The Business Case For ELearning [Electronic resources] نسخه متنی

Determining a Value on Investment for E-Learning

Whether it's a nonprofit or for-profit business, financial metrics will generate a healthy and meaningful debate focused on quantifying the actual advantages of an e-learning initiative. A study concluded in April 2004 at Cisco shows that for every dollar Cisco spent on one specific e-learning initiative in fiscal year 2003, the company received $16 in value. Yes, the value was 16 times the expenditure.

The e-learning initiative for the study was Partner E-Learning Connection (PEC), a Cisco portal dedicated to delivering learning content to resellers without fee. The study was based on an annual reseller survey to identify the use of e-learning and how that use affects business. When this study was conducted, the PEC was in its fourth year of operation and was cited by resellers as a significant factor in increased sales.

Arriving at the Numbers

The analysis for arriving at the 1:16 x ratio discussed in the preceding section is based on the reseller survey conducted by Walker Information in July 2003 on the effectiveness of the PEC e-learning portal. The respondents for the survey included the employees working within Cisco reseller organizations. Presented here are the findings from the survey:

Ninety-five percent of the respondents reported that PEC e-learning program made them more productive in selling, supporting, and servicing Cisco products.

On average, respondents reported saving nine and a half hours per month per person in selling, supporting, and servicing Cisco products as a result of the PEC program.

Eighty two percent of the respondents reported increased sales as a result of the PEC program.

On average, respondents reported increased sales of $9700 per month as a result of the PEC program.

Following are the findings:

Finding 1 (based on a, b, c, and d) In total, estimated partner increases in sales are more than $1.2 billion per year as a result of PEC. (Equation: 13,000 users per month * $9700/month/person * 12 months. * 82% = $1.2B/year.)

Finding 2 Cisco avoided costs of a little over $40 million in fiscal year 2003 by using the PEC program in lieu of instructor-led training by the Cisco sales force, roadshows, labs, and other methods that would have been required to deliver similar amounts of training if PEC did not exist.

After adjusting for reseller margins, development costsdepreciation, and overheadsthe study concludes the following:

For every dollar Cisco spent on PEC in fiscal year 2003, the company received $16 in value (that is, costs avoided plus profits on incremental sales reported by resellers minus expenses to operate and provide content for PEC).

Principles Behind the Numbers

So what did Cisco learn from the PEC experience! What was it that led this e-learning program to achieve this attention-getting financial performance? Here are just four of the practices:

E-learning as a conscious investment.

Financial projections, user feedback, and evidence of productivity gains in the reseller channel were key indicators of success in the beginning. Based on the success in those early months, senior management in three different organizations made a conscious decision to increase investment in this e-learning initiative.

Beyond training, e-learning covers assessment and communication.

E-learning was found to be more productive at Cisco when offered to learners as a package of e-assessment, e-training, and e-communication components. Training is only one aspect of e-learning at Cisco. E-assessment and e-communication complete the capability. Assessments, through online tests and certifications, drive learners to content by instilling accountability in the learning process. E-communication tools that support collaboration, communication, and information and knowledge sharing on a day-to-day basis enable individuals to weave learning into the fabric of their day.

E-learning aligns with the sales process.

E-learning efforts at Cisco have gained immense acceptance internally by aligning with the sales processboth internal and partner. If the sales force or the sales channel ends up being more productive through the use of e-learning, the recurring metric of increased revenue is always on hand to show the value of the project, and a host of advocates are readily available to offer testimonials.

Some training managers express frustration with cost-saving numbers from e-learning because they believe those metrics are a one-time phenomenon. They believe that a financial benefit that was recurring each year would be a more valuable metric in making a case for continued support of e-learning within an organization. What better metric than product revenue? It's annual, starts from zero each year, and gets the attention of the decision makers immediately and often.

E-learning offers economies of scale.

When the technology infrastructure and content expertise are in place, e-learning makes the incremental cost of reaching new learners remarkably lower. By exploiting the classic technology advantage economies of scaleofferings are extended using e-learning to a larger base of learners. For organizations such as Cisco, with a large number of reseller partners and their employees benefiting from e-learning, the overall productivity impact multiplies even more.