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"Since 1995, SyberWorks has been providing organizations with a unique and economical solution to develop, deliver, manage, measure,
and improve their
e-Learning activities. "
Source : SyberWorks
E-Learning Benefits and ROI Comparison of E-Learning vs. Traditional Training
E-learning is also known as :
electronic learning,
e learning,
elearning programs,
elearning learning,
elearning systems,
e-learning definition,
e-learning benefits,
e-learning tools,
distance learning,
advantages of e-learning,
define e-learning,
e-learning workshops,
find e-learning software,
e-learning tips,
e-learning authoring tool,
e-learning web based,
custom e-lessons.
Background
SyberWorks, Inc. (www.syberworks.com) is a
leader in the custom e-Learning Solutions and Learning Management
System
industry for Fortune 1000 corporations, higher education, and other industries.
Located in Arlington, Massachusetts, the company serves the expanding 11
Billion dollar e-Learning segment (1).
Since 1995, SyberWorks has developed
and delivered unique and economical solutions to create, manage, measure, and
improve e-Learning programs at companies and organizations in the United States,
Canada, Europe, and the world.
Author's Biography
Dave Boggs is the
founder and CEO of SyberWorks. He has been involved with computer-based and web-based
training for over twelve years. He is responsible for directing the company's
overall business strategy and overseeing its financial growth and prosperity.
Dave has positioned the company to provide customizable solutions to its
customers. These solutions often meld performance support, job aids, reference
information, and other tools with e- Learning in one integrated site to
increase the productivity of key target audiences such as sales, distribution,
and field service.
Before founding SyberWorks, Dave was the VP of Sales
and Business Development for Relational Courseware. Dave holds a Bachelor of
Science degree in Physics from Union College in Schenectady, NY and an MBA from
the Kellogg School of Management at Northwestern University in Evanston, IL.
White Paper Focus
In most cases, the biggest quandary an organization
must solve is to put together a rational, i.e., a cost justified, business
case why they should spend capital to invest in a learning management system.
The focus of this white paper will outline the benefits of web-based training
along with a practical framework for developing ROI when looking at the cost
of traditional training methods verses e-Learning.
The Benefits of E-Learning
Some of the benefits of realized by corporations and institutions that use web-based
training as an integral facet of their organization's training function are
listed below:
Strategic Advantages
Creating a Global Workforce - Web-based
training is a powerful instrument for developing a global labor force. Web-based
training can deliver custom, sophisticated instruction to employees all around
the planet. (2)
Reacting to Abbreviated Product Development Cycles -
Companies that create today's best of breed products and services are now
introducing their wares more quickly into the marketplace. The use of web-based
learning management systems allows your organization's training function to
keep pace with the market. Web-based training can be used to provide the
needed instruction without taking workers away from their daily responsibilities.
(3)
Managing Flat Organizations - Down and right sized organizations have now
become the norm in today's business landscape. As a result, line managers
have multiple responsibilities and are severely time impoverished. ELearning
can help by delivering training for those areas which line managers are normally
responsible, such as desktop application training and product training. They
are then freed up to tackle other pressing priorities in their workday.
(4)
Adjusting to Employee Wants and Needs - Economic and demographic shifts has
fueled the growth of telecommuting, virtual offices, job-sharing, and
flextime. Delivering training via the Internet overcomes the obstacles
imposed by the exigencies of a transient workforce. (5)
Facilitating a
Contingent Labor Force - Contingent workers, such as temporaries, consultants,
retirees who work part-time, the self-employed has increased dramatically
over the last decade. Companies and organizations have become more reliant on
contingent workforces to deal with peak labor demands. E-Learning solutions and
web-based learning management systems are invaluable tools to train and
manage this unique labor force. (6)
Retaining Valued Workers - Education has
become a critical lynch pin in a company's or organization's worker benefits
portfolio. Workers in today's new economy are not as afraid to move to a new
position if they feel their interests and career welfare are better provided
for in a different environment. Web-based training programs that offer
certifications, college and graduate school education, and other important job
skills become powerful incentives for an employee to stay. (7)
Increasing
Productivity and Profitability - E-learning programs and training increase
employee knowledge and skill levels. As they become better at their jobs,
they sell more products, reduce waste, are more productive and efficient. An
educated, well-trained workforce is the main driver to profitability for today's
businesses. (8)
Tactical Advantages
Flexibility to Learn Anytime, Anywhere - Learners can access courses and content
from their office, home, or hotel room from any spot around the globe.
(9)
Reduce Travel and Related Costs - Save on hotels; airfare, meals, and other
travel expenses associate with traditional onsite training. (10)
Tools for
Tracking, Updating, and Managing Training ' Web-based learning management
systems make it easy to track, update, and manage online learners. Learning
management systems facilitate, reporting, succession planning, and workforce
development from one, centralized, web-based source. (11)
Affordable Per-Student
Costs - Almost every computer today can be set up with a modem and free browser
software with which to access the Internet, so set up costs are relatively low.
