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

Benedet points out that directors in training departments tend to be close to the business but not a true partner. "There's the rub. Should an organization want to implement a strategy for ROI, it must first revisit how its own learning organization is organized. It should include 'performance consultant' as part of a trainer's job."

Benedet suggests that organizations considering implementing an ROI strategy start the process by delivering an ROE (return-on-expectation) survey. "It should be highly visible, and should pave the way for future sponsorship and participation in real ROI projects." She advises companies to look at an opportunity and determine whether measures are in place. "If not," she advises, "do a return on expectations."

Continual roadmap

Nucleus Research, a Wellesley, Massachusetts-based research firm, keeps careful track of ROI issues throughout e-commerce. It reported last fall that e-learning solutions and e-business integration platforms ranked among the ROI leaders; businesses such as b2b marketing and stand-alone content management ranked as ROT laggards.

Along with providing such analysis, Nucleus advises companies on how to quantify their ROI. Its own reports lean heavily on the hard costs and overhead savings that are easier to obtain than productivity data. Nucleus says that most companies gain significant returns from even modest investments in e-learning technology. "Most e-learning customers have quickly recognized first-tier benefits, including reduced costs for travel, customer support, human resources overhead, and regulatoty compliance--and eventually second-tier benefits, such as increased employee performance that directly impact profitability."

Rebecca Wettemann, founding partner and senior analyst at Nucleus, says that ROI analysis remains a valuable roadmap for e-learning. "Calculating ROI isn't difficult; it's merely structured," she says.

Wettemann reminds that the typical CFO conducts an ROI analysis on every other business component. Similarly, the CIO must articulate the business benefits of e-learning based on clear assumptions, she advises. "The strategy for the CIO is to identify the benefits and work to quantify them based on characteristics of the organization, and to look at expected best-case and worst-case scenarios." She says companies can maximize the return on their e-learning investment by being as efficient as possible with the technology.

"Companies need to take a critical look at what they're trying to deliver. If they can use off-the-shelf content, they should do that. If basic tracking is all that's needed, they shouldn't buy an expensive LMS. If they need high-fidelity learning,, they'll get the best returns by developing the content. They should do this across their learning goals."

ROI analysis is a valuable roadmap to continually measure the success of a company's e-learning solution, notes Wettermann. "I do ROI analysis before I deploy e-learning and once deployed, I use it to see if I get the benefits I expected." When analyzing benefits, consider only those that have an impact on the business and not those that offer only warm and fuzzy feelings, she tells clients.