roi of elearning

8132019 ROI of eLearning

httpslidepdfcomreaderfullroi-of-elearning 118

Making Leaders Successful Every Day

April 13 2009

The ROI Of eLearningby Claire Schooley

for Information amp Knowledge Management Professionals



copy 2009 Forrester Research Inc All rights reserved Unauthorized reproduction is strictly prohibited Information is based on best availableresources Opinions reflect judgment at the t ime and are subject to change Forresterreg Technographicsreg Forrester Wave RoleView TechRadarand Total Economic Impact are trademarks of Forrester Research Inc All other trademarks are the property of their respective companies To purchase reprints of this document please emailclientsupportforrestercom For additional information go to wwwforrestercom

For Information amp Knowledge Management Professionals

Includes a TEI

EXECUTIVE SUMMARY

Online learning earns companies a positive return on investment (ROI) in less than a year I you

have a business that is spread across many locations it makes good business sense to implement an

online learning program as a replacement or some ace-to-ace learning and as a complement to other

instructor-led training in the orm o blended learning Whether employees take compliance training

desktop skills development or leadership training online learning is flexible consistent and repeatable

with minimal travel costs Te keys to success in attaining the 69 ROI that we show in this documentinclude excellent eLearning content that engages the learner good change management plans or this

new way o learning and technology that is scalable and easy to use to manage the learning

TA BLE OF CONTENTSThe New Model For Corporate Learning

Shift Approaches Without Losing Learning

Effectiveness

Use Three Factors To Determine The ROI Of

Your eLearning Decisions

Calculating ROI For A 5000-Employee NorthAmerican Insurance Company

eLearning Adds Big Benefits For Learners And

The Company

RECOMMENDATIONS

Put Components In Place To Ensure A Positive

And Rapid eLearning ROI

Supplemental Material

NOTES amp RESOURCES

Forrester interviewed five user companies that

wished to remain anonymous and talked with

dozens of users and learning management

system (LMS) content and service vendors about

costs and benefits over the past six months We

used this information to create an ROI model

based on our TEI analysis framework

Related Research Documents

ldquoHow To Maintain Your Learning Program In A

Down Economyrdquo

February 12 2009

ldquoHow To Create A Comprehensive High-Impact

Learning Strategyrdquo

May 6 2008

ldquo The Forrester Wavetrade Enterprise Learning

Management Suites Q1 2008rdquoFebruary 12 2008

April 13 2009

The ROI Of eLearningA Total Economic Impacttrade Analysis Uncovers Big Benefits From Learning Online

by Claire Schooleywith Matthew Brown Jon Erickson and Sara Burnes

2

5

5

10

13

14

15



copy 2009 Forrester Research Inc Reproduction ProhibitedApril 13 2009

The ROI Of eLearning


2

THE NEW MODEL FOR CORPORATE LEARNING

Smart companies provide employees with learning opportunities to keep skills and knowledge

razor-sharp so employees produce quality work In the past employees typically learned in

classrooms led by expert instructors But this scenario has changed and companies are struggling to

decide how they should approach learning given the varied expectations o employees the amount

o inormation that employees must know or be able to find quickly the increasing globalization o

business and the growing number o remote workers mdash all o which dramatically affects learning

approaches or the workorce1

Face-To-Face Learning Used More Selectively

While ace-to-ace instruction offers the opportunity to interact in-person with the instructor and

classmates and may be the first choice o most people that scenario is not realistic in todayrsquos ast-

paced global environment (see Figure 1-1) But classroom instruction is not disappearing Situations

in which bringing people together physically are critical to quality learning and well worth theinvestment include

middot Developing sof business skills Learning negotiation skills practice in group acilitation and

discussion o diversity issues are three examples when ace-to-ace instruction is the preerred

modality Facial expressions and body language are important components o the learning

experience

middot Creating personal and team trust Once people meet ace-to-ace they ofen develop a special

connection that acilitates uture learning especially when the learning involves teamwork and

working through issues and problem scenarios as part o the learning experience Participants

have a closer affinity to work together virtually when they have some emotional ties to their team 2

middot Blending ace-to-ace and online learning experiences Te term ldquoblended learningrdquo means

teaching using multiple ormats according to whatrsquos most appropriate or particular content

