First came all the articles, then came the resurgence of books, and now I even see that an entire conference is being devoted to the ROI of training. Obviously we're seeing a huge backlash against the unrestrained orgy of IT spending of the late 1990's, and against previous e-learning initiatives that fell short of expectations.

Personally, I think its all hype and I've had enough.

First, many senior executives don't care about ROI. In Jack Welch's book, Straight From the Gut, he tells of his decision to invest millions of dollars in a GE's new Crotonville training facility, even while undertaking massive layoffs. He didn't have an ROI spreadsheet to tell him it was a good investment, he just new that investing in talent was critical to GE's future.

Second, ROI is an imperfect science which often involves making educated guesses at potential savings and gains. Senior executives know this, and know that there are many real world variables that can't be captured by a formula. As my own CFO told me recently, "I don't trust any spreadsheet model I haven't manipulated myself."

Third, ROI "guesstimates" are often a cop-out for much tougher measurements of actual results. Rather than ROI math, how about measuring employee engagement scores before and after management training or pilot studies of sales training programs that measure closing ratio's and time-to-close?

Making the C.A.S.E for e-Learning

E-learning at its best is closely aligned to an organization's strategic objectives. And the more strategic it is, the harder it can be to measure its benefits. Rather than return on investment, the emphasis should be on "total business value added" which includes likely but intangible benefits. C-level executives do care about cost savings but they care just as much about sales, service, brand strength, speed, innovation, employee retention, access to information, innovation safety and alignment.

OK, now I have to confess that I'm not really against cost-benefit analysis. However, different kinds of e-learning investments require different kinds of justification. When thinking about e-learning investments remember the acronym C.A.S.E.:
" Content
" Automation of Process
" Synchronous Learning
" Experimentation

Content projects typically involve the licensing of off-the-shelf courses or the development of custom courseware. For this type of e-learning investment ROI is a good metric if it will really replace classroom-based training (due to elimination of travel, time away from jobs, etc.). However, the improved behaviors that result from the training, and business impact likely to occur, should also be part of the business case.

Automation projects are efforts to digitize previously manual processes. Typically this includes learning management systems and testing systems that replace the manual scheduling, testing and tracking of learners. Often these projects require increases in headcount rather than reductions, but executives will see value in improved access to information, ability to zero in on skill gaps, and an improved employee experience.

Similar to the content argument an investment in a synchronous learning system (e.g., Centra or Interwise) should be justified if it will really reduce travel associated with live meetings. However, improvements in communication, organizational alignment, and speed are also high value benefits from this technology.

Finally, experimentation includes those skunk works projects like home grown knowledge management systems, just-in-time learning objects, performance support tools or other things that don't fit into classic "defined-problem" e-learning solutions. While this category will be hardest to justify, it is the category with surprise results that might actually lead to competitive advantage and measurable impact on the business.

To summarize, ROI analysis effectively minimizes the risk of failures and financial waste, but it also reduces the chance for innovative breakthroughs and tough-to-measure results. By only focusing on ROI, Chief Learning Officers may miss some tremendous opportunities to contribute to their organization's strategic goals. To gain project support, an e-learning plan should include ROI estimates as one dimension, while focusing on overall total benefits to the company.