Demonstrating ROI for an LMS

Hi all,

I am proposing a learning management system to the company. As part of the proposal process, I want to show the cost savings of the system. However, when I searched online everything I found focuses on eLearning. While eLearning is one cost-saving aspect of a system, we still plan to continue classroom and webinar courses. 

How have other people demonstrated the ROI of a learning management system? Does anyone have any templates they are willing to share? In my former position, they already had an LMS and I was switching them to a new provider. It was easy to show the ROI because the vendor was significantly cheaper. Any help is greatly appreciated! 

8 Replies
Bob S

Hi Ian,

It's probably just semantics, but remember to think about an LMS as an "investment", not just a "cost savings" necessarily. Remember your stakeholders are business people and you need to speak their language and address their pain points with any investment in training. Sourcing, implementing, and maintaining an LMS costs money. Period.  It's what you get for that investment of resources that can make them worthwhile....

  • Increased training utilization = better performance (which saves what or increases sales/service by x?
  • Better regulatory compliance = reduces risk = saving what potential costs?
  • Improved/Defined developmental paths = better engagement = potential savings from turnover reduction by x amount?
  • etc

Basically.... make a list of ALL the reasons the BUSINESS might want an LMS, then work backwards to assign a value.  Remember.... value comes in many forms beyond just cost savings, but also reduced risk, increased performance, engagement, reduced resource load, reduction of duplicate efforts, speed to deploy reduces opportunity costs,  etc etc

Hope this helps!

Ulises Musseb

I'd suggest to consider the industry of the company where you are presenting your proposal. For example, I'm in the medical industry and there's a lot of regulatory, compliance and department specific education that has to be delivered and reported in order to remain in business. That's a selling point for an LMS that can serve as a central point of all required training and education data collection and reporting.

Also, for Organizational Development purposes, a selling point is that many LMS now can tie up training with performance management, tying the training with specific goals and competencies, providing a better way for managers to identify development opportunities for their staff. Talent Management and training can be linked within a well designed LMS.

From a technical perspective, user data can be imported from existing most common staff management system software, meaning that there's no need to create separate user accounts for the LMS (considering that there's in fact a system in place, at least for internal email).

Alexander Salas

Great advice given here guys.  If we haven't let's connect on LinkedIn. I have several posts on LMS selection. The key wins are tracking and centralization of resources but the game has changed alot.  Newer companies like Absorb and Growth Engineering are maximizing the power of HTML5 while the more traditional products are way behind.

Ian Mondrow

I don't think its far to say traditional products are behind. I looked at Absorb and found their core product to be lacking. They may be great at gamification, but it does me no good if the reporting capabilities are weak.

I think there are pros and cons to every vendor. For example, I used SumTotal Maestro in my last position and loved it. I found it very robust and the reporting capabilities are the most advanced I have seen. As a learning professional, reporting capabilities is always my #1 priority especially if I want to show ROI. In addition, they offered a server that was only managed by US persons. This was critical in my last position since we were a government contractor. 

It just depends on what your organizational needs are. 

Bob S

At the risk of going too far off topic, just thought I would weigh back to address the Absorb assertion regarding reporting.  

My take on that that platform is that the right-out-of-the-box standard reporting is a bit limited... by design. They've attempted to capture the most common reports one might need and put some common sense bumpers on them to keep reporting fast and responsive (vs other platforms where you you submit and and come back tomorrow). And if you truly have a unique need, they are more than happy to create custom reporting as a one off or on a schedule. 

Ian Mondrow

I understand you philosophy. However, I very much like to be in control of my data. I want my reports when I need it and don't want to have to worry about the vendor creating a custom report. I work in a fast-paced culture where the response,"I will have it for you tomorrow," would be unacceptable. This is personal preference though. 

I had no issues with SumTotal's reporting capabilities. I found them to very fast and efficient, even if I had 20 filters set. My point was that people should not dismiss the original vendors because they do offer some great advantages. SumTotal was a great fit for my former employer and I would encourage them to continue with them for years to come.