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© Philip Herring 2011 Page 1 E-Learning – what, how and why? _____ A Decision Makers Overview of E- Learning.

A decision makers overview of elearning

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The questions everyone wants to know the answer to are: who is the best provider and what does it cost?The answer is: they are both trick questions. Each is easy to answer if you do not care about the outcome other than the cost and being able to check the “training complete” box on a to-do list. However, the answers are not at all straight forward if you actually want to deliver the outcomes envisioned by the client (internal or external).My purpose here is to draw back the curtain and expose the wizard so that you are better equipped to:• Understand more of what is available and how it may relate to your organizational needs,• Ask the right questions and lead the procurement process rather than being sold to, • Better position yourself to define the project scope so that it both satisfies your needs and is within budget for money and nonmonetary resources,• Keep with best learning practices and are capable of returning the knowledge transfer results and true ROI your organization expects,• Identify the questions you need to ask, and• Develop some expectations as to how your questions should be answered in order to demonstrate that the solution provided will meet your financial and outcome requirements.

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Page 1: A decision makers overview of elearning

© Philip Herring 2011 Page 1

E-Learning – what, how and why?

_____

A Decision Makers Overview of E- Learning.

Page 2: A decision makers overview of elearning

© Philip Herring 2011 Page 2

Table of Contents

Table of Contents.......................................................................................................................................... 2

Forward: ........................................................................................................................................................ 3

The first questions:........................................................................................................................................ 4

Learning Styles vs. Training Methodology: ................................................................................................... 5

Learning Styles.......................................................................................................................................... 6

Training Methodology ................................................................................................................................ 6

Coaching................................................................................................................................................ 6

Guided Design ....................................................................................................................................... 7

Just-in-time training................................................................................................................................ 7

Accelerated learning .............................................................................................................................. 7

E-learning is: ................................................................................................................................................. 8

E-learning is not: ........................................................................................................................................... 8

The difference between e-learning and effective e-leaning: ..................................................................... 9

Translation vs. Interpretation ................................................................................................................. 9

Where E-learning is effective and where it is not,.......................................................................................10

A few truths about the state of e-learning................................................................................................10

Where Distance learning is not effective .................................................................................................10

Where e-learning is effective...................................................................................................................10

How to Choose a Provider ..........................................................................................................................11

What’s the difference?.............................................................................................................................11

Providers..................................................................................................................................................11

Commoditization of Training....................................................................................................................12

Major Red Flags ......................................................................................................................................13

Price vs. Cost ..........................................................................................................................................13

Use of Standards.....................................................................................................................................14

Capabilities ..............................................................................................................................................15

Operational Capabilities Checklist:..........................................................................................................15

Is e-learning really saving $ or is it just a transfer of costs? .......................................................................16

Expected Costs Based Upon Project Type.................................................................................................16

Interface...................................................................................................................................................18

Content ....................................................................................................................................................18

Compression Rates .................................................................................................................................19

Other major cost sensitive design elements............................................................................................19

Summary.....................................................................................................................................................19

References..................................................................................................................................................20

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© Philip Herring 2011 Page 3

Forward:

An insider’s view of the value of distance learning initiatives in a corporate environment.

As a leading consulting to small and Fortune rated training enterprises I am both a buyer of

training programs and a provider of training so I can speak from experience regarding sales

tactics, courseware development, the roll of technology and negotiation of third party contracts

for training development and delivery.

Our clients expect that we are able to identify and provide the leading edge skills and abilities

required by industry experts through effective knowledge transfer. If any of these elements are

not true then there is no reason for any organization to come to us for training advice.

This puts us in a very tight position. Develop and deliver on the promise of excellence,

efficiency, and provide a best in the world thought leading learning experience that no other

organization has yet developed or lose credibility in a world where credibility and capability is

what keeps us in business.

The best way I know to accomplish this is to educate our clients and potential clients in the

methods and effectiveness of training, how to choose training providers, and how to know what

questions to ask in purchasing training using the inside sales and procurement information that

only training providers have.

This may sound counter intuitive but it is my belief that a well informed client is better able to

discern:

Differences between training providers,

Identify value added capability service and delivery,

The true value being offered by all competitors responding to requirements.

So, if you know what I know and you are able to challenge our organization in every aspect of

your requirement, very clearly articulate the result you expect and understand what it takes to

get there we never have to sell anything. Our interaction with your organization, as a client,

becomes a consultative process whereby our industry leading capability and delivery are

evident and we can concentrate on fulfilling real needs rather than trying to convince a client

that what we do is the best solution.

Philip Herring

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The first questions:

The questions everyone wants to know the answer to are: who is the best provider and what

does it cost?

