What Is The Return On Investment (ROI) Of Your LMS?
LMSs are being used to impart information to all employees. However, a company should be cautious before buying an LMS. A business benefits from an LMS because it does not have to arrange training sessions for employees. They can log onto the LMS and gain all the knowledge they need. The LMS also has an attendance management system, through which employers know whether the employees have logged in or not. Employee seat time is less in the case of an LMS than in conventional classroom sessions, where employees learn less but devote so much time. However, in the case of conventional classrooms, a company has to handle the paperwork to determine whether employees have taken all the training classes. The company must estimate the ROI of an LMS before getting it.
Why Companies Need An LMS
1. Decreases Costs
When a company experiences decreased expenses due to an LMS, it means a hike in revenues. When a company does not have an LMS, it spends too much. It requires arrangements for the instructor, their boarding, and transport, which costs. If the company conducts training at a site, it also has to pay rent. The LMS, on the other hand, just requires an employee to have access to a computer.
Even if VILT is used to train employees, it means the employee can get training whenever they are free. Employees can also revise the LMS content in their spare time. A company does not have to spend its budget on printed materials for employee training, unlike classroom training. The best part is that an LMS has records of whether an employee completed their compliance training or not, so a company has no problem at the time of audit. A company should realize that when it provides training to its employees, they don't quit as easily. However, when no training is provided and employees quit, hiring charges are very high.
2. No Hiring
Moreover, a company is at a disadvantage when it hires a new employee because old employees are already familiar with the functioning of the company. Whenever an LMS is used, it ensures that the positions can be filled internally. This is because employees are trained to be shifted to these positions. An LMS even generates course certifications to prove that.
An LMS does not have any space limitations, such as classroom training, where only a limited number of learners can be seated. It's also tough to adjust the various classroom training sessions according to the hectic schedules of different learners. Travel costs for the instructor and the learner form a huge proportion of the training costs, almost 40%, but this is not so with an LMS.
3. Learn New Tools
The LMS can cause problems when employees can't learn how to operate it. This is because the employees will need to learn how to use it. Employees need screencast-based tutorials or classroom sessions to learn an LMS. The company has to consider the time employees will be required to learn the LMS because, at that time, they will not be working.
Also, the company would need to pay the vendor to train the employees on using the LMS. An LMS might not be combined with third-party tools; in that case, the company has to buy new software, like an eLearning authoring tool.
It would help if you also imported all the templates to the new LMS. How much time will it really require? Do you need the vendor's IT staff to do this task?
Calculating The ROI Based On Different Types Of LMS
A company can evaluate the costs of an LMS versus its benefits. An LMS has costs like its setup, training the employees about it, and the subscription fee. The subscription fees of an LMS can be low or high, depending on whether they increase with the number of features or users. A large company pays more for an LMS because it needs frequent customization, which means adding new features to it. So, dividing the costs by the benefits of an LMS gives its ROI.
As far as the cost of an LMS is concerned, it varies depending on whether it's a cloud-based LMS or an on-site LMS. A cloud-based LMS is a SaaS software that does not require any training or installation costs. However, you may need to pay a fee per user depending on how many people are using it. An on-site LMS requires a lot of training costs because it has to be installed on the premises. Apart from that, the buying company has to incur licensing charges before getting it. The hosting fees of an LMS include the server space needed.
An open-source LMS is free of cost and can be downloaded from the Internet. But money has to be incurred to customize it. For example, plugins have to be purchased, or developers have to be hired to create the required extra features. Also, expenditures have to be incurred for hosting an open-source LMS, where the server space varies depending on how many users need access. A proprietary LMS needs a licensing fee per user, which increases the cost per user. It also requires a subscription fee per user.
Therefore, a company must consider all these factors before getting an LMS.
