Cost-benefits of (e-)learning

Paul Bacsich, Director of Special Projects

UK eUniversities Worldwide Limited

WCBF/London, September 2003

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Structure of session

About UKeU (10 min)

About costing, especially hidden costs (20

min)

Interactive exercise in small groups (15 min)

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UKeU: Core Mission and Values

Customer focus

Quality driven

Integrity

Shareholder value

Innovation in techniques, technology and approach

To deliver the best of UK university education online across the world

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UKeU programmes

Wide variety from the best UK universities

Masters, degrees, diplomas and certificates:

Business and Management

Information Technology

Healthcare

English Language

Biotechnology, Environment and Science

See www.ukeu.com for latest list

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Higher education – and more

Corporate training (including but not restricted to offers from UK universities such as “corporate Masters”)

Managed Services

Consultancy and Research

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Corporate customers: Marketing/business development

In selling and marketing to corporates, UKeU will: Ensure that the offer (eLearning) has demonstrable

currency in staff recruitment and retention

Demonstrate that the offer has training competency, plus academic worth where appropriate

Align each offer to corporates’ business strategies

Facilitate the creation of a convincing R0I rationale

Learning and training for business effectiveness

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Managed service

eLearnin

g integral

to

business

life

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Managed service

Access to UKeU world-class eLearning platform Access to UKeU development tools Access to UKeU experts* in eLearning software development Consultancy and project management services

Generation of re-usable Learning Objects, to SCORM and IMS standards

Production of management information reports (for RoI, etc) Provision of billing services

Low start up costs Reduced recurring costs

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Operational infrastructure

Enterprise-class Managed Learning Environment developed jointly with Sun Microsystems

Fujitsu: data centre and network partner Fully redundant and rapidly scaleable multiple

internet connections to UK and worldwide Fully redundant architecture to ensure 99.5%

availability

Usual Data centre services 24 x 7

Help Desk

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Special Projects: Consultancy and Research Research Centre

(UKeU+Manchester+Southampton) System design, multi-cultural aspects, costing, standards

In addition Evaluation of courses Quality management Sponsored research, development and consultancy

Specific studies and projects: Standards conformance, initially for content (EU) Mid-band services including “training TV” and

synchronous Role of f2f in e-learning-led propositions Off-line working (including m-learning)

Cost-benefits of (e-)learning

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Pedigree of costings work

“Costs of Networked Learning” Project JISC-funded at Sheffield Hallam University 1999-2001

case studies including ABC trial

large literature search of distance learning, e-learning and e-training articles

Telelearn study of costs of e-training (EU funded)

Other work: costs of IT systems for e-learning, change management, tools for e-learning,...

Concepts also developed and refined while running joint MSc courses at Sheffield Hallam U with vendors (SAP, Oracle…) for government and corporate customers

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Some terminology

Costs: on the books, and off (more later)

Benefits: productivity via skills or attitudes

RoI: Benefits Costs as a %

Differential RoI: RoI compared with classroom

Metric: way of measuring benefits E.g. less time off work

faster response to customers

less bad debts

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Back to basics: Why install e-learning? Benefits first!!

Save moneyreduce trainer costs by use of IT

reduce trainee costs travel cost

Save timetravel time

Train better (15-25-60% gains?)…so save time or money later

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Back to basics: Why install e-learning? Benefits first!!

Save moneyreduce trainer costs by use of IT

reduce trainee costs travel cost

reduce “system” costs; by exporting costs

to trainee E.g. own PC in own room on own phone... In own

time…...

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Hidden Costs/Savings

Employers focussed on the direct costs of the training programs and were “unaccustomed to identifying the indirect costs that the project was encouraging them to do” – Temple (1995)

We have identified many examples of hidden costs space costs may decrease (e.g. training rooms)

IT costs will increase

admin costs should decrease

costs hidden in trainee budgets may increase... Hence the stakeholder approach

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Save time – much more complex...

Save timetravel time

reduce “time on task” by “better” training (25-40% saving?) by individualised training (easier)

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Save time – much more complex...

Save time valuetravel time

reduce “time on task” by “better” training (25-40% saving?) by individualised training (easier) by moving time to “time of the 3rd kind”

E.g. by using time fragments

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Time of the 3rd kind

Time1: on duty - used to be called “at work”

Time2: off duty (not at work)

Time3: in-between on duty but less productive

E.g. travelling E.g. slots in between other tasks

off-duty but somewhat productive E.g. in bar with colleagues E.g. at dinner with customers

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Time3 – value

“time of 3rd kind” can be hard to deal with

BUT

This kind of time is the entry point for m-

learning

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The main Stakeholders – and their time3 issues

The organisation

and the staff of that organisation

The learners

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Stakeholders – two more special cases

The organisation

and the staff of that organisation

The learners

and their organisation (e.g. supplier chain)

and in some cases their parents/partners

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Course Lifecycle Model

Planning and Development

Production and Delivery

Maintenance and Evaluation

Three-phase model of course development

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Breakdown of three-phase model

Planning and Development

collecting materials developing material writing user guides and course

publicity

Production and Delivery

duplication of materials delivery of training mentoring and group work

Evaluation and Maintenance

quality assurance exercises updating of materials evaluation against course aims

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Issue 1: Cost drivers – Economies of scale

The phase in traditional training where numbers truly bite is the Production & Delivery phase.

Careful choice of delivery method can contain the growth in delivery costs… E.g. use of highly interactive content

But this tends to involve high front-loaded costs and longer time cycles

and more issues with updating

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Issue 2: Interaction

In training: early CBThad no truck with tutors

In universities: tutor involvement, and interaction between students, has been seen as important constructivism

However, the worlds have nearly converged

There is nothing bad about e-tutor involvement: just build the costs into your budget

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Towards RoI – the spreadsheet

The traditional financial model underpinning professional work in many (not all) companies is defective in at least four ways:

No Stakeholders

Crude Overhead Allocation

No agreed set of activities

No time recording

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New approach to Financial Schema

Multi-level

Activity-Based Costing

Flexible Overheads

Three-phase Course Lifecycle

Model

Based on previous works

Multi-stakeholder

Time DivisionTime recording

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Financial Schema – key “Stakeholders”

Stakeholder dimensionExpendituredimension Institution Student Staff

Total

Staff costs

Depreciation

Expenses

Overhead

Total

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Extend your analysis to all stakeholders including their time elements (and subjective elements) E.g. apparent cost reductions may lead to stress elsewhere

Use methods of Activity Based Costing/Management in your approach to Course Life Cycle issues Even a small amount of ABC thinking can materially

improve your planning of e-learning

Planning is not just financial forecasting: it involves looking at non-money issues

Think globally to reduce costs, even for UK propositions

To produce robust RoI arguments

Thank you for listeningI am at pbacsich@ukeu.com

The JISC Costings Reports are at

http://www.shu.ac.uk/cnl/

www.ukeu.com