Why the gains from a learning management system outweigh its costs

We have no money. Who is meant to take care of it? And what’s the point anyway? These are some of the most common arguments and concerns brought forward when the topic of learning management systems (LMS) comes up. However, many decision-makers miss that the payback period for such an investment is incredibly short – provided the system is implemented and utilised in a consistent and meaningful way.

It’s easy to show that this is not just an empty marketing claim when basing calculations on a business case. You run through a scenario, examining strategic, economic and managerial, as well as process-based aspects. We spoke to Sales Manager Svenja Kreten who has created business cases many times over.

A business case is useful for evaluating the investment in an LMS. It helps to illustrate costs, benefits, risks and time investment better. It makes the company’s payback period for the LMS transparent and clear.

Arguments like “too expensive, not worth it” can easily be proven wrong with facts and figures: Functional benefits such as time savings, learning success, administration costs and realisation of revenue potentials can be broken down accurately.

A business case examines the feasibility of an investment. A calculation is performed on the project, providing the relevant indicators. In principle, a business case can be used for a vast range of circumstances. It’s always useful when looking at long-term or cost-intensive acquisitions. That definitely makes it a worthwhile exercise for the introduction of a learning management system.

The exact figures of the company’s spending are clearly defined - for example expenditures for the employees’ professional development. Specific expenditures are examined, like those incurred through manual administration of employee training courses. This includes both labour costs (human resources) and material costs (copies, name badges, etc.). The analysis also extends to parameters that directly or indirectly impact revenue growth.

The focus is on the cost savings the learning platform offers compared to traditional employee training measures. Costs and revenue potentials are both equally examined.

First, all expenses related to training and professional development are listed. Step two involves the evaluation of factors affecting revenues. Based on these cases, secondary calculations can also be used for specific departments of the company. Topics like new employee onboarding can be analysed separately.

The calculation on an LMS business case looks at the entire training and professional development process. Along this process, the parameters that can be influenced by the LMS are filtered out.

This includes some trivial aspects, like travel cost savings achieved by moving training courses from a face-to-face format to a virtual one. More complex parameters might include a reduction in the production error rate through more efficient training, or revenue increases through a shorter time-to-market cycle. These parameters are then quantified.