Illustration of ROI on LMS
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    According to Investopedia ROI can be defined as a financial metric that is widely used to measure the probability of gaining a return from an investment. It is a ratio that compares the gain or loss from an investment relative to its cost. It is as useful in evaluating the potential return from a stand-alone investment as it is in comparing returns from several investments. Return on investment (ROI) is a crucial metric for any business. So is ROI of LMS. 

    ROI is important for measuring business success over time and as takes the guesswork out of making future decisions.

    Why Calculate Training ROI?

    Most expenditures in a business have the same purpose: to bring in more revenue. For example, spending on advertising provides information about your product, investing in employee benefits attracts a more committed workforce. And spending on training ensures that your employees are given the necessary skill training that will help them improve business performance.

    Training is like any other investment; you need to gather data to see if it’s working. Training helps equip your employees with more information and skills that help them do their jobs better.

    A negative return means the training isn’t having the desired effect. Maybe it’s too expensive. Or it’s added another layer of task that your overburdened employees don’t have time for. 

    Why an LMS?

    Employee training is often looked at as a “cost center”. One reason is the upfront and ongoing expenses of ‘traditional’ learning systems. The other reason is the lack of support and training for such systems. However, studies indicate that organizations that have the appropriate learning platform, with the right implementation, end up saving thousands of dollars in IT costs and achieve higher employee output.

    Investing in a new LMS might look like a daunting task for any company, as it requires shortlisting an LMS from several vendors, evaluating various features, customizing the solution, migrating data onto the LMS.

    Intelligent use of LMS capabilities can mean the difference between an accurate investment of resources, and spending an L&D budget in the dark.

    That is why having a robust ROI measurement system in place is vital to analyze if your employee training is so crucial.

    The ROI of a New Learning Management System (LMS)

    ROI stands for return on investment. It is an economic indicator that shows the impact of your training program in monetary terms. With ROI, you’re getting past lower-level evaluations of training impact like employee satisfaction and cutting straight to the bottom line: for what we spent, what did we get out of this training?

    ROI of an LMS is a purely economic measure. It indicates the benefits of the training program using an LMS, relative to its costs. Benefits include any economic improvements to your company’s operations that flow from your training, such as increased profit or cost savings.

     Here are a few factors to be considered :

    • The number of employees enrolled in the LMS?
    • What is the average cost of each course?
    • Do you pay external Instructors for their services?
    • The cost of travel and accommodation for these instructors?
    • What is your annual budget for an LMS?

    Let us look at few areas where an LMS can help you optimize your ROI:

    Top-line Revenue benefits

    An LMS helps train your workforce efficiently thereby improving skill sets. By offering effective training through an LMS, you’re able to enhance employee skill sets and correspondingly business performance. This will compound across the organization and will lead to improved revenue. 

    Saving on Infrastructure costs 

    Most LMS solutions are hosted on the cloud and this results in lower investment in IT support and maintainence. However, a few years ago LMS solutions used to be hosted in-house which resulted in extensive investment in maintenance and IT infrastructure.

    Unless your organization has a large IT team, Cloud-hosted LMS vendors that offer unlimited and ongoing support are proven less costly than per ticket or per hour formats. Managed hosting solutions support the development of eLearning beyond technical fixes, providing man-hour savings, and giving IT and admin teams the freedom to work on other important projects.

    Data Security

    A Self-hosted LMS allows organizations to maintain absolute control over their data. However, depending on the extent of technical expertise required, this can make for a substantial investment, as installation, set up, customization in hardware, and staff training costs.

    Using a cloud-hosted LMS platform an organization can take advantage of external security, such as AWS encryption. While just as (if not more) secure than internal data security software, the costs are likely to be significantly less.

    Lowering Training administrative costs 

    For several organizations still conducting their employee training in-house, the cost adds up rapidly. Expenditure on printing physical training materials, their distribution, and salaries to instructors to facilitate training for employees results in rapidly rising costs.

