Dollar for Dollar, what am I getting?

Many organisations use interactive multimedia because it is a more effective way to train their employees in many areas. But it does take some investment, especially if employees do not currently have easy access to personal computers.

Is the investment worth the return you get? You knew we were going to say, "It depends", didn’t you? It depends on the number of employees you need to train, the nature of the training material, your training goals, and the kind of learning culture your company has.

An article worth reading is Rex J. Allen’s "The ROI of CBT", CD-ROM Professional, October 1996 (that’s right, this stuff doesn’t change much!). In it, he summarises the experiences of several companies:

Savings Experience Using Computer-Assisted Learning

Sample ROI Methodology:

Assumptions -- Here is a sample of how a company might analyse their Return on Investment by using computer-assisted learning. Let’s assume this company has a 5 day course they currently teach, and they are evaluating replacing it with e-learning. Let’s also assume that an e-learning course to replace it would take employees 3 days to complete.

In this training scenario, e-learning can be delivered in the first year for approximately 60% of the cost of the current classroom training. Subsequent years would see significantly higher savings, as there would only be maintenance and update costs, in place of the development costs. The steps and assumptions taken are detailed below:

Detailed ROI Steps & Assumptions

1. Savings in Time and Money

• CURRENT TRAINING -- EMPLOYEE COST -- assuming 500 employees, @ $20 per hour, @ 5 days, the cost of employees being trained in the current training = $400,000
• CAL TRAINING -- EMPLOYEE COST -- assuming 500 employees, @ $20 per hour, @ 3 days the cost of employees being trained in the current training = $240,000, or a savings of $160,000 in employee time.

Back to chart

2. Savings in Travel and Hotel

• CURRENT TRAINING -- TRAVEL/HOTEL COST -- assuming 50% of these employees will travel to be trained, or 250 employees, @ $1,000 for the week = $250,000
• CAL TRAINING -- TRAVEL/HOTEL COST -- assuming 0 employees travel to be trained = $0, or a savings of $250,000

Back to chart

3. Savings in Trainer Wages

(assuming trainers, at a fully burdened wage, make $40,000 per annum,
at a 25% burden, or almost $1000 weekly.)

• CURRENT TRAINER -- WAGES & TRAVEL -- assuming 2 trainers @ $1,000 per week @ 2 weeks per course (preparation and follow-up) @ 25 courses = $100,000
• CAL TRAINER -- WAGES & TRAVEL -- assuming the same two trainers spend 6 weeks each to implement and support the CAL systems: 2 trainers @ $1,000 per week @ 6 weeks = $12,000, or a savings of $88,000

Back to chart

4. Cost of Training Development

• CURRENT TRAINING -- COST TO DEVELOP -- assuming 40 hours of training @ $4,000 developing cost per hour = $160,000
• CAL TRAINING -- COST TO DEVELOP -- assuming 24 hours of training @$20,000 to develop the initial hour, and $10,000 for subsequent training hours = $250,000, or a higher cost of $90,000

Back to chart

5. Cost of Additional Equipment

(assuming 1 computer per 5 employees needs to be upgraded)

• CURRENT TRAINING -- COST OF EQUIPMENT -- $0
• CAL TRAINING -- COST OF EQUIPMENT – assuming 100 computers @ $2,000 per computer, amortised over 3 years = approximately $70,000 per year, or a higher cost of $70,000

Return to Top