(12)
Just-in-Time Learning - Online learners can take training just before
they need it rather than enrolling in a program months before they need the
training or refresher class. (13)
Making Updates Easy - Web-based training
can be updated quickly and easily, so there is no time lag or extra
reprinting cost. (14)
Administer Competency and Compliance Management -
Multiple spreadsheets across various managers' computers make competency
management and compliance management a tedious and time consuming task. A
centralized, web-based learning management system aggregates all the data into
one location were all the necessary managers can access the information when
they need it. (15)
Training Delivery Advantages
Consistent Delivery - Web-based
training is delivered uniformly in a consistent framework, which increases
understanding and absorption of the material. (16)
"Learning Object"
Architecture Supports on Demand; Personalized Learning - Web-based training is
designed and developed so content can be chunked into discrete knowledge objects
to provide greater flexibility. Students can access these objects through pre-set
learning paths, use skills assessments to create individualized study plans,
or use search engines to locate exact topics. (17)
Interactive Content,
Graphics, and Animations - Interactive content, graphics, and animations make
lessons standout and help imprint the material on the student's mind.
(18)
Customized Material - Content can be customized to meet the training objectives
of a specific program quickly and easily. (19)
Self-Paced Programs -
Students can learn at a pace that works for their individual learning style and
life circumstances. (20)
Infrastructure Advantages
Leverage Existing Infrastructure - Web-based training makes use of already
existing infrastructure such as computers, servers, intranets, etc. There is no
addition outlay for hardware or capitol assets. (21)
Controllable and Secure Access ' Web-based learning management systems can be
easily configured to secure and monitor access. (22)
Private Networks and
Secure Server Installation ' Web-based learning management systems can have
greater security because they can be installed on private networks and secure
servers. (23)
Linking with other Training Systems - E-learning programs can
link with other human resource development systems or training systems.
(24)
ROI Comparison of Traditional Training vs. E-Learning (25)
Our ROI comparison
of traditional training vs. e-learning must begin with some constructs:
Classroom (traditional custom training)
Traditional instruction may be
developed in-house or outsourced to training development consultants.
Determination by Hour
Reference resources state that the typical development
costs for a 40-hour training session would be:
40 Hours Training X $4,000
Development Cost/Hour =$160,000
Using a Training Manual as Criteria
A
problem with determining the development of training by length of class is that
often trainers will either cram in too much or else pad the time allotted for
the training. 40 hours in class may be too little for the amount of material to
be covered. It may also be too much time, if there is an insufficient amount
of content.
If the training development is done in-house, it is better to
consider the cost of developing a good training manual that will cover the
subject matter and provide necessary exercises for the students. This would
include a trainer's manual that would guide the trainer through
demonstrations and such.
A generous estimate of 5 man-hours per manual page
would result in 1000 man-hours for a 200 page manual, which could be covered
in 40 hours. At a burdened rate of $60/hour, the in-house development cost would
be:
$60/hour development cost X 1000 hours = $60,000
If an outside
consulting firm did the job, it would cost:
$120/hour X 1000 hours =$120,000
E-Learning (custom training)
The cost of developing e-learning can be more
expensive. This is especially true in developing CBT with video and audio.
Using multimedia in web-based training can also drive up the cost.
Determined
by Hour
Since e-learning takes less time than classroom training, a 40 hour
class is usually completed in 25 hours with elearning.
Reference resources
state that the typical cost for a high-end e-learning module would be:
25
Hours Training X $16,000 Development Cost/Hour = $400,000
Determined by Page
Using the measurement of an assumed time it takes for the user to complete the
training is not an sound metric to represent e-Learning. E-Learning/web-based
training is self-paced, so the amount of time required varies. A better way
to get at this problem is to figure out how many pages or screens are required
to complete the training module.
A good way to develop a fair and
representative numbers for e-learning is to start with the training manual
concept. This is logical approach because more often than not, e-learning is
not created from scratch, but from a content source point, say a training
manual. If e-learning is started from scratch, then a form of a training manual
is created that may include wire frames, scripts, and a story board, during
the instructional design process.
Factors in determining the cost per
e-learning page or screen include, writing the content, designing the page and
adding illustrations, and producing multimedia effects if used.
- Content and
Graphics-A generous rule of thumb for writing the content and adding graphics is
3 to 5 days per page. Simple pages can take less than an hour, if the writer
knows the subject matter.
- Audio and Video-Audio and video are still
measured in time, with video costing about $35,000 an hour.
Savings
In
determining the ROI for e-learning, you need to factor in the savings due to
reduction in time spent on training.
Reduction in Time Spent on Training
Typically, the time a worker must spend being trained is reduced by about 40%
using e-learning. This metric is cited in various studies comparing
traditional classroom instruction to equivalent CBT instruction at Xerox, IBM
and Federal Express.
