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Cheaper, Yes. More Convenient, Yes.
2 April 2003

E-learning for business return on investment

In these tough economic times, e-learning might seem like an obvious expense to drop from an over-stretched corporate budget. Yet many corporate e-learning customers are not only sustaining their e-learning spending levels, but are even increasing their technology-based education budgets.

For example, at NRG Group, a document solutions subsidiary of Japanese-based Ricoh, spending on e-learning has increased significantly over the last three years, rising 30 per cent between 2000 to 2001 and 50 per cent in the past year.

According to the High-Performance Workforce Study 2003, published recently by Accenture, the consultancy firm, more than 40 per cent of human resources staff interviewed said their companies had increased their training and development budgets. No change was reported by 38 per cent and only 16 per cent had reduced their spending.

Heady claims about the cost-saving benefits of e-learning are everywhere. Ted Hoff, chief learning officer at IBM, says the company saved $400m last year by using e-learning. Apokjeden, a Norwegian pharmaceuticals company whose e-learning system was supplied by Oracle, also attests to big savings. "We estimate that we will save 40 per cent of our annual training budget using Oracle iLearning," said Bjarte Reve, vice-president of sales and marketing.

With Gartner, the IT research company, predicting that "online learning will be the most widely used web application by 2005," and IDC, another research company, projecting a value of $17.7bn for the corporate e-learning market by 2005, there is reason to believe that e-learning is giving businesses a significant return on investment.

Proponents of e-learning give two main reasons for the growth of the sector: it saves many of the costs associated with staff development and increases productivity. "While many companies are drawn to e-learning because of its potential for reducing training budgets, it is equally important because companies and employees are required to learn and transfer knowledge faster and faster - a critical capability for competitiveness in an increasingly digital world," says Martin Curley, Intel's director of IT innovation.

Many e-learning specialists point to the time-saving benefits of e-learning. "With the lifecycle of an IT product often short, months spent rolling out classroom training to staff around the world can waste the most important period of its brief competitive advantage," says Phil Howe, NRG's e-learning development executive.
"Now by training all relevant staff around the world in a few hours to suit their timetable during the month before the launch, we are maximising the business opportunities from our new products."

On the cost-benefit side, switching from traditional face-to-face classroom-based learning to online courses, teleconferencing and other "virtual" education tools produces tangible savings. E-learning offers companies the opportunity to reduce travel spending and expenses associated with education events such as travel, accommodation, venue hire and catering.

"In our experience, major training events can cost up to $50 per hour, per person," says Mr Curley. "Online training costs can be implemented for as little as several dollars per hour." Also, while face-to-face learning requires interaction with a teacher, e-learning saves on teachers' salaries.

Yet no matter how big the cost-savings of implementing e-learning solutions in the workplace, the true success of e-learning in the corporate environment is ultimately gauged on improved employee performance. An InformationWeek study conducted at the end of 2002 showed that 85 per cent of the top 100 InformationWeek companies cite e-learning as a productivity booster.

However, increased productivity is proving difficult to accurately assess. According to Accenture's latest study, 47 per cent of companies surveyed never or rarely measure their training initiatives against productivity. E-learning experts such as Claire Schooley, Giga Information Group's e-learning industry analyst, are concerned that companies are not properly measuring performance and so do not have a true picture of the effectiveness of their e-learning programmes.

"The real question is, can companies transfer learning into better performance," says Ms Schooley. "You hear high productivity numbers, but these are often based on whether employees liked the courses or did well at exams. It's much more difficult to assess whether a course makes a real difference in terms of improved productivity."

Indeed, despite the grandiose cost-saving and productivity-gaining claims for e-learning, the Accenture study showed that only 17 per cent of the training executives surveyed believed their e-learning initiatives had helped to strengthen the skills needed to achieve their companies' top strategic priorities. Also, only 18 per cent of respondents said they received regular evaluations of the effectiveness of their training efforts.

According to David Smith, Accenture Learning partner, it will be a while before e-learning executives learn to gauge the true success of their initiatives. "Without the metrics and processes in place to properly evaluate learning initiatives, the impact from training assessments is difficult, if not impossible to assess," he says.

But before companies can expect a healthy return on investment from their efforts, the deployment of and culture surrounding e-learning must improve. Ms Schooley says content needs to become more focused and integrated, with companies making the most out of classroom based-work. An e-learning culture must be promoted in the workplace, to motivate employees to train in a new way. Technology must become seamless, and companies need to become more savvy about deciding what to outsource and what to develop in-house, she says. Only then will enterprises really begin to reap financial rewards from their e-learning efforts