Costs, benefits and ROI of e-Learning
This page provides links to resources that look at the costs (set up, development, delivery etc), the benefits of introducing e-learning and at the return on investment (ROI).
Articles in date order, most recent first.
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This article on Learning Analytics (LA) explains the 5 level LA pyramid of Dr. Kirkpatrick and Dr. Phillips and how to implement Learning Analytics in an organization using the 1-2-3 approach.
Added: 17 December 2007
"Summary research report from an Elearnity corporate research project with B&Q, BP, BT, Coca-Cola Europe, HSBC, Marks & Spencer and Vodafone, looking at measuring and proving the value and impact of learning. . This document provides a viewpoint of the outcomes from the project."
Added: 14 November 2005
Reviewer's Note: Article available as a PDF
"Organizations make investments in e-learning solutions with the expectation that the solutions will have a measurable impact on performance by achieving specific business outcomes. Measuring the value of learning solutions enables organizations to demonstrate the return on investment they make in training. In addition, organizations that measure training are able to increase the contribution of their learning solutions using continuous improvement processes that drive higher levels of return through enhanced performance over time." Skillsoft White Paper, July 2005
Added: 21 October 2005
Reviewer's Note: "The value measurement process increases the value of the learning solution through continuously measuring improvements to drive higher levels of return over time."
"Of the many factors that come into play when determining the proper training delivery approach-efficiency, timeliness, consistency, and appropriateness of delivery method-the key driver is typically program cost. Program cost, which includes among other factors, the cost of initial development, instructor's time, material, travel, and opportunity cost of the learner, can vary widely for similar programs depending on the delivery method." Paul T Walliker, Learning Circuits, June 2005
Added: 25 June 2005
Reviewer's Note: "To help its managers better understand the relationship between cost and delivery methodology, Caterpillar University constructed a mathematical model to better calculate the key cost components. Itskey finding:even when similar programs are compared, e-learning is less expensive to deliver almost regardless of learner population."
"A cost analysis model for e-learning and a methodology for setting up a virtual foreign languages school is presented. The Total Cost is expressed as a function of the number of months (or quarter, or semester), the number of courses and the number of students taking a monthly course." Demetra Mantzari and Anastasios A. Economides, European Journal of Open and Distance Learning, 2004
Added: 20 December 2004
Reviewer's Note: "Unlike previous research that analyzes the costs of virtual universities, this paper uses the Breakeven Point Analysis to determine the number of students' and/or courses, for a Virtual Foreign Languages school to be profitable."
"Online instruction is gaining an increasing presence due to the benefits associated with it, including the ability to consolidate education and training across geographical and time constraints, and the claim by many that online education and training is cost efficient. This paper provides a relatively concise and useful history of online learning, and a discussion of issues to be faced by the professional who intends to move the education and training environment online in response to the current academic and business environments." Sharon Jeffcoat Bartley And Jennifer H Golek, Educational Technology & Society, 7 (4), 167-175.
Added: 8 November 2004
Reviewer's Note: "It presents a cost matrix tool by which the costs of online education and training can be tabulated and/or compared with the costs of the traditional education and training medium."
"Does it cost less to design and develop online teaching and learning today than it did a few years ago? Are the categories of cost different today from the past and from what the costs might be in the future? The costs of developing online programs are significant, yet there are few resources to help planners." Judith Boettcher, Syllabus Magazine, July 2004
Added: 2 July 2004
Reviewer's Note: Here, Judith Boettcher proposes a few guidelines for predicting the costs involved in the design and development of online instruction.
"A training program with objectives linked to business results and backed with a solid business case is less vulnerable to spending cuts. To ensure adequate funding and organization-wide commitment to your training program, you must be equally committed to aligning its value to corporate objectives." Tom Cooper, LTI Magazine, 16 June 2004
Added: 18 June 2004
Reviewer's Note: Conclusion: "Taking a consistent and credible approach with your training programs will demonstrate the value to the business and prove training to be a wise investment and not a cost."
"ROI, or return on investment, is king in today's business world ...But some organizations have slowly shifted from a single dogged focus on ROI to a more complete analysis called "ROV," or return on value. ROV is a term that is used less by companies, but one that actually paints a more accurate picture of the impact of investments on the overall business. It broadens the analysis of ROI to include both the financial costs and hard returns, and also the intangible benefits, like having a scalable business, having more competent employees or having more satisfied customers."