    To reduce these repeated costs, you need an LMS that allows your enterprise to create courses, organize, and replicate training content, quickly send them off to the relevant parties, and host virtual instructor-led training sessions and recordings that can be stored and re-watched during another training program.

    Cut down Travel expenses 

    When you have a workforce that is mostly or entirely remote or offices that are globally dispersed, training options that are available on-demand through an LMS are easier and cheaper to maintain. With a learning management system, you slash expenses on airfare, hotels, meals, and other expenditure, and the final savings in cost are substantial.

    Minimizing lost productivity 

    Lost productivity is the indirect cost that an employer incurs whenever the employee is away on training. With online training delivered through an LMS that fits the convenience of the learner, employees can fulfill their training needs from home, on the way to a sales pitch, or even in the cafeteria at the office. Making e-learning courses available on a mobile device, on their work laptop, their home office desktop, or whenever people can squeeze in relevant training content means that you’re stretching and optimizing employees’ time, and productivity. 

    Collaborative learning benefits

    In most companies, younger employees constantly seek tenured employees for advice or feedback. Learning socially is a very important source of how we cement new information. An LMS that incorporates collaborative and social features like chat, group feed, and discussion forums allows the companies subject matter experts to contribute their knowledge to multiple audiences at once and keeps employees learning from their peers/colleagues without the need for in-person meetings.

    Additionally, your employees are learning from knowledgeable and trusted sources who are familiar with your brand rather than a random Google search.

    Reduce attrition 

    Employee turnover can’t be completely eliminated. However Losing top talent, is not only very expensive additionally it results in lost productivity until a replacement is found and fully ramped up. And that’s just the beginning. But, you can reduce it by providing an engaging onboarding experience and a workplace where employees feel valued and want to stay. Enterprise Training initiatives using an LMS can make employees feel accomplished and affirm that their career takes a definite path with your organization. 

    Time for high-level strategy

    A modern LMS can automate the creation of personalized learning paths, track and monitor employee progress, access training KPIs and reports in real-time, send notification reminders, and enroll users, among many more. By automating most LMS admin operations, not only are support costs reduced, additionally, the HR personnel are left with time to focus on high-level strategy.

    Analytics and Higher productivity

    Sales training, onboarding, regulatory compliance, and customer or partner training using an LMS can offer courses to enable employees to reach peak productivity more efficiently and rapidly. Organizations that invest in quality training by using an LMS can leverage their employees’ talent with courses that make it easier for learners to succeed.

    A major advantage of an LMS is that it is capable of collecting extremely granular learner data to gain a comprehensive and accurate overview of the effectiveness of your eLearning. Learner data can also be compared year-to-year, allowing you to ensure that iterations of the training programs are increasingly effective. In addition, worker performance can be compared year-to-year to evaluate whether your workforce also is becoming increasingly productive.

    There’s no doubt that effective training can be an extremely important variable in organizational growth. But it is also important to know whether you are getting an optimal return on your investment. As with all initiatives, the results matter. However, that being said there is no singular approach to measuring the ROI of your training program. There are various qualitative and quantitative factors to consider, such as the training goal, skill level of employees, employee feedback, training engagement, and performance results. It is also imperative to ensure that training is sustainable and a long term endeavor. Training must be a continuous process wherein employees upskill and reskill thereby improving business performance.

    Whether you’re looking to understand how to improve the current ROI of your employee training program or looking to implement a new LMS with engaging training courses, we have the expertise to help you reach your goals. 

    Why choose Kloudlearn?

    Kloudlearn helps you deliver engaging enterprise training with a robust Learning Management System. You can easily create interactive eLearning content with Kloudlearn’s built-in course authoring tool. Increase your learner’s learning retention and engagement with gamification, social learning, and mobile learning. You can track your training course performance and learner’s progress using pre-built reports and an interactive dashboard. Host your online training through Kloudlearn’s Zoom Integration. To know more about Kloudlearn, Schedule a Demo today. 

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