Improved Performance
As mentioned earlier, our
collective experience with deployment of good CBT and WBT is that it is not only
faster than classroom training (an nearly always cheaper over 2-3 years), it
is also better. People learn better with e-learning. They remember what they
learn more accurately and longer (retention) and they are better able to use
what they learn to improve their performance (transfer). Across many different
studies and reports from the military, education and industry show 15-25%
increases in learning achievement.
Example of ROI Calculations
Assuming a
traditional classroom training plan that includes 500 trainees who each
experience a week of training, travel for half of them (250 employees), the
time constraint of a 3 month roll-out (5 trainers, 10 locations)-all compared
to an equivalent eLearning scenario using very conservative assumptions,
including an opportunity cost rate of $400 per day.
| |
Classroom Training |
E-learning |
| Wages of Trainees($20/hr, burdened) |
$ 400,000 |
$ 240,000 |
| Travel Costs (50% of people traveling) |
$ 250,000 |
$ ---------- |
| Trainer Wages |
$ 47,500 |
$ 11,400 |
| Trainer Travel |
$ 20,000 |
$ ---------- |
| Development
Costs (custom training) |
$ 160,000 |
$ 400,000 |
| Delivery Systems (1st
year amortized) |
$ --------- |
$ 35,000 |
| Totals |
$877,500 |
$686,400 |
These
figures indicate that the e-learning approach, given conservative assumptions,
saves approximately 20% in the first year of implementation. In the second
and later years when development costs are not a factor for this course, the
savings for eLearning grows to nearly 50%. In addition, the CBT or WBT can be
rolled out in half the time, once developed.
In conclusion
The
return-on-investment for eLearning can be 50%-60% greater than for traditional
training, which itself can have a 4x ROI, if done properly.
(1) "2003 e-Learning Survey", Taylor Nelson Sofres plc, London, United
Kingdom, 2003.
(2) (3) (4)
(5) (6) (7) (8) Web Based Training, 2nd Edition, by Margaret
Driscoll, Wiley, John & Sons, Copyright 2002, p. 6-7.
(9) "Using the Web for
Learning: Advantages and Disadvantages" by Kevin Kruse, E-Learning Guru.com,
Copyright 2004.
(10) "Performance Improvements through Web-Based Training"
by Anne Kitchen and Jim Ryan, AMEC.com, Copyright 2004.
(11) "Using the
Web for Learning: Advantages and Disadvantages" by Kevin Kruse, E-Learning Guru.com, Copyright 2004.
(12) "Using the Web for Learning: Advantages and
Disadvantages" by Kevin Kruse, E-Learning Guru.com, Copyright 2004.
(13)
Web Based Training, 2nd Edition, by Margaret Driscoll, Wiley, John & Sons,
Copyright 2002, p. 8.
(14) Web Based Training, 2nd Edition, by Margaret
Driscoll, Wiley, John & Sons, Copyright 2002, p. 9.
(15) "Performance
Improvements through Web-Based Training" by Anne Kitchen and Jim Ryan, AMEC.com,
Copyright 2004.
(16) "Performance Improvements through Web-Based Training" by
Anne Kitchen and Jim Ryan, AMEC.com, Copyright 2004.
(17) "Using the Web
for Learning: Advantages and Disadvantages" by Kevin Kruse, E-Learning Guru.com,
Copyright 2004.
(18) "Performance Improvements through Web-Based Training"
by Anne Kitchen and Jim Ryan, AMEC.com, Copyright 2004.
(19) "Performance
Improvements through Web-Based Training" by Anne Kitchen and Jim Ryan, AMEC.com,
Copyright 2004.
(20) "Performance Improvements through Web-Based Training" by
Anne Kitchen and Jim Ryan, AMEC.com, Copyright 2004.
(21) Web Based
Training, 2nd Edition, by Margaret Driscoll, Wiley, John & Sons, Copyright 2002,
p. 8.
(22) "Benefits of Web-Based Training", Online Learning Center,
Copyright 2005, http://208.179.70.229/benefits_article.html
(23) "Benefits
of Web-Based Training", Online Learning Center, Copyright 2005,
http://208.179.70.229/benefits_article.html
(24) "Benefits of Web-Based
Training", Online Learning Center, Copyright 2005,
http://208.179.70.229/benefits_article.html
(25) "Return-on-Investment (ROI)
from E-Learning, CBT and WBT" by Ron Kurtus, Kurtus Technologies and The
School for Champions www.school-for-champions.com/elearning/roi.htm, Copyright
2004.
By David Boggs, CEO
SyberWorks, Inc.
411 Waverley Oaks Road
Building
3, Suite 319
Waltham, MA 02452
Phone: 781-891-1999
Fax: 781-891-1994
www.syberworks.com