For example a leadership course might start with a sel-paced eLearning module on leadership

basics with some instructor-led virtual classroom sessions to discuss concepts ollowed by a

two-day classroom session to practice leadership skill scenarios and get eedback

Technology Opens Up New Learning Options

Sel-paced learning virtual classroom videoconerencing inormal learning through social

networks and virtual worlds make up a dizzying array o environments or learning Some are moreinstructor-led and others are totally learner-driven Tey are also cost-effective once the technology

is in place and the company culture embraces other learning patterns As with classroom learning

the ormat must enhance the learning need Examples include



copy 2009 Forrester Research Inc Reproduction Prohibited April 13 2009



3

middot Inormation policies and procedures Presenting this kind o material in a classroom lecture

is a waste o quality instructional time when learners can read these on their own and then reer

back to the materials as they need to implement a particular practice Te key is inormation

that is accessible when the worker needs it

middot Compliance training Sexual harassment training financial accounting requirements medical

disclosure procedures and saety policies are some examples o required learning or certain

jobs where eLearning is effective or both initial compliance ulfillment and renewal Te

technology provides tracked and audited test results o large numbers o workers over a short

time period

middot Social learning Blogs wikis instant messaging podcasts online discussions communities

o practice online mentoring and virtual worlds are inormal learning methods that are

gaining traction especially with technology-savvy employees who are amiliar with these kindso technologies in their personal lives Generally inexpensive to set up these resources allow

learners to share inormation get answers to questions quickly and drive their own learning

middot Simulated learning Te more senses used during a learning experience mdash such as reading

seeing a demonstration explaining concepts to others and practicing the skills learned mdash the

stronger the learning A role-play sales encounter with customers or learning about and

perorming simulated medical procedures are examples o simulated eLearning experiences

Classroom And Online Self-Study Prove Equally Effective

Outside o subject areas where ace-to-ace interaction is necessary recent research indicates that no

significant differences exist in the effectiveness o learning through classroom online or sel-study3

But choose your communication media and tools careully to ensure that

middot Careully developed graphics and visuals help explain new concepts Visuals graphics simple

simulations and even short videos contribute to a more visual approach to understanding

concepts Tis combined with instructorrsquos audio help ensure good learning In act some

animated sequences in eLearning would be difficult to duplicate in the classroom

middot Interaction through blogs wikis and discussion boards help learners see other points o view

Te danger o isolation o online learners is mitigated by a plethora o interactive tools used to

reinorce the learning Although these tools are just beginning to be ldquowrapped aroundrdquo existingormal learning expect uture inormal learning to play an important role in corporate learning 4

middot Content is available to review multiple timesTe opportunity to access specific sections o

the learning content as many times as necessary to grasp key concepts provides or a better

overall understanding o the topic Also choosing the best time to learn puts the learner in a

better rame o mind to learn






4

Online learning effectiveness depends on course quality and good technology as reinorced by a

quote rom allent-Runnetsrsquo research (see Figure 1-2)5

ldquoOverwhelming evidence has shown that learning in an online environment can be aseffective as that in traditional classrooms Studentsrsquo learning in the online environment is

affected by the quality o online instruction Not surprisingly students in well-designed

and well-implemented online courses learned significantly more and more effectively than

those in online courses where teaching and learning activities were not careully planned

and where the delivery and accessibility were impeded by technology problemsrdquo

Figure 1 eLearning Goals And Challenges

Source Forrester Research Inc53282

A successful eLearning program1-1

eLearning challenges are many1-2

PeopleContent

Technology

Developknowledgeable

Employees Partners Customers

For a successful eLearning initiative you will need

Executive support Find a champion to support your eLearning initiatives

Learning staff Hire smart educators who understand business

Learning format Yoursquoll want to have a mix of online live virtual classroomface-to-face classroom blended and informal learning

Engaging content To keep learnersrsquo interest eLearning should be as multimedia-richas appropriate to enhance content aligned with business goals

Tools should be easy-to-use scalable and robust mdash and able to handlecontent management learner management and content creation

Technology






5

SHIFT APPROACHES WITHOUT LOSING LEARNING EFFECTIVENESS

It may be tempting to assume a shif to eLearning is only about cutting costs Yet over-reliance

on financial ROI justification risks compromising your current learning programrsquos effectiveness

Tus Forrester first recommends a ull assessment o indicators like employee content evaluations

instructor quality ratings employee test results manager analysis o learner perormance and value-

add to the business6 Examples include

middot Learner evaluations Most ofen employees are honest about their perception o the

effectiveness o their learning experiences Tey want to learn skills and concepts that will help

them do their job or allow them to grow proessionally Learning leaders should take results

seriously so that employees know that their comments are valued

middot Assessment results ests quizzes group projects and so on all contribute to determining how

well employees met the course objectives Tis data shows the effectiveness o course designlearning activities and materials Assessments also show i learning staff must tweak or revise

course components to ensure better understanding

middot Perormance transer Employees and supervisors provide good eedback on learning

effectiveness as it relates to job perormance Tis is especially clear in areas like sales where sales

training has a clear impact on sales results But even in sofer measurement areas like leadership

development skills or internal process training managers see changes in employee perormance

middot Business results High employee perormance leads to greater business success Learning that

is aligned with business goals and creates more effective sales and marketing customer service

or company processes can have a direct impact on a companyrsquos bottom line Afer all continualbusiness improvement is one o the goals o employee training

