Developing a Business Case for E-Learning

By David Leaser, business development executive, IBM Lotus Education The training business is slowly shifting from traditional classroom instruction toward e-learning. To fully capture the value and benefits an e-learning program can provide, organizations must consider available content, user/cultural preferences for training modalities, specific training needs and their adaption to the e-learning format, geographical dispersion of students and the total cost of ownership for the program versus the costs savings. The implementation plan should include an instrument to measure the return on investment in categories such as productivity gains, reduced travel, reduced product failure, less-frequent help desk calls, improved customer service, compliance, increased employee morale/retention and revenue gains. Ultimately, companies must determine the best delivery modality to facilitate knowledge transfer quickly, completely and affordably. The experience, locations, and availability of learners represent key variables to determine whether e-learning or hands-on learning is a better fit for an organization. Students Matched to Appropriate Training Modality Students are geographically dispersed E-learning: Yes Classroom: No             Students are technologically savvy E-learning: Yes Classroom: No             Students reside in a central location E-learning: No Classroom: Yes   Students are inexperienced with technology E-learning: No Classroom: Yes                          Students live in different time zones or have staggered work schedules E-learning: Yes Classroom: No   Students have varying levels of skills/knowledge E-learning: Yes Classroom: No Source: IBM Training Recommendations, 2010 Developing a Business Case for E-Learning CLOs reported they opt for e-learning because it is the most appropriate medium for the subject matter to be conveyed. Asynchronous e-learning is preferred when needing to train a group with varied skill levels. With the global financial crisis putting budget pressure on training spending and, more importantly jobs, cost is the preeminent driver (IDC, Corporate Learning Buyer Survey Series 2010: Economy Influences Modality Choice, Doc # 222511, March 2010). Measuring Performance Better measures of learning and delivery performance fall into two categories: performance of the learner and business impact: Individual performance."Time to competency" measures how long it takes for people performing critical business processes to become proficient. For example, how long does it take for a sales representative to learn how to sell a new product or for a customer support agent to learn how to solve customer problems? Other metrics might assess the effect of learning on the amount of the individual's output, the quality, or customer satisfaction (Gartner, Inc., The First 100 Days for Learning and Development Leaders, August 2009). Business impact.The business metrics to justify your investment may include:

• Higher revenue
• Reduced support desk calls (quantity and duration)
• Shorter time to market for products
• Streamlined technology rollouts
• Improved use of business processes
• Faster (and proven) compliance with regulations and company policies
• Improved customer/employee retention
• Diminished customer problems and faster response times

Measuring the Cost Savings vs. Classroom Training IBM estimates that as much as 40 percent of public classroom training costs are spent on travel and lodging. To determine the real cost of classroom training versus an e-learning solution, you should consider the following costs:

• Tuition
• Employee travel (transportation plus unproductive salaried hours)
• Lodging
• Vendor costs
• Instructor expenses
• Administration
• Real estate/room rentals (if any)

Lost opportunity is a real cost. For example, if an employee must spend eight hours traveling to a training class, the employee salary is just one expense: Sales and business losses from downtime also should be evaluated. Improvements in Employee Productivity Improvements in employee productivity can provide a measurable return for a training solution. An IBM training assessment and implementation at an energy company with 1,000 employees found that companies can save significantly on labor costs with minimal investments in employee skills development. Assuming an annual average employee salary is $40,000, or $20 per hour; employees worked 50 weeks per year; and 1,000 workers saved three minutes per day, or one hour per month, the study concluded that training that produced an average productivity improvement of only three minutes per day would save the company at least $240,000 per year. Source: IBM Training Recommendations, 2010 The study did not consider the ROI in categories such as reduced travel, reduced product failure, less-frequent and shorter help desk calls, improved customer service, compliance, increased employee morale/retention and revenue gains. David Leaser is a business development executive for IBM Lotus Education. Contact him at david_leaser@us.ibm.com. To learn more about how training and skills development can help you generate revenue, improve productivity, and save costs, visit http://www.ibm.com/software/lotus/training.