The ROI of Learning Management Systems: 3 Ways to Measure

A learning management system (LMS) is an investment in your employees.

The long-term and short-term effects of training employees through an LMS solution lead to a suite of benefits that gain a return on the investment (ROI).


How to Measure ROI?

An LMS solution will impact an organization in many different ways. Much of the impact will depend on your organization’s goals.

For example, a university and a corporation will have two very different approaches to teaching. The university will regularly offer in-person lessons, while the corporation might do a once-a-year training event. Both may find their learners would benefit most from online eLearning courses. This leads to very different cost savings when switching from one teaching method to the other.

That said, there are three general types of ROI all organizations will experience through an LMS to varying degrees. (For a look at purchasing costs, check out our price of LMS post.)

3 Areas to Consider

1. Cutting Costs

Initially, a new LMS will lower many expenses:

  • Cloud solutions reduce IT infrastructure needs – Most learning management solutions are hosted in the cloud, so the vendor maintains each client’s data. Some clients may be upgrading from an older LMS solution that’s hosted on-premise and requires staff and hardware to maintain. Upgrading to a cloud solution reduces these costs.
  • Reduced tuition expenses – For organizations seeking an alternative to college courses, LMS is a platform to earn the same degree in an online setting. Making it available to your learners eliminates the need for them to search for a program, and if you’re a business that provides tuition reimbursement, providing courses through LMS in-house can dramatically cut costs while offering access to a large number of learners.
  • Compliance tracking to avoid penalties and save audit history – When organizations use an LMS to train employees, one significant benefit is that learners can take courses for compliance-based roles. This includes employees within health care, safety, human resources and many other fields. The solution stays on top of ongoing certifications so that before an employee’s certification expires, the solution will urge them to enroll. In the case of an audit, everything is recorded in the system to eliminate penalties against your business.
  • Training expenses such as materials, instructors and shipping – For organizations looking to provide online and in-house training, all materials are digital and saved for each new batch of learners. Live instructors can still be incorporated into the solution through video, but it’s not always necessary when learners can directly access the material themselves. Previously recorded lessons can be saved, so an instructor could be paid for a one-time recording and it can be reused for years.
  • Travel expenses such as accommodations, pay, productivity and travel – When organizations use an LMS, they can cut back on off-premise training opportunities. This means that hotels, conferences and air fare are no longer necessary, and employees don’t waste time traveling. Other accommodation expenses such as dinners, which involve menus and other administrative needs, are also eliminated.

2. Saving Time

An LMS is a useful tool for prioritizing an employee’s time, helping them be more efficient as they learn in a few ways:

  • Time saved by accessing eLearning – Learners can access the solution at their convenience, whether its during downtime at the office or at home in the evening. Rather than traveling back and forth from a lesson’s location, learners use a computer or even a mobile device. Some lessons may be synchronous, which means there’s an instructor in real-time. For lessons that require this method of teaching, learners can just log on to the system when the course begins.
  • Faster collaboration – Some lessons may require learners to collaborate over assignments. With an LMS, meeting and communicating online are made easy. LMS solutions often include discussion boards for learners to share material.

3. Improving Productivity

Improved productivity makes the most valuable impact as a long-term affect. Here’s how:

  • Reduced turnover – Employees who have access to professional development opportunities are more likely to stay, according to previous Better Buys research. Even when they’re not actively engaged at work, having access to these opportunities still makes a significant impact on their likeliness to stick around another five years.
  • Higher long-term engagement and productivity – Organizations that care about high-quality training have high-quality performers. A high-performance culture focused on continuing education has many advantages. A-players are more likely to stand out, which has a positive effect on everyone’s daily workflow.
  • In-house certifications for internal positions – For positions that don’t require an industry certification, business can still develop their own within the LMS solution. Specialized roles can benefit from internal certifications, such as in Excel or leadership training. These courses transparently build a succession plan that sets employees up for the next steps in their careers.

The Impact

The cost of an LMS solution varies, mainly depending on the number of learners. But the larger your pool of learners is, the higher your return will be, as you’re no longer spending money on expensive off-premise trips for training and have a greater share of productive employees who are less likely to leave.

Some of these benefits are immeasurable, but with the right LMS solution many metrics can be tracked to give you an accurate ROI. These metrics include attendance and custom scoring, giving your administrative team the data it needs to grow training programs effectively.

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