition of an e-learning platform, courseware, or technology produces an array of hard and soft cost-savings that often factor into the equation. But not always. Every situation is slightly different.

How much money can a company directly save by replacing its dependence on the classroom with a distance learning operation? It's not rocket science. The standard ROI equation calculates Return = Benefits--Cost of the System.

Easily determined hard savings include reduction in training budgets and materials, travel, instructors, physical facilities, administrative time, and hours of lost productivity when employees are off-site--among other saving. But what about improved productivity and proficiency, learning curve, and employee retention, satisfaction, and maybe even morale? They're not always so easily measured. In some cases, they're not even relevant. Or they may be relevant to one level of the operation but not to another. In addition, the increased productivity of some departments, such as sales, is more easily measured than that of others. And when do you begin measuring those soft ROI factors? How often do you do it? When do you stop, or do you?

How do you measure the impact of e-learning when it's part of a blended learning solution? How do you get business units to buy into the concept so that ROI calculations can be solidly based on their short-and long-term strategic goals? (Wait. Where was that seminar again?) And how do you ensure that ROI calculations really determine the true value of e-learning to an enterprise?

Fortunately for training professionals, there's no shortage of opinions or expertise. Indeed, an army of e-learning vendors stands ready to assist any perplexed executive on the nuances of ROI and the benefits to be gained by their particular products. For example, SkillSoft dispatches representatives twice a year on 30-city tours to provide workshops on e-learning ROI. The free seminars focus on best practices for analyzing the ROI of various types of learning programs, business factors involved in ROT analyses, tips on how ROI studies can help solve business problems, and case studies. Attendees learn how to design ROI studies in these typical areas of cost justification: classroom expenses, employee turnover, training duration, employee productivity, and legal costs.

Visit any vendor's Website and you'll likely find a white paper or two devoted to ROI issues. One such document from LMS provider Plateau Systems seeks to help the training manager sell the Plateau enterprise system to senior managers in a language they understand. It carefully explains the short- and long-term, as well as strategic and individual benefits, and offers formulas to measure them.

And there is plenty to learn.

"Suddenly, the conversation on ROI is changing," says Brenda Benedet, director of e-learning strategies for SkillSoft and a principal leader of its ROT workshops. "In the past, organizations merely looked at cost-savings and benefits from an e-learning perspective. Today, as they position e-learning as a strategic and majority element of blended learning, they're also looking for more tangible returns that relate to the business--performance changes as well as the business impact." Adds Benedet, "Gone are days when at the end of the year, organizations were content to report x amount of e-learning usage. Today, they must know if it made a difference. Hence, an interest in ROT and multilevel measurement.

Benedet says e-learning ROT is a vitally important topic within companies and training departments face challenges in making it relevant. "Historically, learning professionals were good at determining cost-effectiveness and delivering that story based on utilization. But as e-learning addresses business problems, they need to look at actual impact. We see content now addressing specific kinds of business solutions, such as call center training, sales training, IT certification, and leadership. Those are strategic issues."

Companies can measure performance and business impact more aggressively by looking at the learning solution in terms of the potential business impact and potential ROI, says Benedet. She believes it's important that when conducting ROI of e-learning, corporate trainers ensure they have appropriate stakeholders within the organization on board. "It's important to remember that learning professionals don't own the business problem or the data for measurement, so they must be a partner with the unit. They must understand what that unit's business needs are, as well as the objectives that the unit is being directed to deliver that year.