Added: 8 May 2004
Reviewer's Note: "ROI may be king today, but ROV will soon assume the throne."
"Learning about ROI seems to be enjoying a renaissance in the training industry. Workshops and certificate programs abound. However, the courses I've looked at teach things that no business manager would buy. Here, let me tell you why I feel this way." Jay Cross, Learning Circuits, April 2004
Added: 10 April 2004
Reviewer's Note: Portions of this piece are excerpted from Metrics, Jay's e-book available from www.internettime.com.
"The scale outlines the range of online content that we can use. It describes an increasingly interactive user experience using a one-to-ten scale, in which "one" involves the common experience of simply reading text on a screen and "ten" represents a virtual reality scenario." Tim Guerra and Dan Hefferman, Learning Circuits, March 2004
Added: 23 March 2004
Reviewer's Note: I use something very similar to this to explain to clients how much things are going to cost, so this is a handy tool to demonstrate the different types of e-learning solutions and also how to select one that is most appropriate for the learning problem, budget, etc
"When determining the ROI of e-learning investments, "the vast majority [of businesses] measure what they can easily -- usage and completion, for instance," IDC's Michael Brennan noted. "However, a small but growing portion are [beginning to] assess if the material employees are training on is useful to their day-to-day job activities." Alison Diana, TechNewsWorld, 8 December 2003
Added: 18 December 2003
Reviewer's Note: Some examples of organisations assessing the ROI of their training efforts
"The first step in cost-benefit analysis is simply to measure all of the direct and indirect costs involved in the design, development, delivery, and maintenance of the program. Because different industries have different ways of doing business, this process calls for some careful examination of how your organization goes about its daily work activities. So often, time is money. If you can more efficiently train employees then the time saved can be used for productive work. More work time is then translated into a financial benefit." Kevin Kruse, e-Learning Guru, 2002
Added: 14 December 2003
Reviewer's Note: A thorough breakdown of the costs involved in creating formal learning solutions
"Want to see some positive E-learning ROI? Get personally involved and develop programs that get people to take action. It's more than putting your training online." Michael Allen, Optimise Magazine, December 2003
Added: 4 December 2003
Reviewer's Note: Conclusion - "But the move to online learning will challenge executives to learn basic principles and force designers to focus on business needs and create effective learning experiences. The alternative is simply a substitution of technologies and a weak ability to achieve needed levels of performance. Once that understanding is in place, ROI will follow."
"By now, it should be obvious that traditional training or conventional courseware-based e-learning cannot meet the learning and development needs of an employee that uses real-time workflow technology to perform his or her job." Sam Adkins, Learning Circuits, October 2003
Added: 23 October 2003
Reviewer's Note: "Time is money"
"For years, there has been debate about the appropriateness of return on investment (ROI) as a measurement tool for learning and development (L&D). Today, the debate has shifted to the ways in which ROI can be integrated into other measurement processes. Much of the use of ROI has come from pressure from senior executives requesting value and, in some cases, outright demands for ROI for certain programs-or face the consequences of budget cuts. These requirements have led the L&D function to face reality: ROI is an issue that will not go away." Jack J Phillips, eLearning Developers Journal. October 2003
Added: 23 October 2003
Reviewer's Note: A succinct look at ROI for Learning and Development
"Discussions of Return on Investment (ROI) for e-Learning are pervasive, and often too abstract to be useful. Here is a complete guide to the issues, models, and step-by-step processes for conducting and presenting and ROI analysis. Everyone is competing for scarce resources these days -- here's how to prepare your best case!" Bill Brandon, eLearning Developers Journal, 14 April 2003
Added: 17 April 2003
Reviewer's Note: You will need to register with eLearning Guild to access this resource
"E-learning, which offers widespread accessibility, a broad selection of training content and rapid delivery, requires a financial investment. As with any other investment, executive management demands that e-learning proves its value to the corporation. Yet, to date, there is no easy or straightforward way to calculate e-learning ROI." Gili Gordon, e-Learning Magazine, 12 February 2003
Added: 16 February 2003
Reviewer's N0te: Includes "six key steps to the "80/20 ROI Rule," an approach that has been used successfully in assessing a number of e-learning implementations."
