Do you often get asked this question, or ask it yourself? The answer forms the foundation of any successful organisation.
With the hindsight of 25 years in technology, let me share what will help you determine what ROI is, and what ROI you should expect.
ROI is Return on Investment. Simple, right? It depends on what you are trying to achieve.
Technology Investment ROI: 3 Key Questions
- Lower costs. Is this investment going to lower my overall costs?
- Save time. Will this investment save me time?
- Increase productivity. Will this help me, my teams, and my business get more done—effectively and efficiently? This has the most valuable impact on the bottom line.
There are many variables that determine the ROI percentage you will achieve through technology investment.
- Where does your organisation stand from a technology perspective? For example, are there many manual processes that can be automated?
- What is the level of change management process your team will need to go through?
- What core processes are being adapted?
- What type of technology is being considered?
Your answers to these questions will dictate ROI attainment of between 47% and 87%. As a best practice, you should anticipate a minimum of 65% ROI in any technology investment.
Return on investment (ROI) is the ratio of a profit or loss made in a fiscal year expressed in terms of an investment and shown as a percentage of increase or decrease in the value of the investment during the year in question.
This is the basic formula for ROI:
ROI % = Net Profit / Total Investment * 100
Now let’s look at some scenarios.
Most organisations know of these critical success factors that affect the bottom line:
- Effective training for employees and customers
- Timely information updates for employees and customers
As organisations consider the ROI of investing in an eLearning platform, here are two scenarios that clearly shows the difference in ROI between online and traditional training.
Let’s compare the cost of training 100 employees in person and online.
In our scenarios, we obtained the actual cost of 1-day classroom training on a popular workplace topic at a leading training institute: $795 per person. This fee would factor in trainer time, coordinator time, venue cost, travel and accommodation, materials and so on.
|Training cost for 100 people||$79,500||$0||-$2,500|
|ROI (Net profit $10k)||12%||93%||121%|
In Scenario 1, your organisation provides internal training for employees at no extra charge. The ROI is 93% compared to the ROI for classroom training of 12%—more than a six fold increase.
In Scenario 2, your organisation provides external training for customers or members at a low fee. The ROI is 121% compared to the ROI for classroom training of 12%—more than a nine fold increase.
These may be simplified scenarios, yet I hope they get you thinking of the bigger picture and how you can create a sustainable and scalable new platform for ongoing progress and profitability.
Regardless of your organisation and training goals:
- A business wanting in-house workplace training
- A training company selling training to customers
- An industry association providing a value-adding service to members
Considering ROI opens up great opportunities to ensure you are maximising your investment. If I or any one of the Velpic team could help you create inspired learning, please reach out to us via our website or on LinkedIn.
Meanwhile, if you would like to experience Velpic’s next-gen eLearning platform for yourself, we welcome you to sign up for our free trial.