E-learning is a broad concept and has many executions. Someone might say e-learning is an online environment where students learn. Another thinks that the modules that students follow are the e-learning. Part 1 of the e-learning business case: cost and financial feasibility.
E-learning is a collective term for online learning. Online learning can be a simple web-based fill-in exercise, but also a ‘serious game’ in a Learning Management System (LMS).
The Business Case e-learning covers a number of aspects of e-learning in three parts, such as costs, benefits, risks, resultsand financial feasibility. There is also attention to a number of prejudices, ‘Legacy thoughts’ and trends.
Cost and financial feasibility
E-learning education, like traditional e-learning, entails costs. The cost of e-learning consists roughly of three parts:
– Development costs of the e-learning module(s);
– Offering the e-learning module(s) to employees;
– Costs of non-productive employees.
E-Learning Development Costs
The development costs for e-learning modules are significant as content development is a time-consuming task. Saying ‘yes’ to e-learning today often means not being able to offer a first education online to the target group for 3-4 months.
The development costs are independent of the number of trainees (employees). With this fact, it is easy to conclude that e-learning becomes cheaper as the number of participants increases. After all, the development costs remain the same, while the number of students increases, resulting in a lower ratio: cost/student.
Offering e-learning module(s) to employees
However, offering the e-learning to employees is tied to the number of participants. Many providers of online learning environments charge a fixed amount per student per year or per so-called student-course combination. The number of courses the student attends can therefore also be taken into account in the costs per participant per year. Based on a redemption of the number of trainees, the costs per participant per year are usually between € 10,- and € 40, – depending on the number of trainees. Again, the more students, the cheaper the access to the online environment per student.
Cost of non-productive employees
The cost of traditional training has more components, but some components are less transparent:
– Cost trainer;
– Cost of training equipment;
– Costs non-productive employees;
– Travel expenses;
– Cost training accommodation.
Compared to e-learning, both forms of training have to do with the fact that the time employees spend on training is due to the time they are productive in their work. However, e-learning is characterised by a more intensive form of training, which means that the training time is shorter than with traditional training.
It can be concluded that the choice of e-learning training may result from a cost consideration, taking into account a minimum number of trainees. If, for example, the subject matter remains unchanged over three years, the Return on Investment (ROI) can also cover several years. Should the content of the training change, the cost of adjusting it will be much lower than the initial development costs. However, developing E-Learning for a (very) small group of about 20 employees usually only pays off after several years.
E-learning training leads primarily to a reduction in training costs. In addition, e-learning offers the possibility that learning becomes a permanent part of the employee’s tasks. Where traditional training often focuses on a few contact moments per year, e-learning can be offered more frequently by, for example, using group discussions, memotrainer®, polls, quizzes, etc. These small learning objects are characterized by a short development time and yield faster.
By offering employees more training, they can become more proficient and continuity and quality within the organisation can increase.
When does e-learning pay off? The cost aspect, as many think, is indeed related to the number of participants (trainees) per year. Suppose an employee has a training budget of € 250 per year and the company consists of 100 employees. The total training budget for this organisation is € 25,000 per year. If the cost of the online environment is € 3,000 for these 100 employees, then the organization can spend € 22,000 on e-learning every year. However, if an e-learning module is developed in year 1, it has an unlimited shelf life. The costs for any adjustments are often less than 20 of the initial development costs.
Depending on, among other things, the development costs for the e-learning module, the financial tipping point for e-learning is between 50 and 75 employees. The payback period covers an average period of one and a half years, at the beginning and in the case of a target group around the tipping point. This means that in the second year the investment in e-learning already yields returns. For larger target groups or the reuse of courses in different target groups (trainers), the payback period is often even shorter than one year and e-learning is therefore cheaper than traditional training.