"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." Paul Harris, Learning Circuits, February 2003
Added: 10 February 2003
Reviewer's Note: "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 chinstroking, serious seminar time, and earnest input from consultants and vendors."
"Optimizing return on e-Learning requires an implementation strategy that helps learners get all they can -- and need -- from the courseware. Involving more than just instructionally sound e-Learning, the implementation should be a blended learning system that includes both on-line and off-line components. From the learners' guide through on-the-job coaching to management participation, only a comprehensive plan will maximize results." Conrad Gottfredson, e-Learning Developers Journal, 24 September 2002
Added: 1 October 2002
Reviewer's Note: Some suggestions for maximising ROi with e-learning
"E-learning can have an enormous financial impact on a business, but proving a return on investment can be tricky unless you know what to look for. There are hard and soft cost savings associated with e-learning. Hard numbers are the external factors, such as the cost of flying an employee to training and the hours of lost productivity while the person is off-site. Such expenditures are easy to verify if you have documentation of the amount of money spent on travel and the number of hours employees spend training over a given time period."
Added: 21 August 2002
Reviewer's Note: 3 companies (including Cisco) show they prove the value of e-learning
"ACS's Learning Cost Calculator is a sophisticated tool designed to gauge a company's current training spend and calculate a range of potential cost savings by moving more classroom training to web-based learning."
Added: 26 July 2002
Reviewer's Note: Enter the inputs and then submit for immediate results
"How to link elearning to business strategy," Josh Bersin, e-learning Magazine, June 2002
Added: 7 June 2002
Reviewer's Note: "Training managers and executives understand that if there isn't a business strategy behind an e-learning program, it is bound to fail. And if you don't measure business effectiveness, you're offering the learning equivalent of junk mail-lots of stuff that may or may not have an impact."
"Since the advent of training, all those involved in profitability or Return on Investment (ROI) have struggled with how to accurately cost learning programs. e-Learning is no different! Paying attention to the variables will increase the probability that you won't go over your budget... of if you do, that you'll certainly know where it happened!" eLearning Developers Journal, 23 April 2002
Added: 25 April 2002
Reviewer's Note: This is the launch page for this and other eLearning Developers Journal articles. You will need to be an eLearning Guild subscriber (free) to access the actual PDF document
"Y2K and the e-commerce gold rush made ROI analysis little more than an empty formality at most companies. Now ROI is back. We give you seven tips to see if your method measures up." Christopher Koch, darwin magazine, March 2002
Added: 4 March 2002
Reviewer's Note: One comment on ROI stated here: "ALmost invariably, it's simply made up numbers to justify a project" So here are tips to create a repeatable, accurate ROI process
"In an effort to eliminate oversimplifications in the discussions about the reasons people elect online learning and about the costs of online learning, this article defines several of the variables involved and provides a metric for evaluating different forms of learning." Stephen Downes, 21 February 2002
Added: 22 February 2002
Reviewer's Note: "In an effort to eliminate oversimplifications in the discussions about the reasons people elect online learning and about the costs of online learning, this article defines several of the variables involved and provides a metric for evaluating different forms of learning." Stephen's own explanation of this article
"I frequently talk to learning professionals who face the daunting task of determining e-learning's ROI. The conversation almost always has an either/or tone, with such questions as "If I replace my traditional classroom training with Web courses, how much will I save?" As a strong advocate for e-learning, I find that logic flawed. People fail to recognize many non-cost related benefits of e-learning solutions, such as reach, consistent messaging, and flexibility."
Added: 22 February 2002
Reviewer's Note: Efficiency and speed are important in ROI calculations
"In a post-Maslow/Kirkpatrick world, which metrics matter? 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." Clark Aldrich, Online Learning Magazine, February 2002
Added: 4 February 2002
Reviewer's Note: We need some new measures of success.
