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How to Calculate the Effectiveness of System Implementation  
How to Calculate the Effectiveness of System Implementation
 

An automated HR-system can significantly reduce costs for personnel training (full-time and distance), assessments, and testing. Surveys and studies conducted by WebSoft revealed that when the number of users exceeds 2,000, the average payback period is 12-15 months.

It is best to calculate the effectiveness of distance learning technologies while you are using them. It does not mean that other tools prevent a return on investment (ROI). For example, automated testing of personnel resulted in significantly reduced labor costs in the HR-Unit for collecting, processing, and analyzing assessment forms, and it also accelerated the evaluation process while reducing errors.

Consider the calculation of efficiency for implementing a Distance Learning System (DLS) in a bank with around 5,000 employees. The following example - not a classic calculation for ROI, but a derivative allowing the cost of one-person taking the course through distance learning compared to an alternate full-time education to be calculated. ROI is easier to calculate if you know the exact number of students per period.

Suppose 50% of staff undergo instruction within 2 years of training at the DLS, averaging 3 courses each. This is equivalent to 2 years of study for at least 7,500 students.

Calculating the costs:

  • DLS software (licenses, setting up and implementation) - $ 15,000
  • DLS vendor technical support - $ 3,000
  • Server hardware and system software - $ 4,000
  • Annual salary for a specialist (including taxes) - $ 30,000 (a dedicated person who is engaged in the system administration who develops his own courses)
Total for 2 years: $ 82,000

The calculation is certainly not accurate. There may be additional costs for infrastructure, but our example assumes that there is no fee for the traffic on the channels allocated to the bank; and that the bank pays to rent channels for its business needs in general, not just for DLS).

Divide this amount by the number of courses studied and we get the cost of $11 for one person attending a course.

In both cases the conditional wage of the coach or the specialist equals $2,000 per month.

Consider a one-day seminar by an on-site coach (assuming 15 persons attend the seminar):

  • Trainer Salary - $ 120
  • Room rental, coffee, tea - $ 100
  • Flight + accommodation + travel (for the trainer) - $ 600

Total at least $ 820, or in $54 for each person attending the course.

In each case, the the costs for time spent by students are not calculated because they are the same for both.

Thus, we estimate that the cost of full-time education is five times higher than in a DLS. However, we are discussing a classroom activity that can be replaced remotely.

If a company can replace a large enough portion of full-time training with distance learning, expenses can be recouped within a few months (often through implementing just one e-course). Following these calculations, a company who has decided to use DLS to fulfill their business objectives may wish to further calculate the ROI.  Otherwise, it is enough to consider the person per course cost indicator. If spending more on full-time education is acceptable, then the ROI calculation can be ignored.

Remember, costs for full-time training changes depending on the number of students while the cost of e-learning is almost fixed. This means that as more employees undergo training, training costs continue to decrease.  This is especially true for companies with large volumes of learning courses (i.e., training will be 20-30 times cheaper than full-time).  to get a sense of degree of the cost reduction, if a course was utilized 15,000 times rather than 7,500, costs for that course would be halved.  This phenomenon is impossible for on-site, full-time learning to achieve.