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There are two levels of benefits in implementing e-learning.
Level 1 benefits arise from the elimination of existing costs, such as reduction in travel expenses, reduction in training time, reduction in trainers and administrators, reduction in compliance breeches and lower customer support costs.
Level 2 benefits arise from leveraging e-learning to support changes in the strategic direction of the organisation that positively impact on the bottom line. There is, in fact, a direct relationship between an organisation's performance and spending on training (Patterson, West and Lawthorn, 1999).
Identifying the types of benefits you expect to achieve is critical in reaching a positive return on investment (ROI).
JA Cross (2001) suggests that the ROI varies depending on the level of management you are within your organization, as follows.
Function |
Goal |
Measurement |
Training manager |
Close skill gap |
Individual performance |
Business unit manager |
Achieve business goal |
Project goals, business metrics |
Human resources manager |
Choose best alternative |
Financial metrics, business case |
Executive management |
Gain competitive advantage, business transformation |
Business case, shareholder value |
Your return on investment and business case will need to address all of these goals and measurements to some extent.
The ROI calculation
Return on investment (ROI) tells you the percentage return you have made over a specified period as a result in investing in a training program. The calculation is relatively simple (although the underlying calculations and assumptions are not).
% ROI = (benefits / costs) x 100
The ROI can also be expressed as a 'payback' or 'break even' period
Break even period = costs / monthly benefits
The ROI calculator provided here can assist you in assessing your ROI.
Other ROI calculators are available online. A free financial metrics calculator is also available.
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FinancialMetricsLite.xls [http://www.solutionmatrix.com/download-center.html]
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Cross JA. A fresh look at ROI [http://www.learningcircuits.org/2001/jan2001/cross.htm]
Patterson MG, West MA and Lawton R (1999) People management, organisational culture and company performance . Paper presented at the Industrial and Organisational Psychology Conference, Brisbane, 26-27 June.
Patterson MG, West MA, Lawton R and Nickell J (1997) Impact of people management practices on business performance . Issues in People Management, 22. London: Institute of Personnel and Development.