"The NEWLY UPDATED PROJECT ESTIMATOR is now available! Updates include new questions regarding eLearning, Learning Management Systems, Student Response Tracking Databases and more!! Several revisions have been made in response to questions posed by submittors. We hope these changes will help clarify the needs of your project team and help us to deliver a more accurate quotation for your project. Remember to bookmark this page for quick reference!" Creative Approaches Inc
Added: 25 November 2001
Reviewer's Note: To download
An ROI analysis of the Blended Learning eConference held in July 2001
Added: 29 October 2001
Reviewer's Note: An interesting breakdown and analysis of the costs involved in running an e-conference
Centra presents a number of ROI case studies:
Added: 19 September 2001
Reviewer's Note: A look at how some big companies have made cost savings and other benefits from using e-learning
"Congratulations on your interest in e-learning as a strategy for reducing the costs and improving the effectiveness of your training and development efforts. Please answer the following questions about your corporate learning needs. We will generate an ROI analysis based on your inputs" Sintrio.com
Added: 14 September 2001
Reviewer's Note: Another way of working out your cost savings
SkillsRiver has "put together a cost justification model. It compares traditional training delivery with an e-learning solution.
Added: 14 September 2001
Reviewer's Note: You can try out the model and read about it in a (Word document) management summary
"TCM Project (a joint endeavour between the Western Cooperative for Educational Telecommunications and the National Center for Higher Education Management Systems (NCHEMS) has produced the following free materials: TCM Handbook: outlines the policies and methodology utilized to calculate technology costs (pdf) TCM Casebook: a compilation of implementation case studies from a selection of the TCM pilot projects (pdf) TCM Calculator: Microsoft Excel Spreadsheet that would capture the TCM Handbook procedures in an easy to use format"
Added: 21 August 2001
Reviewer's Note: A useful set of tools
A collection of thoughts and resources by Jay Cross, Internet Time Group
Added: 17 July 2001
Reviewer's Note: Another useful page from Jay Cross
"E-learning may be the wave that carries the future of corporate training. But if that wave is ever to crest, corporations must be able to determine a financial return on their investment. Only if early adopters can truly demonstrate an ROI in dollar figures will e-learning wash over corporate culture and change its landscape." John L Setaro, Learning Circuits, June 2001
Added: June 2001
"Online training sales rise, even as IT budgets are tightened." Elizabeth Goodridge, Information Week, May 2001.
Added: May 2001
How do you convince your company to swallow the costs of e-learning during an era of corporate belt-tightening? Show them the profit. Sarah Boehle, Online Learning Magazine, April 2001.
Added: May 2001
"Building the Business Case for E-Learning: How to Translate the Benefits of E-Learning into Language the Whole Organization Will Understand will provide answers, as well as worksheets to help you figure out the ROI you would see with e-Learning, plus case studies from other organizations who have made the transition and how they did it." A downloadable report from Brandon Hall at $495. An Executive Summary is also available.
Added: May 2001
"E-learning might not necessarily slash your corporate training costs, but according to LearnShare, it can give you more bang for the buck compared to traditional training methods." E-Learning AdvisorZone, March 2001.
Added: April 2001
Computer-based, multimedia training can make a big difference, IF it is done right." Rex J Allen, 2000
Added: April 2001
"No one would open a new office, roll out a new application or even hire a new employee without knowing-not thinking, not guessing, not wishing and hoping, but knowing-they were getting something back. To do otherwise would be bad business. But in the area of IT training, it happens all the time." 15 February 2001, cio.com
Added: March 2001
"Training return-on-investment meets the information age." Jay Cross, Learning Circuits, February 2001
Added: March 2001
"Upper-level decision makers seem to thrive on "what if?" Here's how it works: Line workers, managers, and independent consultants enthusiastically propose a project, and executives shred it apart with "what ifs?" and "have you considered?" Saul Carliner, Learning Circuits, Feb 2000
This breaks down the development time for distance learning and web-based courses by Dr Judith Boettcher, Centre for Research and Educational Networking (CREN). (These tables can also be downloaded as Excel spreadsheets.)
"Estimating costs of training projects is a black art only slightly more precise than reading tea leaves or bird entrails. These spreadsheets offer a framework-or just a framework for a framework - for estimating costs." William Horton Consulting Inc.
"E-learning is rapidly growing as an acceptable way of training. ... But what do we know about these innovative approaches to training? Is e-learning effective? Considering the costs of implementing computer-based training, is there a positive return on investment?" ASTD, Virtual Community
"When faculty talk about distance learning, more and more questions seem to be converging on issues of budgeting and costing. It is significant to note that the questions are not whether or not one ought to "get into" distance learning-this was the hot topic a year or so ago-questions now are focusing on how much "getting into" distance learning will cost. Here, Judith Boettcher [of the Centre for Research and Educational Networking (CREN)] examines some of the main components of the cost of developing distance learning programs."