A good LMS is an investment in your employees. Short- and long-term effects of e-learning translate into a return on investment (ROI) for the company.
The benefits of corporate e-learning are well known, but are they quantifiable? Distance learning may have little tangible output, and to ensure that the e-learning platform is delivering the desired results it becomes important to measure the ROI.
In this JOurnal article you will find the method by which you can define the ROI of LMS platforms. It’s good business practice to calculate the costs and revenues of each investment. Why exclude training from the calculation?
This article may be useful to:
- who is now opening the doors of distance learning to their company;
- those who want to move from traditional training to distance learning;
- those who are not satisfied with their LMS and want to find a better one.
HOW TO CALCULATE THE ROI OF LMS PLATFORMS
The impact of adopting a learning management system (LMS) in your organisation changes from company to company. However, we can identify six steps to measure the ROI of distance learning:
- calculate time savings over traditional training;
- review expense sheets;
- consider the employee retention rate;
- compatibility and data integration costs;
- determine the learning curve of the LMS;
- calculate the costs of running the platform.
TIME SAVING
LMSs are designed and developed to optimise the time employees spend learning. And time is money. With e-learning, learners can access courses at any time, so there’s no need to organise internal class days. But the time savings come in many ways when using an LMS. Through mobile learning, for example, employees can take courses at home or on public transport on their way home. For synchronous training, on the other hand, trainees can log in directly at the start time of the lesson. The time factor is one of the most difficult to calculate when measuring the ROI of LMS platforms. One way is to compare the time it takes to attend online classes and the time it takes to attend an in-person course.
COST SAVINGS
Cost reduction corresponds to an increase in company margins. Traditional courses require printed materials and, if not held in-house, classrooms to be rented. Trainers, if they are external, may need to be reimbursed for transportation and accommodation. With LMSs you can do away with all of this. The online trainer only needs a pc and an internet connection to deliver the lesson in real time remotely. In case of asynchronous training, the lesson is recorded. LMSs also usually provide different plans to suit all budgets, allowing you to optimise your expenses.
However, it should not be feared that with e-learning savings the efficacy of training is also reduced. Modern platforms offer the possibility of unannounced checks, which is also provided for by the requirements of Training 4.0 for e-learning platforms . Furthermore, VITECO platforms have an innovative detection system that verifies that the person attending the lesson is actually the designated person.
EMPLOYEE RETENTION
To do business you need to not only take care of your customers but also of your employees. The employee retention rate indicates the ability of a company to keep employees in-house over a period of time. One way to increase it is to provide access to new professional development opportunities. With an e-learning platform, companies can retain their top talent by promoting career advancement and gaining an advantage over key competitors. VITECO’s LMS can also automatically deliver certifications on acquired skills that are useful in careers within organisations.
Employee retention rate affects the company’s margins because high turnover results in higher orientation costs. In addition, a new employee is not as efficient as an employee who is already familiar with the specific dynamics of a business and often performs less well at first.
INTEGRATION COSTS
Your new DL platform may not integrate with your tools and data format, necessitating additional spending on conversion software. You also need to calculate the integration time and additional resources that may be required to activate your new online courses. To optimise resource usage, it is critical to choose an LMS that can convert and support the SCORM format, the global standard for all e-learning courses.
DETERMINE THE LEARNING CURVE
Your employees may have to take training to learn how to use all the features of the new DL platform. This is one of the factors to consider when measuring the ROI of an LMS or when you need to determine the cost of orientation for a new distance learning platform.
In any case, the advice to make employees familiar with the new system faster is to choose a modular and user-friendly LMS.
DETERMINE THE MANAGEMENT COSTS OF AN LMS
Many LMSs have features that make them different from others. The market offers a variety of platforms that will have different impacts on the ROI of moving from traditional training to e-learning. Cloud solutions for LMSs are widely believed to be more efficient. The first of the advantages is that they have no installation or management costs. The second is that you don’t need to own expensive hardware for data storage. All you need to consider is a monthly subscription that depends on the number of users who will be taking the courses and any additional features.
ROI MEASUREMENT
An LMS transforms your training processes and improves the learning experience for customers, partners and employees. However, calculating the ROI of distance learning is by no means simple, although it is necessary to convince your company’s stakeholders of the value of the operation.
To summarise, an LMS can primarily affect the company’s performance in two different ways. On the one hand, there are direct cost cuts:
- reduced costs for travel and training facilities;
- reduction of fees and reimbursement of expenses to trainers;
- less material to print, mail and update.
Also to be considered are estimated revenues from medium and long-term benefits such as:
- more time to work by reducing learning time;
- increased productivity with higher retention rates;
- Increased customer satisfaction through targeted training.
ROI is calculated by adding the direct cost savings and revenue estimates. From these, the costs of the e-learning platform are subtracted. The result is then divided by the total investment costs and multiplied by 100. The percentage obtained is the ROI.
As an example, let’s suppose that for a company the cost cut plus the estimated increase in revenue equals 5,000 euros on an annual basis. To this sum you must subtract the cost of the platform, let’s say a thousand euros per year. The 4,000 euros thus obtained (5,000-1,000) must be divided by the cost of the platform of 1,000 euros. The value obtained must finally be multiplied by 100, thus obtaining an ROI of 400%.
WHY IT IS IMPORTANT TO CALCULATE THE PERFORMANCE OF E-LEARNING
For any business, an e-learning platform is a significant investment and, therefore, must be evaluated from an economic perspective. E-learning systems are generally designed both to deliver training effectively and to optimise the costs of in-company training. Usually, the price varies according to the number of trainees. An LMS should therefore be able to cut costs, reduce time and increase productivity.
TIPS TO MAXIMIZE THE ROI OF AN LMS
The first tip for maximising the ROI of an e-learning platform is to promote mobile learning to your employees. The latest trend in distance learning encourages continuous, personalised training that is accessible through any device. The second is to organise preliminary sessions in order to immediately overcome the most common inconveniences that new users might encounter. The third tip is to collect feedback from trainees so that you can improve their learning experience as you go. Most LMSs allow you to make numerous changes to your courses without necessarily having to go through the developers.
Before proceeding to the purchase, it is necessary to evaluate the characteristics of the platform and its level of adaptation to the training standards. While not all LMS offer a good quality-price ratio, VITECO’s platforms have been designed precisely to enhance the quality-price ratio, thus responding in the best possible way to the desires of companies of all sizes and all sectors. You can request, by filling out this form, a consultation on the LMS that best suits you or try a free demo.