My answer is: they are both trick questions. Each is easy to answer if you do not care about the

outcome other than the cost and being able to check the “training complete” box on a to-do list.

However, the answers are not at all straight forward if you actually want to deliver the outcomes

envisioned by the client (internal or external).

First of all, it is not fair to expect that anyone not accustomed to:

Designing and delivering “Learning Style” based e-learning using specific “Training

Methodologies”,

Fully utilizing the capabilities of e-learning systems,

Metrics that look at current state, development state, and end result requiremtns, and

The way adults learn (adult learning theory)

will understand all the questions that need to be asked before considering an e-learning

solution. (See learning styles vs. training methodologies below)

This would be akin to asking someone from the training industry to manage a corporate

acquisition. Easy, right? – Just pick a target company, ask “how much does it cost”, and write

the check…

Just as your local CPA is probably not equipped to handle the ins and outs of a merger or

acquisition; in many cases the local Training Manager may not be equipped to undertake the

analysis necessary to determine the scope of the project based upon a standard training needs

analysis.

Most needs analyses are based upon technical information requirements without considering

how people learn, apply and retain information.

The problem here is that the uninitiated company and its employees are in effect thrown to the

sales wolves of e-learning providers where you ask for X and are delivered X. So, your

provider has delivered x but it is not your “X” and you will never know it until you have spent the

time money and resources to produce a training program that does not deliver the goods when

your employees under perform against your forecast results.

Although this may not be a completely fair characterization of sales teams, it is the job of a sales

organization to assess your requirement and to provide their best solution to your needs. As

hard as a sales person may try, their best solution is not necessarily your best solution.

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My purpose here is to draw back the curtain and expose the wizard so that you are better

equipped to:

Understand more of what is available and how it may relate to your organizational

needs,

Ask the right questions and lead the procurement process rather than being sold to,

Better position yourself to define the project scope so that it both satisfies your needs

and is within budget for money and nonmonetary resources,

Keep with best learning practices and are capable of returning the knowledge transfer

results and true ROI your organization expects,

Identify the questions you need to ask, and

Develop some expectations as to how your questions should be answered in order to

demonstrate that the solution provided will meet your financial and outcome

requirements.

To take the first step in drawing back the curtain the first things we need to address are the

preconception of:

Learning styles vs. Training Methodology

What e-learning is,

What e-learning it is not,

The difference between e-learning and effective e-leaning.

After these topics are covered we will be better prepared to discuss the costing of your e-

learning solution.

Learning Styles vs. Training Methodology:

Not everyone learns in the same way (Learning Style) and there is more than one way to

present training materials (Training Method). However, each methodology supports specific

learning styles.

If a learning experience (Training Method) is not engaging, only those that are highly motivated

or, by chance, learn best in the style supported by the method will be successful (will

successfully complete the course and gain the knowledge skills and abilities intended). In fact,

all instructors have looked out on an audience of students to see heads nodding and eyes

glazing over. If a live presenter teaching students in an open environment where students are

aware of and watching each other notices such behavior what happens when that live

interaction is removed? The crux of the e-learning issue lies in dependence upon legacy

systems (technology) for delivery of and in producing the lowest cost per unit solution leading to

cutting corners in development and a failure to deliver training based upon appropriate learning

styles.

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The first mistake organizations make is accepting the widely held belief that the use of

technology is itself a learning strategy or training methodology. In fact, according to Forester

Research (www.forrester.com), 70% of those who start an e-learning course never complete it.

This is bolstered by the Corporate Exchange University’s (http://corpu.com) research

demonstrating that 70 % of online learners never complete their courses.

This is in large part due to the misplaced use of technology as a training method.

Technology is the tool that is used to deliver the result of the learning strategy and the training

methodology itself. Learning strategy should be driven by corporate objectives from which

desired competencies can be extracted, constraints (technological, time, budget) can be

established, student experience and current capability level may be assessed, which will then

allow you to outline the types of learning experiences that may be used to provide the

interesting and engaging learning experience necessary to achieve required corporate

outcomes.

Learning Styles include student activities that enable a student to absorb new knowledge or

information.

Training Methodology includes those elements that support specific learning styles and which

align directly with how your audience learns. Methods include both systems and specific

training actions.

The best training methods make use of a combination of methods which are supportive of as

many of your trainees learning styles as possible (Kevin Moore & Greg Harmeyer April 23, 2002

Learning Solutions Magazine) such as:

Coaching,

Guided Design,

Just in Time Training, and

Accelerated learning.