Apply the same evaluation levels to your online learning with particular emphasis on perormance

improvement And ensure that learning online is becoming more closely integrated with work7

USE THREE FACTORS TO DETERMINE THE ROI OF YOUR ELEARNING DECISIONS

Companies must objectively evaluate the financial impact on business when considering the

adoption or avoidance o eLearning eLearning can help address many critical business problems

like supporting global employee learning decreasing travel and expenses and increasingproductivity in a competitive environment But companies need to do a careul assessment o the

nature o internal and external learning at all levels o the business How Companies can use a

simplified version o Forresterrsquos otal Economic Impacttrade (EI) model to systematically consider






6

1 Benefits How will your company benefit rom eLearning

2 Costs How will your company pay both in hard costs and resources or eLearning

3 Risks How do uncertainties change the total impact o eLearning on your business

Key Benefits Competency Speed Flexibility Consistency Repeatability Travel Reduction

Organizations implementing eLearning can expect several benefits that help drive business orward

due to knowledgeable and well-skilled workers Learning directors can quantiy the scale timing

and duration o these benefits by considering one or more key metrics and then calculating the

value to the organization o improving those metrics over time (see Figure 2) Benefits include

middot Faster employee competency which means increased productivitySel-paced eLearning

allows learners to assimilate content at their own speed mdash ofen 20 to 50 aster than in aclassroom I they understand a concept well they can skim online material I a module is

difficult learners can slow down review material a second time or access online help Search

allows employees to find just the content section they need to reach competency aster and start

producing sooner Employees in global offices can ulfill course requirements in days rather

than months using eLearning because o the reach and scalability o the technology

middot Flexibility o learning provides accessibility anytime anywhereEmployees can learn at home

in a coffee shop on an airplane or at any spot around the globe Because o the ubiquitous

nature o the Internet they can access learning any time that fits into their schedule For

many employees determining their own study time makes learning possible because their

lie circumstances donrsquot allow a traditional classroom approach In ast-paced environmentslearning on-the-go mdash even rom handhelds mdash gives learners the flexibility they need

middot Consistency o eLearning delivers uniorm contentSubject matter experts and instructional

designers create content using adult learning principles graphics and interactive media to

provide the best learning experience and achieve learning objectives Terersquos no question as

to whether a group at one location received the same learning as those at another location All

learners receive the same consistent content ranslations also provide content in learnersrsquo

native languages With eLearning there is less content variance than with instructor-led learning

middotRepeatability provides opportunity to review material Although eLearningrsquos upront costs

are high depending on production values content reuse makes it very cost-effective Even

with updates XML technology enables developers to change specific learning objects leaving

the rest o the content untouched Learners download course material eliminating hard

copy duplication Sel-paced learning and recorded virtual classroom sessions are under user

control so learners can repeat sections they did not understand Tis wouldnrsquot be possible in a

classroom lecture where learners hear content once and hope they have taken good notes






7

middot ravel reduction provides additional savings Auto and air travel with hotel and meal

expenses or instructors and participants are prohibitive Facility rental technology connections

and materials costs add more expense to ace-to-ace training Some travel is necessary

depending on circumstances especially in a blended training but the travel is less requent and

or shorter durations Many companies realize the cost benefits o reduced travel in the first two

or three years o the implementation and then ocus more on the business improvement benefits

as online learning becomes more integrated into business processes

Figure 2 Key Benefits Of eLearning


Dimension eLearning helps by hellip

Faster time to competency bull Learners assimilate content at their own speed

bull Employees quick ly locate learning content they need to review

bull Scalability means more people get up to speed in less time

Training flexibility

Training consistency bull Unif orm content across employee base even whenlocalized for other languages

bull Less content variance than instructor-led training

Repeatability bull Once produced content can be reused with no additional costs

bull Updating content requires only a change to a learning object

instead of an overhaul of the complete course

bull Learn from any global location

bull Learn at any time

bull Learn using diff erent devices including mobile devices

Key Costs Technology Content Learning Employees Learning Culture Development

Organizations that implement eLearning can expect several costs especially as they begin to ramp

up the eLearning program Tese include additional technology inrastructure and new applications

in-house course content creation acquired content vendor courses additional staff and a PR

training program or employees so they understand and eel comortable using the new learning

approach (see Figure 3)

middot Te learning management system (LMS) is essential to manage eLearningTis ROI

analysis assumes a sofware-as-a-service (SaaS) eLearning implementation8 Tis means the

company pays a yearly ee or the LMS based on the number o users Te LMS resides withand is managed by the vendor Te yearly LMS cost includes maintenance and most upgrades

