Return on Investment _ for an LMS

For the price of one lunch you can have your student in the system for a year

Choosing the right LMS is easy as 1-2-3!

The choices for Learning Management Systems (LMS) are wide and complex. To make the right choice, we suggest doing the following:
1. Identify and articulate your needs
2. Assess your budget
3. Analyze ROI (return-on-investment) numbers

Easier said than done? We’re here to help with this simple and impartial assessment. Answer these questions and you’ll be on your way to determining the best LMS for you.

Step One: What are your needs and goals?

• What are your business training needs?
• What are your goals in implementing this system?
• Do you want to increase tracking and reporting of your learners’ progress?
• Are your needs mainly administrative?
• Are you planning to deliver your training online, will you stick with classroom and/or CD-ROM and DVD-based training, or will you use a combination of all three?
• Are your learners located within one site, or in multiple locations, perhaps all over the globe?
• Will the system be used only by internal employees, or will external customers, clients and partners also use and benefit from the system?
• Do you want a system that’s customizable to your needs or are you content with a one-size-fits-all approach?
• Do you want to include live learning events delivered via the Internet, or will you focus on self-paced learning? Do you envision learners collaborating?

One more important point to consider : Is your organization committed to learning and knowledge transfer? Make sure that key players in your company are committed to the idea that the continued success of your business is tied to growth in knowledge, learning and development. This commitment is critical to the successful outcome of your learning programs.

Step Two: What is your budget?

How much money can you realistically spend on a learning management system? What is your current training budget? How much will you be able to spend within the next five years?

Your budgetary guidelines are going to eliminate many vendors from your list almost immediately. Most medium-sized companies simply cannot afford to spend upwards of $1 million on an LMS. That’s why, at Ziiva, we’re committed to providing customized, cost-effective LMS solutions for companies that don’t have unlimited budgets.

Step Three: The ABCs of ROI

When do you declare that your new LMS is a success? When it’s up and running smoothly, or when X number of learners have used the system, or when your bottom line actually improves due to employees’ newfound knowledge? Find a “celebration point” to shoot for and acknowledge. Before implementing a LMS, consider success factors. Naturally, increased profits are the best indicator of whether your new LMS is a success. Is the LMS saving money, making money, or contributing in a positive way to your company’s bottom line? To calculate that, you’ll need to study return-on-investment carefully. Return on investment is not an exact science, especially in an intangible field like training. How much is increased employee knowledge and skill worth, exactly? This is difficult to measure. Yet, when deploying an LMS, only by assigning monetary value will you realize the true success delivered. How will you measure the payoff? Here are some key indicators to consider:

• Increased knowledge
• Decreased administrative costs
• Greater access to company-wide knowledge
• Increased learner retention and/or interest
• Decreased travel time for learners (if implementing Computer Based Training or an online system)
• How soon before the investment pays off? Two years, five years, longer?

Know what you’re measuring.

Successful ROI calculators isolate their true data from the effects of other factors, including the work environment and the level of management support.

Sample, don’t saturate.

Instead of analyzing every criteria and factor involved, pick a few--travel time and printing costs, for example. This saves valuable evaluation time and money, while yielding the key data you seek.

Show the money.

Converting data into hard monetary values is essential in any successful ROI study. But, how can you translate an intangible benefit of training, like increased job satisfaction, into dollars? Before your training, ask employees to rate job satisfaction on a five-point scale. Follow up some time later and survey them again. Then, tie their increased job satisfaction rating to a higher level of customer service. Better customer service leads directly to increased revenue. Bingo. You’ve tied an intangible like job satisfaction directly to your bottom line.