None of these labels are intuitive when applied to e-learning as they were all developed before

the advent of contemporary technology and systems. In any case, each technique was

developed to address those cognitive areas that bolster learning for adults, are equally relevant

and can be translated to apply to e-learning today.

For example:

Coaching is the act of engaging a student in an actual problem solving discussion during

which something new is learned. Coaching allows a learner to apply earlier lessons to real

scenarios. This adult learning method includes procedures for joint planning and goal

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setting, coaching, information sharing and modeling, learner information gathering and

practicing, analysis of and reflection on the learner’s experiences, and coach feedback

(Leat et al., 2006). Coaching also recognizes that effective learning requires experience.

Guided Design is characterized by direct instruction by requiring students to participate in

pre-specified problems. It requires students to apply new knowledge skills and abilities to

real world problems.

Guided design may use self-paced, e-learning, or ILT teaching delivery methods to

cover core subject matter which must then be applied to actual working problems. The

guided design model also provides for students to work in group settings in order to

solve problems in a collaborative environment and is designed to promote critical

thinking and self-directed learning (Hancock, Coscarelli, & White, 1983).

Just-in-time training is characterized by the immediate effect of delivering new skills

usage opportunities, tailored to an individual’s roll and in a real world context, within

a short time from training delivery. As an adult learning method Just in time training

provides the information required to improve performance or complete a task, on-the-job

use of the information or guidance, and the availability of input from a “coach”, as above,

on an as-needed basis

Accelerated learning, first called suggestopedia (Lozanov, 1978) techniques are the

most widely used and it has found its way into global management systems such as ISO

standards training. RAB-QSA, one of the world’s largest Quality Management education

certification bodies, now requires that training providers use accelerated learning methods

as a part of all accredited training. The use of these methods is auditable as part of the

annual review process for RAB-QSA certified training providers. In fact, the failure to

demonstrate accelerated learning techniques will result in a major non-conformity which,

left uncorrected, results in the loss of accreditation for the learning program.

The primary aspects of this method are the use of “tranquil” learning environments and

implementation of active learner engagement in the learning process (Meier, 2000).

Active learning includes role play, practice exercises, group activities, presentations and

journal writing which increase retention and expedite the student learning process.

Donovan et al. (1999) defined how people acquire, learn, and master new material and

information and used these definitions as benchmarks for developing operationally defined

characteristics to assess the effectiveness of training.

Further, the Donovan research was able to integrate key elements involved in

benchmarking, delivery, and assessment to further demonstrate that adults:

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Are more attentive and more engaged with learning programs if they know why they are

learning something relevant to them and of importance,

Are able to see the relevance to their job and, in turn, corporate goals and when the

training is related to existing learner knowledge,

Learn faster though targeted subject related activities,

Retain information longer though problem-solving activities and consulting with others,

Need to make immediate use of the training to achieve mastery of the material,

Develop a deeper understanding and are more effective in the continued application of

the training in real world environments when they are supported by on going monitoring

and self assessment.

These six characteristics also align very closely to those described by Graham and

Wedman (1989) as the critical aspects of effective adult learning programs and, due to the

misconceptions surrounding e-learning, are exceptionally important to creating successful

outcomes thus confirming Donovan.

E-learning is:

Technically, e-learning is learning that takes place through “electronic” means via the internet,

using computers or over a network. However, most people think of e-learning as simply

eliminating the instructor and putting the course content on line or on a disk for someone to read

and become magically enabled to tackle real life situations. The only training that is more

expensive than this misguided notion and resulting underachieving / failed project is to conduct

no training at all.

Abbreviations like CBT (Computer-Based Training), IBT (Internet-Based Training) or WBT

(Web-Based Training) have been used as synonyms to e-learning while distance learning

[idiom] is a method of studying which training is broadcast or classes are conducted by

correspondence or over the Internet, without the student's needing to attend a an instructor led

class in person.

E-learning is not:

A panacea for training that magically reduces the costs to a fraction of your Instructor Led

Training (ILT) costs while providing the exact same or better learning results.

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The difference between e-learning and effective e-leaning:

The most important point to make is that well produced student centric Instructor Led Training

(ILT) can only be directly translated into e-learning and maintain its efficacy in very limited and

specific cases. In all other instances e-learning must evolve beyond Power Point slides to

something that promotes learning and adoption of new knowledge, skills, and abilities. In effect

the subject matter needs to be interpreted.

Translation vs. Interpretation

It is a very small semantic difference but makes for a huge difference in the results you achieve.

A translation is a direct literal move from one format to another. It is like going to an online

translation service and typing in a phrase and receiving a result. Try reversing that process

now. Use the translation you received and translate back to English. What you received was a

direct and literal translation of the words on the page with little focus on meaning and language

nuance. The same is exactly true for training when moving from ILT content to e-learning.

