From finance to marketing, automation and analytics are getting a digital overhaul. Adopting digital transformation in all these areas is a huge investment for businesses and many feel they need to pick and choose the most important functions to invest in while others, like training and learning, fall by the wayside.
Learning is vital to every company, whether you operate in a regulated industry that requires strict qualifications and practices or simply want to nurture talent internally. In fact, for most employees today the chance to learn new skills and develop is one of their top reasons for choosing to work for and stay with a particular company.
With an LMS and a detailed learning strategy, businesses can:
Ultimately, an LMS can significantly improve profitability. Nurturing your top talent and retaining your best employees help to reduce recruitment costs while boosting productivity and achieving better business results improve overall success.
Of course, the technology for learning management systems alone has progressed considerably over the past few years. Even companies with an existing LMS are likely missing out on powerful features and functionality if their system is more than three or four years old. Many of these features are vital to achieving the type of success businesses need to stay competitive today.
Selling the idea of a learning management system can be extremely tough, whether it will be your company’s first LMS or you want to update your old one. With so many business functions and other areas competing for technological investment within the company, more and more businesses are only investing in those they deem the most important; in other words, profitable. That means to get the LMS your company really needs you’ll need to make a strong business case that outlines real ROI rather than simply benefits.
There are 6 steps to demonstrating the ROI of an LMS like SuccessFactors Learning and building your business case.
The first way an LMS can prove profitable is by saving your business money. Take a look at all the deliverables of your preferred system alongside any of your current activities and performance to identify areas that the new LMS could have tangible and direct savings. Here are just a few of the main cost saving areas, but you may identify more depending on the current learning activities and success, or lack of, in your business.
The second part of profitability is revenue. An LMS can have many revenue benefits, whether it’s improving revenue gains from current training activities or leveraging new revenue streams. Again, you will need to look at everything your preferred LMS delivers with its functionality and how you plan to use these to develop your learning strategy. Here a few of the key top-line revenue benefits an LMS could help you realise.
With your cost savings and revenue gains you can then work out the first year ROI of your new LMS and compare to current performance to demonstrate the true quantitative benefits of investing in a learning management system. Here’s a quick example.
|Hard Cost Savings:||£600,000|
|Top Line Revenue Benefits:||£200,000|
|Sum of Hard Savings and Benefits:||£800,000|
|Less Cost of the System:||£200,000|
|Return Before Investment:||£600,000|
|Return Before Investment:||£600,000|
|Cost of the System:||£200,000|
You can also work out the payback period, or the days until the business will break even on the investment and the LMS will start paying for itself.
After demonstrating the tangible potential ROI of the new LMS you can then demonstrate some of the other benefits that may be harder to measure but are no less real. While these benefits won’t be persuasive without the quantitative evidence of ROI, they could help secure investment when used in addition to the previous calculations. You can even use the previous calculations to work out the ROI of a range of LMS to help you choose the best one. For example, with SuccessFactors Learning you can highlight the following strategic benefits.
After outlining real ROI and the strategic benefits to the company you can finally highlight some of the individual benefits to your employees and HR team. While they may not have a direct impact on profitability most have a knock on effect for positive ROI and all are important for keeping your business running successfully, not just smoothly.
Finish with some real-world examples to provide the final evidence to back up your previous points. There are plenty of SuccessStories that highlight the benefits of SAP’s Learning module or even take a look at our own Client Stories, many of which involve learning and training as part of their solutions. Our LMS solution for Thomas Cook, for example, shows how they were able to align their training with their corporate strategy and values as well as reduce admin time, speed up reporting, ensure compliance and much more with SuccessFactors Learning.
Once you’ve successfully made your business case simply give one of our team a call today and start your journey to superior training and development with SuccessFactors Learning.