The total cost of ownership for enterprise e-learning

“We want to build our own e-learning. It should be customized for our business.”

This is a common approach. BUT! E-learning is new in India. Most Learning and Development (L&D) teams do not understand the enormous cost, effort and time required, to make Enterprise E-learning work.

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

So, I’m 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 Learning Management System (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 LMSs 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.

Must Have Functionalities of learning management system

Next: the E-learning

We will cover ‘how to ensure a good e-learning course’, in a separate post – it needs that detail. Let’s understand here, whether to build or buy – and the implications of both choices.

Let’s look at the “We will build” option. You start by spend cost and time, to evaluate and finalize a vendor.

Cost of e-learning development

Now, building GOOD e-learning, takes time and is expensive. Assume INR 1-1.5 lakh per E-Learning Hour (ELH), and an output of 2-4 ELHs per month (your review speed, is the bottleneck).

So, if you want to launch with, say, 20-25 hours (a bare minimum) of ELHs, it can take a year. If you’ve invested in an expensive LMS, and it is not being utilized, you’re stuck.

Important but often missed point #1:

E-learning development, will take a lot of YOUR time, as well. It needs a dedicated senior resource, who understands what is needed. So, factor in that cost and time. Most people just measure the vendor cost. But from an organisation’s POV, the cost of your time, is a significant cost, too.

Important but often missed point #2:

E-learning needs updation. When it comes to any functional course, a change in even ONE screen, can mean that the topic becomes obsolete – you’re imparting wrong learning.

So, factor in ~ 25-30% of the original development cost (including your time), as an annual updation cost. Else, be prepared to dump that expensive e-learning, after 3-4 years.

Updation can cost INR 40,000 per E-learning Hour. The alternative, is to trash the courses.

Important but often missed point #3:

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

The functional skills Jet Airways pilots or cabin crew need are the same, as those from Indigo. HDFC Bank, offers fundamentally the same products – deposits, loans, fee based products – 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.

Critical and 99.9% missed point #4:

Support staff cost. You’ll have factored in a team, to manage the LMS. That’s not what we’re talking about: you need a team, to support the learning. What kind of support?

1. Setting and ensuring a learning plan: Basis the course and the learner, an optimal learning schedule is essential. E-learning is plagued by     low completion rates. You need both processes and a team, to ensure that learners stick to learning schedules.

2. When you learn, you have queries. If you don’t have a way to resolve them, you lose interest, get lost 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 Subject Matter Experts (SMEs), for sessions or answers, when [a] is insufficient. This needs a quick TAT, to avoid drop-offs.

This can cost about INR 900 per learner.

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

Points to remember before taking up enterprise e-learning

Here is a neat little TCO Calculator. Go ahead and download it, to work out the Enterprise E-learning costs, for your organisation.


Download the FREE TCO Calculator


Enterprise E-Learning: What is the Total Cost of Ownership?

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