Many organizations either assume the translation method is the “standard” way to create e-

learning or do not know there are alternatives whereas training providers use this method for

quick low cost development.

However, e-Learning, exponentially more than instructor led training, must keep the people it's

designed for in mind. How do we learn? How do we acquire and retain skills and information

and how can we present the training in such a way as to assure that it is effective and the

organization receives the results required?

Only when we address individual learning styles can the "e" in e-learning factor in. Then the

technical side — the electronic delivery — can be adapted to the learner.

In some cases translation from ILT methodology is effective because it matches the type of

learning to be accomplished and the style of learning most effective for learning. These cases

are generally informational instruction rather than knowledge transfer. Informational training

projects can include any situation where a static process is being related to students. Examples

include some regulatory information, policy, and some procedural information such as:

Anti harassment training,

Emergency evacuation procedure,

Regulatory reporting requirements,

Physical plant controls.

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Where E-learning is effective and where it is not,

A few truths about the state of e-learningFrank L. Greenagel, Ph.D.

E-learning providers have not kept pace with the development of increasingly rich IP-

based delivery platforms because the e-learning in many ways is mis-understood by

both providers and purchasers of training.

Developers don’t seem to be aware of how people learn which is too often demonstrated

by the use of flawed leaning models and failure to include features that take into

consideration differing learning styles.

Corporations are often more interested in throughput and low unit cost, so solid

measures of effectiveness are frequently underdeveloped or systematically applied.

The available platform drives the instructional strategy, which may not be appropriate to

the learning style of trainees or to the learning objectives.

The cost of development is high, so misguided (cheap) programs drive out the good

ones in the absence of any commitment to measured effectiveness.

Effective e-learning experiences for complex competencies are difficult to scale if

standards are misunderstood or misapplied.

Where Distance learning is not effective

E-learning is generally effective in every environment and situation where any other training is

effective although there are drawbacks to its use in certain situations.

Speed to market is a weak spot as effective e-learning requires, on average, 4 -5 times the

development time and expense as the same subject developed for an instructor led (ILT)

environment.

The most difficult areas to effectively use e-learning are knowledge and skill development for

experiential functions such as wiring fiber optic networks. In fiber optics (FIOS) cabling, the

experience of actually feeling how cables are stripped and clipped into connectors and then

testing the newly made connection cannot be taught through demonstration. This must be

taught through hands on experience.

However, e-learning may be used to supplement hands on learning and is extremely effective

as a post class on the job memory aid or technical reference.

Where e-learning is effective

E- Learning can be effective almost anywhere as long as the correct methods are utilized and

the methods support appropriate learning styles. It is deservedly famous for its ability to:

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Reduce costs which follow a better than linear decrease as student population grows,

Increase learning effectiveness and sustainability,

Support disbursed employee networks,

Train large numbers of people in a short time, and

When used in combination with a well executed Learning Management system provide

unparalleled:

o Assessment of program effectiveness,

o ROI tracking form the individual to the enterprise level,

o Tracking of training project delivery milestones.

E-learning is one of the most effective methods in supporting experiential ILT or as a

continuation of ILT training in support of knowledge retention and speed with which an individual

is able to master new skills.

How to Choose a Provider

I am not going to go into how to run your procurement process. You already know how to

assess providers on the typical variables. Instead, I will focus on variables that rarely make it

into proposal requests.

What’s the difference?

A great question that I fail to ask myself often enough. To begin with it is critical that we are

operating on an apples to apples basis; comparing course to course, outcome to outcome,

method to method, learning style to learning style, and all the variables under each. In every

case we need to peel back the project like layers of an onion.

Providers

Training providers come in all sizes shapes and ability levels and generally seem to sell the

same products and services as every other provider. So how do you choose the right provider

for your organization?

A few important considerations are:

Reputation with your firm and the market in general,

Brand value (lack of risk)

Support,

Scalability,

Capability and experience,

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Understanding of learning styles, e-learning methodology, and the ability to integrate the

two,

Etc.

Commoditization of Training

When I purchase training services it seem to me that every sales rep that comes through the

door tends to say the same thing even though they use different words and ways of presenting

their solution; “we have the best materials, we have the best trainers, we have the best solution,

etc.” so how do you choose? It seems to me that the way training solutions are presented turns

every solution into a commodity.

As a commodity how do we decide who to choose other than by the price? To begin with cost is

probably a better measure. Dealing with the commodity effect is the first problem faced in

determining what the actual cost of a program is. My purpose is not provide a tutorial in

accounting for line items on a financial spreadsheet but rather to identify those issues that affect

not just how much you pay for a program but value and outcomes as well.