Organizations configure rather than customize their business processes since extensive LMS

customization is not part o a SaaS strategy Te I department should still be involved to

ensure a smooth implementation9






8

middot Virtual classroom technology integrates with the LMS Each organization selects rom a

handul o virtual classroom vendors10 In some cases the LMS vendor or content vendor offers

a virtual classroom application Your organization may also use its existing Web conerencing

provider i the application offers enhancements or virtual learning Te cost is based either

on a ee or each named organizer (instructors) or on the number o concurrent users who

will receive virtual classroom instruction at any given time11 Tis ROI study uses the named

organizer option Te virtual classroom application and the SaaS LMS connect through APIs

middot Production tools allow in-house content development In-house content production includes

repurposing existing classroom content or online use and authoring new content specifically

or eLearning A potpourri o Sharable Content Object Reerence Model (SCORM)-conormant

authoring tools provides eLearning authors flexibility in the depth and variety o content they

can create Tese include the easy-to-use rapid eLearning development tools and the more

traditional tools that require more in-depth knowledge and authoring experience

middot Off-the-shel content comes rom special eLearning content vendorsContent vendors

provide off-the-shel eLearning content that organizations license on a yearly or multiyear

basis Generally organizations choose to license libraries o content like I business skills or

desktop skills Tey decide how many employees will access specific libraries and contract or

that number o users Tese vendors also provide customizable print materials mentoring and

the ability to customize some o the eLearning course components In this ROI document we

ocused on the off-the-shel eLearning content and did not include the other services these

vendors offer12

middot Special content needs tap custom content developersOrganizations engage a customeLearning content development company or courses with content eatures beyond their in-

house staff capabilities courses that require more advanced tools or activities like simulations

and branching or learning that requires extensive concept development and course execution

Custom content organizations have creative architects instructional designers and content

developers highly skilled in planning and developing learning experiences

middot Learning and development employees to develop deliver and mentorypical learning

staff include titles like learning and development director online trainer curriculum writer

instructional designer Web designer and developer graphic design specialist and LMS

administrator Some o these positions will be new hires others will be role changes or existinglearning staff For example some classroom instructors may develop skills as virtual classroom

instructors Especially in an organization with some decentralized learning a learning specialist

may become a consultant assisting lines o business in planning their eLearning






9

middot Help desk staff must be knowledgeable and ready to assist users User assistance is generally

the responsibility o specific employees within the organizationrsquos help desk Learning directors

must ensure these employees are well trained on the applications and tools During the initial

weeks o the rollout ensure that these LMS help desk people are available during extended

hours to allow easy access to help or employees Help desk should prepare FAQs to post online

with the most requently asked questions and prepare other do-it-yoursel troubleshooting aids

middot Creation o an eLearning culture is critical to success Special inormational and rollout

programs determine the success o getting employee buy-in to eLearning Involve internal

marketing people to create LMS awareness during the program planning and launch Create

ldquotraveling road showsrdquo where employees can use the application ask questions and begin to

understand what an LMS is why itrsquos important to the business and how to use it effectively

Give employees opportunities to participate in pilots and give eedback Finally continue

providing updates and latest inormation afer the rollout13

Figure 3 Key Costs Of eLearning


Project phase Key costs

Technical bull LMS as SaaS implementation is a predictable yearly cost

bull Virtual classroom requires additional leader seats

bull Purchase of content development tools

Content bull Contract for off-the-shelf course content

bull Contract with custom developer to create company-specific courses

People bull Director to manage program and align with business needs

bull Staff for creation development and deployment of contentbull Administratorhelp desk to ensure day-to-day success of program

eLearning culture change bull Special rollout informational and training sessions

bull Marketing activities to inform employees

Risk Analysis Vendor Relationships Technology Costs Content Quality

No change mdash or avoidance o change mdash is without risk Factoring this uncertainty into the analysis

converts an optimistic and potentially unachievable plan into one with higher accuracy Refine

initial estimates by actoring in three key risks

middot Maintaining strong relationship with vendors Because o the SaaS deployment the LMS

and the virtual classroom implementations are significantly easier than installed applications

However you must maintain strong relationships with the vendors and address any application

issues immediately Ensure that vendors provide adequate support or learners who may

struggle with issues o system uptime ease-o-use and access to course content






10

middot Managing high startup costs Te SaaS LMS is a predictable yearly cost so the upront cost

o the LMS and virtual classroom technology is not as significant as installed applications

However the organization must hire new staff and retrain some existing staff to mentor learners

develop eLearning content and teach online Te organization must purchase new authoring

tools or upgrade existing ones or content development Communication messages must

start beore the applications are launched and continue during the implementation until the

technology becomes an integrated part o employeesrsquo daily work

middot Ensuring excellent engaging content Both repurposed and new eLearning content must

provide engaging learner experiences Te statement ldquocontent is kingrdquo is true You may have

wonderul technology but without excellent content eLearning ails Spend the time to repurpose

classroom content with graphics and activities appropriate to the objectives and expect that the

eLearning course will look very different rom the classroom version Careully select off-the-

shel content From some vendors you will select libraries rom other vendors you will selectindividual courses Preview these to make sure they fit with your objectives and are well done

