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Calculating LMS Return On Investment: Complete Guide

In modern times, analytics has become the core of every step you take. From exercising to running a business you have access to all the data that you generate and with the help of that data, you can actually calculate a lot of things that help you make your next move. One of the crucial factors of such analysis is the return on investment or in business terms, the ROI! The concept of ROI is quite simple to understand. Take an example of a fitness band. You invest your saved cash in buying that band so you can take care of your health and achieve the fitness goals that you have in mind. Now with every workout, you get a detailed report of how many steps you took, how many calories you’ve burned, etc. With that information, you can actually calculate whether the motive of buying the band is being fulfilled or not. You will also be able to understand what are the things that you are now getting access to which were not available prior to the band. These differences define the return on investment.

You might be wondering what ROI has to do with an LMS? Well, everything! You see, LMS has turned into a vital tool that almost every organization is using nowadays. You will see hundreds of articles that state an LMS is a valuable addition to your enterprise or it is a perfect value for money tool to help you out with your learning management. While these articles may be correct or wrong, have you ever wondered what is the basis of such claims? Well, ROI is what defines the success rate of an LMS. The more value it adds to your current system, the higher is its return on investment and hence the better value for money it becomes hence it is your duty to know the ROI. Unfortunately, people using the tool are often unfamiliar with the concert of calculating ROI which stops them from making the most out of

So how to calculate LMS return on investment? Is there a particular formula that helps you do it or you can only learn about the ROI after you have implemented the process? Well, this post will answer each and every query of yours related to the ROI calculation and will also help you understand what are the core benefits of using an LMS and what kind of an LMS is the best bargain for your money. For the next section, let us quickly understand what are the core features of an LMS that impact your business and how these features can impact the overall ROI.

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LMS Features That Impact Your ROI: How to Make the Smart Move?

An LMS has turned into a necessity for every type of enterprise. It basically is a tool that allows you to manage your learning resources while taking care of your training and development process. People usually have a perception that implementing an LMS may cost higher than following traditional management practices which is nothing less than a myth. An LMS brings a lot of features on board that make the implementation practical and worth every penny; however, you have to be smart while choosing what kind of features you need. You see, with the help of custom LMS development companies, you have the power to choose what is beneficial for you and what is not of high importance. According to that, you can find yourself a perfect fit and give your business the boost that it may need.

Understanding ROI is one of the most important aspects of operating a business. You have to keep an eye on all the resources and since LMS is a resource that you have deployed to make profits as well as enhance the experience of your employees and users, it is really important to know about the factors that impact your ROI. These factors are -

  1. User Engagement
  2. Impact on Revenue
  3. Impact on Learning
  4. Brand Reputation & Awareness
  5. Monetary Benefits

These factors are always affected by the ROI and are helpful in calculating the final return on investment. Now you may be wondering, these factors seem a bit typical to keep track of, how to calculate ROI? Well, there are certain steps that can help you get an understanding of what your returns are over a certain period of time. Check out the next section to understand exactly how to calculate LMS ROI.

Also Read — LMS Development From Idea to Implementation

5 Steps to Help You Calculate ROI of Your LMS

Now that you are familiar with what are the factors that your ROI affects, you must be curious to know how to calculate the ROI. Well, for preliminary tests, it is a formula that can help you make the decision. This means that while you are planning to get an LMS for your work, you can simply calculate an estimated ROI by dividing the estimated profit by the amount you are investing in LMS integration. The ROI is always denoted in percentage hence the answer of the division must be multiplied by 100. That is the estimated ROI you must calculate before you invest in an LMS.

Now once you have made the decision and implemented an LMS, it is time to calculate how much you actually got from that investment. There are 5 steps through which you can collect the data these include -

Compare Expenses With Previous Budgets

The very first aim of any new initiative in a business is to reduce the cost that they are bearing without the tool. Learning, training, and developments are one of the most expensive things that enterprises spend their resources on, and one of the biggest reasons that people implement an LMS is to reduce this cost. For instance, if you are a healthcare company you must compare your previous expenses with the amount that you are paying on maintenance of the healthcare LMS. Comparing these two will give you a good glance at the ROI of your LMS.

Refer to Your Employee Retention

Learning opportunities open new doors for your employees. A place where things become repetitive is something that employees tend to leave hence when you give your employees opportunities to learn and grow their skill sets, they tend to stay for a longer period of time. An LMS brings a lot of new things for your employees and hence the retention rate of your old employees increases. If you want to know the true impact of LMS or the ROI, make sure you counter this factor as it will help you calculate the ROI better.

Consider the Maintenance Cost

Whenever you want to calculate ROI, it is really important to factor in all the things that you will have to pay for when you get an LMS. There are things that you have to manage at the beginning for instance the current tech stack that you use might not be able to interact perfectly with your LMS so you will have to pay extra for LMS solutions or you will have to migrate from your end which means it will cost you time and resources which will always count in the ROI calculation. Always remember that buying an LMS is not
The only cost that you bear. There are so many factors that count in your overall cost.

Calculate Time Saved For Profit

While calculating ROI, you should also consider the intangible benefits. Offline learning requires you to have an infrastructure and spend time creating classrooms and training arenas for your employees and students. You have to make sure that all these factors are calculated when you are working on generating the ROI for your projects. All the time that you save when you implement an LMS in your facility. People who were spending hours on lectures and boot camps can now access their lessons through their laptops.

Account for the Benefits of Flexibility

The working days are getting shorter day by day. There is so much work to accomplish that the hours that people spend on the projects feel less. In such tight schedules, your employees find it troublesome to maintain their learning and projects at the same time. With the help of an LMS, they get the flexibility to manage their learnings and since it is online they are available whenever they see fit. The flexibility is something that surely accounts for the ROI as at the end of the day, it is all about employee experience and the learning of your employees.

With these steps, you will find a great deal of data that you can use to calculate ROI in terms of percentage using the formula shared above. According to LMS consulting services, return on investment is something that everyone is always looking for in the long run and it should always be in your vision to make the most out of every penny you spend.

Hope the method helps you find the perfect ROI for your LMS and gives you a peek into how LMS impacts your ROI positively or negatively that is up to you Good luck!

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Meet eLearning needs with Custom LMS Development. Keep employees, students, learners of all kinds updated on new learning materials. Success factors and useful integration, we’ve got you all covered with the latest articles, blogs & more on custom learning management systems.

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A3logics

A3logics

A3logics delivers value-added industry-specific business technology consulting, IT solutions and services to businesses across the globe. marketing@a3logics.in

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