Elearning Market Update (September 2007)

This month we report from recent conferences and supplier events where the demand for more cost-effective e-learning is coming over loud and clear.

'More for less': the demand for better value from e-learning

Over the last few weeks we have attended events such as CIPD, the Computer Education Managers Association and a number of HR supplier’s briefings. One of the clear messages that emerged from all these events is the increased focus on return on investment and the need to do 'more with less'.

At one supplier briefing the message to the assembled suppliers was set out very bluntly. "We have an internal HR team and 200 HR suppliers (including many learning providers), and we don't think training providers in general are cost-effective. We want you to prove you give us a good return on investment and we also want you to reduce costs significantly."

We think it is fair to say that is a clear message! In our experience this is also an increasingly common message as Heads of Procurement turn their attention to HR expenditure. Organisations are rightly looking for faster, smarter and more cost effective solutions which deliver better value for money.

The financial pressures on training departments were highlighted by the 2007 CIPD report on learning and development. 52% of public sector organisations said their training budgets were being cut. The report also highlighted that pressure of time was the most common barrier to learning. On the job training was rated as the most effective form of training which may in part be due to the fact it is integrated with the job.

The focus on improving returns on investment does not appear to be matched by organisations actually measuring their returns. Whilst 60% of HR directors and business leaders believe in measuring return on investment (ROI) for training interventions only 18% are currently doing so, according to a recent survey by Lane4. 68% said it was too difficult to translate benefits into financial figures, while 67% complained that it was too costly or time-consuming to do so. Hence, the focus on reducing costs as a proxy for better returns on investment.

Come on e-learning: move faster

In recent years almost every industry in the world has become more productive through the use of better technology, better processes and better tools. Thus it appears reasonable for HR Directors to expect increased productivity to deliver lower e-learning costs and hence a better return on their investment. However, has this happened in e-learning? In our view many organisations have been slow to adopt new rapid tools and techniques, as a consequence the time it takes them to develop e-learning has not reduced significantly. The good news though is that with rapid tools productivity is improving significantly.

The e-learning industry has never been strong on metrics but we have heard it argued this month that it takes 200 hours of development time to create one hour of e-learning. Some would argue it takes more but let's stick with 200 hours for now. So that is roughly 28 days to create one hour. Based on an average day rate of £500 (you shouldn’t be paying much more) that works out at £14,000 for one hour of e-learning.

Does it really need to take 200 hours? Well, it could, and it could take even longer. However, in our view with some smart thinking an hour of effective e-learning can be developed in less than 20 days, which at £500 a day is less than £10,000 an hour. You might want to pay more for e-learning that’s rich with media, animation or sophisticated functionality – but you’re not going to need that every time. In our view, you should be able to get can get high quality, effective e-learning for £10,000 an hour or less.

E-learning must deliver more for less

For some organisations even £10k an hour is too much and we have seen some good examples this month of organisations creating very low cost learning developments. These have been effective and creative learning solutions that use tools such as podcasting and free web tools that create interactive timelines to quizzes. We have also seen some further great uses of Moodle, the free open source LMS. Thus organisations are able to realise their objectives in achieving greater value for money from their e-learning objectives through the use of rapid tools and approaches. E-learning has never offered such a cost-effective solution to the learning needs of organisations.

This renewed focus on return on investment has led us to review our popular free report on 50 free tools for e-learning and we will publish our new updated report 'More for Less' with next month's newsletter. Can' wait until then? Contact us now to find out how we can deliver more for less with rapid e-learning.