CALCULATING ROI FOR A 5000983085EMPLOYEE NORTH AMERICAN INSURANCE COMPANY

IampKM proessionals who are considering implementing eLearning need to have a firm plan in mind

Most organizations start with the division or unit with the most pressing learning needs and then

add other groups By keeping the projectrsquos scope manageable you are more likely to deliver some

value in a shorter period o time at a reasonable cost o arrive at a quantitative assessment o the

economic implications o eLearning Forrester evaluated the key drivers o benefits costs and risks

or a hypothetical organization considering an eLearning implementation

Establish Company Baselines And Assumptions

For the purposes o conducting the analysis o a typical eLearning implementation we established

a set o baseline values and assumptions that learning directors can adapt to match many individual

organizations Based on numerous conversations with end users we chose to use the ollowing

parameters

middot A public insurance company with 5000 employees in the US and Canada Employees

are located in different geographies 12 locations in the US and three in Canada Although

they spend time sharing inormation and data through the telephone and Web conerences

classroom training classes have been the primary way o conducting ormal learning especiallyin regulatory compliance areas raining in other areas has been haphazard and dependent on

needs that arise

middot Accustomed to classroom training held regionallyAll employees are amiliar and comortable

with classroom learning Te company has not developed any specific learning courses online

Employees are hesitant about eLearning and wonder i they will learn as much online as in the






11

classroom Employees are computer savvy since much o their work is online but they have not

experienced online learning in a business setting

middot A multigenerational workorce with various levels o technology expertiseTe averageage o the workorce is 45 with many Baby Boomer employees nearing retirement and a large

number o new hires in the Millennial and Gen X age groups14 Even though many in the

workorce are older they are quite skilled using the technology related to their work and have

seen the time savings that technology has brought to their work

middot Need or training in compliance desktop and proessional developmentEmployee training

needs cover all business areas Executives are most anxious to convert compliance training to

eLearning From the experience o other organizations these executives know how quickly large

employee groups meet required compliance regulations and the benefit o having an audit trail

o data on employee compliance completions

middot Conversion o some existing classroom content to online Business units working with the

learning and development unit will identiy the courses appropriate or eLearning conversion

Many classroom courses have extensive manuals and workbooks that will assist with this

repurposing effort Other training will retain some ace-to-ace components with other

components converted to online learning to make a blended learning course

middot echnology inrastructure is robust without major network building needed Te companyrsquos

inrastructure will accommodate an installed LMS However because o SaaS success with large

companies and the need to keep I staff on other company critical applications this organization

chose the SaaS LMS model Te organization will use its existing Web conerencing vendor thathas some specific learning eatures and it will purchase eLearning content authoring tools

Develop An Evaluation Timeframe

Tis insurance company has a timeline o three years to implement eLearning throughout their

global organization starting rom January 1 o year 1 until December 31 o year 3 Te experiences

o organizations initiating this type o project indicate that the ollowing phases are likely to occur

middot Planning and preparation phase Tese efforts are not accounted or in this ROI document but

they are essential to a successul eLearning deployment Tis includes developing a governance

team representing all lines o business that oversees content selection and development

technology selection and implementation culture change and employee training and that

ensures learning is in strict alignment with company goals Without effective governance and

support rom a C-level executive the eLearning initiative could easily ail

middot Te technology investment phase Te LMS will manage employee learning Selection requires

careul analysis o LMS needs evaluation o vendor offerings and selection o a SaaS vendor






12

through an RFP process Course authoring tools will include both traditional eLearning

content authoring tools and rapid eLearning development tools Te selection o a synchronous

eLearning vendor will allow virtual classroom training Depending on the LMS vendor

inormal learning may be built into the ormal learning or act as an accompanying module tohandle podcasts wikis and general documents15

middot Te staff investment phase Ofen learning directors must hire staff who have expertise

in online learning Tis includes an instructional designer a Web developer and an LMS

administrator Te training director must be a proponent o online learning and encourage

thinking o simulations and gaming as appropriate approaches or engaging learners Some

ace-to-ace instructors will continue their role but others will become instructional designers

subject matter experts content developers using rapid eLearning tools online virtual classroom

instructors and consultants who work with different lines o business helping them create

learning content Tese instructors need training or their new roles and need to work with a

knowledgeable director who knows the companyrsquos eLearning vision business goals and strategy

or execution

middot Te content investment phaseStaff will begin content conversion rom classroom course to

