Enterprise eLearning: Buy or Build? Understanding the TCO.

“We want to have our own e.learning. It should be customised for our business.”

This is a common approach. But most L&D teams do not understand the enormous cost, effort and time required, to make Enterprise e.learning work. 

“We’ll get an LMS, and then get our e.learning on it. We’re then ready to roll out elearning across our organisation!” Sounds simple. But, like most things in life, there’s an entire elephant hidden behind that ‘simple’.

So, we’re going to give you a quick overview, of what that elephant looks like. You can then make an informed decision, as to what you’re taking on.

First: the LMS. Often, this is an enterprise decision – if you’re using SAP HRMS, you may add on the SAP LMS. But if you’re choosing a stand-alone, a quick word of advice: put down the MUST HAVE functionalities you need. You’ll find, most LMS will give you these functionalities – play SCORM compliant courses, integrate with your ERP/HRM software, generate reports, etc. Do NOT be lured by the ‘nice to have’ bells and whistles, into shelling out more. Simple, sturdy, easy to use and with good support. Done. If you are starting off with a few learners – say, a few hundred – then we’d recommend using a cloud based, pay per use LMS rather than getting your own.

Next, the eLearning. How to ensure a good eLearning course is a separate topic in itself – it needs that detail. Let’s understand here, whether to build or buy; and the implications of both choices.

First, the ‘build’ option. You start by spending cost and time, to evaluate and finalize a vendor. 10-20 person days of effort here, depending on initial level of comfort with eLearning.

Now, building GOOD eLearning, takes time and is expensive. Assume INR 1.5 -2 lakh per E Learning Hour (ELH - about thirty screens); and an output of 2-4 ELHs per month. Why so low? Your review speed is the bottleneck. So, if you want to launch with, say, 15-20 ELHs, it can take a year. If you’ve invested in an expensive LMS, and need to show it’s being used, you’re stuck.

Important but often missed points

1. eLearning development, will take a lot of YOUR time, as mentioned above. It needs a dedicated SME plus a senior resource, to sign off. This is especially true if the e.learning is for areas of internal expertise or technical/knowledge based topics. So, factor in that cost and time. Most people just measure the vendor cost. But from an organisation’s POV, the cost of these resources, is a significant cost, too.

   
   

2.  Elearning needs updating. When it comes to any functional/technical course, a change in even a couple of screens, can mean that the whole chapter or ELH needs updating. Of course, it also means ensuring modularity during development of the course. So, factor in ~ 25-30% of the original development cost (plus SME reviewer time), as a recurring updating cost, each year. Else, be prepared to dump that expensive elearning, after 2-3 years – it will become obsolete. 

   
   

3. Functional skills are 70-80% standard, across the industry. Otherwise, there wouldn’t be an industry!

   The functional skills Jet Airways pilots or cabin crew need are largely the same, as those from Indigo. HDFC Bank, offers fundamentally the same products – deposits, loans, etc. – that SBI does. It has to. The only thing that’s different is small product & pricing variants; and internal processes

   So, it makes sense to build only that, which is specific to your organisation. If there are courses covering Industry wide products, processes, regulations, why go through all the cost and headache? It makes tremendous sense to buy, or license such courses.

   
   

4. Critical and Missed 99.9% of the time: Additional staff cost!

   You need a team, to manage the LMS. You ALSO need a team, to support the learning experience. Globally, self-paced learning has ~ 10% completion rates – which means, ~ 90% of learners do not complete their learning! This is also, of course, a recurring annual cost. What kind of support?

   1. Setting and monitoring a learning plan: Setting up on optimal learning schedule is essential. Thereafter, you need both processes and a team, to ensure that learners stick to learning schedules.

   
   

   2. Query support and reinforcement: If you don’t have a way to resolve learner queries as they learn, they lose interest and drop off. You will need, at the least, a single person who will [a] answer learner queries, via an FAQ repository and [b] reach out to internal SMEs, for sessions or answers, when [a] is insufficient. This needs a quick TAT, to avoid drop-offs.

   
   

Well, this is a lot to think about. Let’s summarize this for you:

1. Enterprise eLearning needs, at the least, an LMS, good eLearning, regular updating and learner support staff.

2. eLearning is expensive; since ~ 70% of it is standard across the Industry, it makes sense to buy or license that 70%. Only build what you have to; as obsolescence rates are high, too.

3. Factor in the cost of a support team to ensure usage and answer queries.

   
   

To learn more about calculating the TCO , setting up eLearning or an overall

skilling strategy for your organization, contact us here