Moving to eLearning and its Impact on Your L&D Budget!

If you are reading this, then I hope it is safe to make the following assumption. You are on your journey to transition from the traditional training methods to adopting eLearning at your workplace. Whether you are just starting or in advanced planning, a key question will revolve around the budgetary impact. Before we address this question, let us first look at a few facts:

A study by Karl Kapp and Robyn Defelice states that the time required for producing one hour of distance learning materials is anywhere between 90 to 240 hours. On the other hand, Chapman Alliance suggests that an hour of eLearning can sometimes cost as much as $10,000 to produce. Of course, these numbers are subject to change depending upon the features and media elements you want to include.

The figures above are only one factor impacting the budget. Numerous other factors reduce the overall expenses and release budget pressure. Hence, before moving to an online model, you should have a detailed understanding of the elements and their overall impact. And this is where we come in. Here is how you can calculate the cost of eLearning and gauge its effect on your final L&D budget. Let us start with the most important—cost of eLearning content creation.

What is the Cost of eLearning Content Creation?

Cost of eLearning and the Instructional Design Model

The cost of online course design and development is heavily dependant on the instructional design model chosen. One of the most popular eLearning models used by industries is the ADDIE (Analysis, Design, Development, Implementation, and Evaluation) model. Each stage of this structure comes with its costs.

Analysis: The analysis stage involves the team gauging the market, competition, and content. If you are creating new content or reusing old content, you need to estimate the costs incurred in both approaches. Again, in the Design stage, you have to make distance learning materials, based on the instructional design best practices. Now, in the third step, i.e. development, your team can embed your training modules with elements like lecture notes, practical tasks, gamification, quizzes, graphs, diagrams, and videos, among others.

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During Implementation, you required to upload the online course content into an LMS of your choice. You additionally have to organise it into an online course and create QA of the ready product. You might also need to go for a trial run. Finally, in the Evaluation stage, you are required to keep track of your course performance, collect feedback, and tweak the content to get maximum Return on Investment (ROI).

Again, for the above model, you need experts like SMEs, an Instructional Design team, Project Management team, and Technical Staff, among others.

Breakdown of the Costs Involved in Each Stage of an Instructional Design Model

Let us again take the example of the ADDIE model. For instance, you should ensure that the course is feasible, both from the economic or social-economic perspective. Some of the expenses involved here include money spent on creating brand awareness, improving corporate culture, deploying employee onboarding training, etc. Now, in the Analysis stage, what can be the costs involved? Well, you will incur expenses in target audience research, current competition research, exploration of preferred promotion channels, and the hourly rate of experts studying the above aspects.

Again, in the Design and Development stage, you will expend effort creating a comprehensive training model, complete with media, graphs, diagrams, and other learning materials that you can quickly compose into a storyboard, infused with quizzes transformed into an online course. In the Implementation stage, where you deploy an LMS, you have to consider cost factors involved in organising the Learning Management System into an eLearning module.

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How Does the Cost of eLearning Affect Your Total L&D Budget?

Well, once you consider all of the upfront mentioned above costs, you might think that the price of eLearning is a tad high as compared to the total L&D budget, allotted for carrying out training sessions. However, there are several other factors you need to consider to see the big picture.

Travel and Accommodation

In-person training sessions need both the trainees and trainers to reach a pre-determined location to attend a module. Businesses have to incur additional travel costs on behalf of their employees and pay for them from their training and development budgets. However, when you implement eLearning, you won’t be having any of these expenses since the staff can tune in to the training sessions from the comfort of their home or work station.

Meal and Venue Costs

In any training session, snack and meal breaks are quite common since the hours are usually long. But you can eliminate these expenses if you conduct the sessions online. On the other hand, in-person classroom training demands a well-equipped physical space to run the event. And start-ups or small businesses that do have access to in-house training facilities might need to rent a separate venue to execute the training program successfully. But with eLearning, you ditch the costs incurred in all of the above activities.

Time Spent Away From Work

Classroom training needs the instructor and attendees to stay absent from their workstations for hours at a stretch. As a result, this can negatively impact the business’s productivity. Additionally, you may waste much time moving the staff from one spot to another. You can otherwise use this time to increase productivity, and thereby, profits. In contrast, eLearning enables employees to attend their training sessions right from their desks, saving a lot of time and money.

Costs Incurred in Salaries And Training Materials

Staff trainers and facilitators have to get paid. Moreover, instructors themselves will also need to be trained, which in turn requires time and money. Again, with eLearning, corporates can save several bucks on printing materials since all content can be hosted online without you needing to print them for each training session.

In short, the long-term cost of eLearning is significantly lower as compared to in-person training because businesses can save money on employee and trainer travel, infrastructure and classroom maintenance, facilitators’ salaries, documentation, and paper costs. What’s more? eLearning allows companies to reuse a set curriculum/course with multiple candidates. The only effort needed is to update the learning material when required.

How Can You Further Reduce the Impact of the Total Cost of eLearning on Your L&D Budget?

Make the Best Use of Your SMEs

Your SMEs are a valuable asset to your organization. As such, rather than wasting their valuable time in unnecessary activities like travel, you can allow them to spend that time building online courses, giving live webinars, doing one-to-one coaching calls and feedback sessions, or creating content for your LMS’s course library.

Calculate the ROI

To calculate the ROI and maximise savings, you need to segregate the key elements that serve as cost factors. Some of the factors include Hard Savings in Terms of Resources Used (Time). Time has sub-factors like total training delivery time, trainer time consumption, participant time consumption, and classroom management time consumption.

Therefore, after implementing an online LMS, your total annual time savings is the total of all the above factors. Convert this number by connecting it to the payroll. Now, you get the difference in expenses incurred — both in terms of Man Days and Cost. Noteworthy to mention here is the fact that this is just your annual savings. When you calculate it over cumulative years, you will see a drastic increase in your cumulative savings.

For more details on how to calculate ROI, you can check out our article here.

Conclusion

The eLearning market is an evolving one. It continually changes with the introduction of new trends and technologies. In all of these cases, the course should remain relevant. Even if your course is comprehensive, it will need touch-ups over time. Add New data or some statistics when breakthroughs occur in the subject matter. Just keep this last bit in mind as you put together your eLearning L&D budgets. And you should be all set. Need a consultation for implementing eLearning at your workplace or just someone to bounce an idea to bounce off of? We are here to help!

Corporate Learning Advisor

Anisha Dutta, our Corporate Learning Advisor, holds a bachelor's degree in electrical engineering and did her master's from IIM Udaipur and Purdue University. She loves working on pieces that require deep research and foresight. Apart from that, she is a voracious reader. Movies, music, and tv shows are the next addiction. Otherwise, she also happens to be an avid traveler, a poet, and an animal lover.

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