online learning content An online approach will not be appropriate or all content Choose

and design content careully to drive engagement and interaction online and leverage built-in

instructional design Simply putting content rom a page o a computer screen with some visuals

and a periodic test will ail as eLearning During this phase content is converted to sel-paced

synchronous and blended orms o online learning Tis phase also includes acquiring content

rom off-the-shel vendors and producing content in-house Discussion o inormal content and

the use o blogs and wikis within the program may not be an initial investment but it must be inyour learning plan

middot Ramp-up phase During ramp up employees are kept inormed about the movement o

learning to an online ormat with learning events throughout the development and preparation

phases Employees need opportunities to try out the technology in small groups and get

comortable using technology or learning since it may be new and unamiliar to many

Provisions are also made to access learning rom home or other locations whenever possible

Tis provides flexibility o both time and location

middot Go-live phase Once eLearning is launched and the process is running smoothly the staff

can look at developing individual learning plans adding more content rom vendors and

developing more custom content Organizations that have integrated eLearning into their

learning and development find 60 to 70 o learning is online in some ormat (totally online

or blended) with 30 as ace-to-ace instruction Rolling go-live dates work well and make it

easier to address issues that arise in one location beore adding additional users Many LMS

providers also provide perormance management and compensation applications as well as the

inormal learning all through a SaaS implementation






13

ELEARNING ADDS BIG BENEFITS FOR LEARNERS AND THE COMPANY

In our hypothetical insurance company we estimate that implementing eLearning in 15 North

American locations over three years will produce an expected return on investment o 69 and a net

present value (NPV) o approximately $4537177 (see Figure 4) Tis ROI depends on the success

o a company in preparing and supporting employees to make the change to eLearning and to

recognize direct benefits o having learning available anytime in an easy-to-access ormat to take at

onersquos own pace We chose a three-year ROI period because change management takes time and each

phased rollout is a learning experience which contributes to the next phase

o implement eLearning our sample insurance company must invest $2762104 mdash course content

training and retraining hardware and sofware and new staff mdash in the first 12-month investment

phase Additional investment o $48 million during years two and three will complete eLearning

implementation companywide reaching an eLearning to classroom ratio o 7030 Te eLearning

costs are exceeded by expected business benefits speed to competency training flexibility andconsistency content repeatability and travel savings or employees and staff According to our

model these benefits will provide payback within 12 months

An eLearning investment can pay off in many areas throughout the organization For sales eLearning

will allow employees to learn about new products and services at convenient times without extra

travel or taking time away rom the sales process For mandatory and compliance training an audit

trail provides proo o completion and inormation on the time that learners spent on each phase o

the training For proessional development and processes procedures and business practices

eLearning means employees become knowledgeable about their job more quickly and are able to

contribute sooner No longer do they have to wait or a class to start learning A critical success

component is the change rom classroom to eLearning as a way o learning productively Te more

successul a company is in change management the aster the payback and the better the ROI

Figure 4 Model Total Economic Impact Analysis Summary mdash eLearning


Year 1 Year 2 TotalPresentvalue (PV)

Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69

Payback Within 12months






14

R E C O M M E N D A T I O N S

PUT COMPONENTS IN PLACE TO ENSURE A POSITIVE AND RAPID ELEARNING ROI

Nationally and globally dispersed companies reap the most benefit from eLearning This scalable

technology provides strong benefits that outweigh the costs In starting an online learning

program follow these guidelines

middot Identify and recruit leadership Identify a learning leader who has strong business acumen

is an excellent communicator is respected by both business and learning leaders and who

understands the components of a vibrant learning program

middot Plan your move from face-to-face to online learning If you have instructor-led training

explore blended learning with some training components in a self-paced online format and

others in a virtual classroom or shorter face-to-face sessions

middot Target low-hanging opportunities compliance courses and basic skills Start with the

obvious and easier learning to show immediate benefit compliance and regulatory courses

that require an audit trail and excellent reporting Examine off-the-shelf vendor offerings and

select discriminately appropriate courses that fit your business needs

middot Select your LMS provider and delivery approach Identify a learning management system

to track manage and report on the learning Explore a SaaS model which offers a consistent

monthly cost and a configured rather than customized application to streamline costs and

reduce in-house personnel

middot Pilot your eLearning tactics before go-live Provide employees with opportunities to try

your online learning and to get comfortable with it before the launch Have mentors in allsites as the go-to-people during the rollout

middot Master rapid eLearning development toolsets Develop appropriate company content

quickly and inexpensively using rapid eLearning development tools that require no technical

expertise For content with long shelf life and more sophisticated content use more formal

development tools or outsource it for custom development

middot Measure the impact of your eLearning strategy and execution Evaluate results of learning

with the emphasis on the employee performance improvement Carry out employee surveys

and manager evaluations around perceived success of the learning Identify some courses to

carry out formal evaluations with pre-and post-learning assessments

middot Complement more formal courseware with informal learning tactics Wrap informal

methods like discussion boards online help blogs and course ratings around the formal

courses for more cost-effective interaction and engagement






15

SUPPLEMENTAL MATERIAL

Online Resource

Te underlying spreadsheet detailing the model in Figure 4 is available online

Te online version o Figure 4 is an interactive tool to allow the user to customize the benefit cost

and risk data to fit your company situation

Methodology

Forrester Research uses a defined methodology or analyzing and evaluating the costs benefits and

risks o a proposed solution Tis methodology termed otal Economic Impact (EI) provides

a holistic view o the decision by including an analysis o costs benefits flexibility and risk By

including an assessment o risk EI provides a realistic view o expected outcomes rather than one

shaded by early optimism and enthusiasm16

Unlike a cost- or technology-based analysis EI does not rely on industry averages or actors that

are applied to all organizations but is a methodology or evaluating projects Te EI methodology

orces the determination and quantification o relevant metrics in light o an organizationrsquos current

state and uture goals Firms can use the EI model as a proactive and predictive tool

ENDNOTES

1 oday more than 34 million US adults telecommute at least occasionally Fueled by broadband adoption

better collaboration tools and growing management experience telecommuters will swell to 61 million US

adults by 2015 See the March 11 2009 ldquoUS elecommuting Forecast 2009-2015rdquo report2 In work settings we process interactions analytically (resulting in cognitive trust) and emotionally

(resulting in affective trust) As virtual distance increases our trust becomes more cognitive because there

are no personal ties and no relationship When virtual distance is lowered our trust becomes more affective

For excellent research on effects o virtual distance and how managers can decrease this distance see Karen

Sobel Lojeski and Richard R Riley Uniting the Virtual Workforce John Wileyamp Sons 2008

3 Source Ruth Clarke ldquoIs eLearning Better Media Comparison Researchrdquo Learning and the Science of

Instruction John Wiley amp Sons 2008

4 Learning management vendors like Mzinga (httpwwwmzingacom) Cornerstone OnDemand (http

wwwcornerstoneondemandcom) and Saba (httpwwwsabacom) have announced Web 20-type

applications that can be used to support more traditional learning

5 Source MK allent-Runnels ldquoeaching Courses Online A Review O Te Researchrdquo Review of

Educational Research Spring 2006

6 Kirkpatrickrsquos levels o evaluation are very helpul in developing different degree o assessments rom simple

ldquoI liked the courserdquo to pre-and post-data comparison showing the employee effectiveness improvement that






16

helped drive company ROI Source Kirkpatrickrsquos Learning and raining Evaluation Teory (httpwww

businessballscomkirkpatricklearningevaluationmodelhtm)

7 oday employees are working in a very ast-paced environment Tey need learning that is immediate

relevant and in the context o their work See the February 14 2007 ldquoKnowledge Learning And Work

Uniterdquo report

8 A SaaS implementation means that the application is hosted by the vendor Different versions o SaaS exist

today but in learning this generally reers to multiple customers on the same iteration o the sofware

with separate and secure databases Tis allows easier upgrades and takes responsibility or the learning

application off the shoulders o the I staff Tis kind o implementation sometimes called ldquoon demandrdquo is

the astest growing LMS implementation method

9 SaaS grows as an attractive technology implementation choice See the February 12 2008 ldquoTe Forrester

Wavetrade Enterprise Learning Management Suites Q1 2008rdquo report

10 Virtual classroom vendors that are used most ofen in business include WebEx Microsof Live Meeting

Adobe Connect Pro Saba Centra and iLinc In higher education Elluminate and Wimba are popular vendors

11 Te choice depends on the number o people who will give instruction and how varied the learner base is in

customers channel partners and employees I you have a designated number o people who will serve as

instructors named users may be most cost-effective and averages about $16 per named user per month On

the other hand i you have numerous presenters and many users inside and outside the organization you

should choose a concurrent license For example i you had 100 concurrent licenses you could have two

meetings o 50 people each or 10 meetings o 10 people each occurring simultaneously Concurrent licenses

cost about $85 per user per year and allow unlimited number o instructors and users I you go over the

100 licenses you are charged extra or those seats above your contracted number

12 Skillsof (httpwwwskillsofcom) Element K (httpwwwelementkcom) and Harvard Business Publishing

(httpww3harvardbusinessorgcorporate) are examples o widely used off-the-shel content providers

13 Select your LMS vendor based on the quality o the RFP responses the success o the live scenario

demonstrations and the strength o financial and reerence-check evaluations See the October 24 2007

ldquoHow o Select A Learning Management Systemrdquo report

14 odayrsquos workorce has our generations each composed o individuals who approach work differently

influenced by the perspectives and values molded during their ormative years See the January 22 2008

ldquoGenerational Workorce Strategies Suggestions For Copingrdquo report

15 Te ormal course with multiple lessons is still around and will always have a place in the learning hierarchy

but inormal learning with ldquoknowledge on-the-gordquo is already here mdash and itrsquos getting stronger See the

November 12 2008 ldquoInormal Methods Challenge Corporate Learningrdquo report

16 For an in-depth discussion o EI and the individual elements within the methodology please see the

August 4 2008 ldquoTe otal Economic Impacttrade Methodology A Foundation For Sound echnology

Investmentsrdquo report



Forrester Research Inc (Nasdaq FORR)

is an independent research company

that provides pragmatic and forward-

thinking advice to global leaders in

business and technology Forrester

works with professionals in 19 key roles

at major companies providing

proprietary research consumer insight

consulting events and peer-to-peerexecutive programs For more than 25

years Forrester has been making IT

marketing and technology industry

leaders successful every day For more

information visit wwwforrestercom

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Forrester Research Inc

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For information on hard-copy or electronic reprints please contact Client Support

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copy 2009 Forrester Research Inc All rights reserved Unauthorized reproduction is strictly prohibited Information is based on best availableresources Opinions reflect judgment at the t ime and are subject to change Forresterreg Technographicsreg Forrester Wave RoleView TechRadarand Total Economic Impact are trademarks of Forrester Research Inc All other trademarks are the property of their respective companies To purchase reprints of this document please emailclientsupportforrestercom For additional information go to wwwforrestercom


Includes a TEI

EXECUTIVE SUMMARY

Online learning earns companies a positive return on investment (ROI) in less than a year I you

have a business that is spread across many locations it makes good business sense to implement an

online learning program as a replacement or some ace-to-ace learning and as a complement to other

instructor-led training in the orm o blended learning Whether employees take compliance training

desktop skills development or leadership training online learning is flexible consistent and repeatable

with minimal travel costs Te keys to success in attaining the 69 ROI that we show in this documentinclude excellent eLearning content that engages the learner good change management plans or this

new way o learning and technology that is scalable and easy to use to manage the learning

TA BLE OF CONTENTSThe New Model For Corporate Learning

Shift Approaches Without Losing Learning

Effectiveness

Use Three Factors To Determine The ROI Of

Your eLearning Decisions

Calculating ROI For A 5000-Employee NorthAmerican Insurance Company

eLearning Adds Big Benefits For Learners And

The Company

RECOMMENDATIONS

Put Components In Place To Ensure A Positive

And Rapid eLearning ROI

Supplemental Material

NOTES amp RESOURCES

Forrester interviewed five user companies that

wished to remain anonymous and talked with

dozens of users and learning management

system (LMS) content and service vendors about

costs and benefits over the past six months We

used this information to create an ROI model

based on our TEI analysis framework

Related Research Documents

ldquoHow To Maintain Your Learning Program In A

Down Economyrdquo

February 12 2009

ldquoHow To Create A Comprehensive High-Impact

Learning Strategyrdquo

May 6 2008

ldquo The Forrester Wavetrade Enterprise Learning

Management Suites Q1 2008rdquoFebruary 12 2008

April 13 2009

The ROI Of eLearningA Total Economic Impacttrade Analysis Uncovers Big Benefits From Learning Online

by Claire Schooleywith Matthew Brown Jon Erickson and Sara Burnes

2

5

5

10

13

14

15






2

















experience




















3









time period





























4












PeopleContent

Technology









Technology






5


































6






































7








































8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













2

















experience




















3









time period





























4












PeopleContent

Technology









Technology






5


































6






































7








































8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













3









time period





























4












PeopleContent

Technology









Technology






5


































6






































7








































8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













4












PeopleContent

Technology









Technology






5


































6






































7








































8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













5


































6






































7








































8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













6






































7








































8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













7








































8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













8





















vendors offer12

















9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













9








































10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













10

























parameters





needs that arise









11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













11






































12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













12














or execution




























13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













13



























Benefit $4325955 $4325955 $12977866 $11148406

Cost $2762104 $3356322 $7600126 $6611230

Net cashflow $1563851 $969634

Year 3

$4325955

$1481700

$2844255 $5377740 $4537177

NPV $4537177

ROI 69







14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













14






































15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













15


Online Resource




Methodology










ENDNOTES






















16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom













16





Uniterdquo report















































Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom























Australia

Brazil

Canada

Denmark

France

Germany

Hong Kong

India

Israel

Japan

Korea

The Netherlands

Switzerland

United Kingdom

United States

Headquarters




Tel +1 6176136000

Fax +1 6176135000


Nasdaq symbol FORR

wwwforrestercom