The commoditization of training is inexorably linked to quality, training methods, learning styles,

the value of training that delivers on its promise made toward objectives and results and the

opportunities not lost due to lack of training or poor training. When a provider starts reducing

cost they have to start cutting elements out of the training. As a buyer you do not care what

their margins are but it is critical to remember that your provider can not stay in business if they

give their product away. There is only so much elasticity in pricing. Once any significant

changes are made to any program there must be a corresponding change in cost and therefore

price.

With the rare exception of some Mom and Pop operations under very specific circumstances the

adage is almost always true. “You get what you pay for”

Therefore, if at the end of the day you feel like you need to play a game of “eenie meenie miney

cheap” run for the hills or be prepared to educate your provider. Stay away from commodity

salesmen. They generally do not know what they are talking about.

An extensive list of options that are well defined and available immediately is an excellent

indicator of the maturity and stability of the organization and its solutions. If everything is

available now, they have almost certainly had multiple prior deliveries meaning they have

already integrated a best practices lessons learned model which greatly reduces your risk.

There is one major variable that comes into play based upon the size and reputation of your

provider. A small organization, generally, does not have the ability to weather the costs of fixing

a problem caused by slim margins whereas larger organizations have the financial stability to

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weather the costs involved with fixing delivery problems in order to save you as a future client or

to salvage corporate reputation.

Major Red Flags

1) The most obvious red warning flag is when a vendors or training executives seek to

downplay successful completion rates as a significant measure of success. Completion is

also linked to outcomes although it is up to you to define what successful completion means.

2) Whenever an organization comes up with an easy off the hand answer to the question:

“How much does it cost for e-learning?”

a. These types of questions and answers are driven by metrics spewed at conferences and

sound like “it takes us X hours to develop one hour of e-learning”.

b. The costing problem here is that the provider is using arbitrary metrics without peeling

back the layers of your training needs and outcome requirements.

3) Lack of experience delivering your solution or implementing solutions that consider learning

styles.

4) Lack of clear SCORM expertise and or lack of standards in the development process.

a. Indicates potential scaling problems and significant risk that your delivery will be platform

specific and static when it comes to updates and upgrades.

b. Represents a clear risk of high future costs.

Price vs. Cost

Price is simply the number on the check whereas cost includes not only the number on the

check but also the potential lost opportunity cost and negative ROI from failing to meet the

training objectives and the resulting impact on the organization.

A provider should be consultative and provide answers to your requirements that fit both the

subject matter requirements and also the delivery methodology relevant to your audience and

their learning styles.

The typical buyer of training goes into a procurement situation with the idea that there is lots of

margin built into a proposed solution that can be negotiated away or where additional services

can be easily added for the same or lower price. In fact there is usually somewhere in the

neighborhood of 10% – 15% in negotiable margin open to discussion before the product you are

going to receive is affected. Beyond this, if you want a lower price or more service, where is the

provider going to take it from? They are in business to make money and are not going to give

the store away or lose money on a deal and make it up on volume. The only way to reduce

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costs is either though scale, where you agree to buy more at a lower price, or for the provider to

lower quality, quantity, features, service, and or support. For smaller operations costs can be

reduced by reducing the take home of the owners / developers. In either case the results are

fraught with added risks. Added risk is an enormous factor in assessing your potential costs.

Remember, “There ain’t no such thing as a free lunch!”

Risk has the potential to negatively impact:

Delivery time,

Production,

Quality,

Methodology and learning styles used,

Capacity to deliver expected outcomes,

Ability to assess outcomes, and eventually

Bottom line losses for fixing a broken program.

This poses a business question that only you can answer; how much risk can you stand?

Once you have the risk threshold question answered, objectives and outcomes defined, and

learning styles identified you are ready to look at the providers you would like to bid on your

project and to the variables that have a direct effect on cost.

Use of Standards

The literature is replete with examples of highly regarded training industry gurus who have

missed the boat on what it means to incorporate standards into training development. Most of

the articles I have seen deride the use of standards because they only look at the use of

templates that restrict scaling or at the term under a microscope and equate the entire

standards world with SCORM compliance.

This is akin to using a single day’s data on the stock market to develop your life long investment

strategy.

In actuality, the use of the term standards, in these cases, is both misleading and shows a clear

lack of understanding of the term and the industry. The use of standards actually is enabling of:

Scalability,

Requires that client requirements are considered on a consultative basis,

Integration of Six Sigma and PMI based Project Management methodology in your

project,

Improved efficiency and effectiveness in the development process,

Greater probability that your project will be successful,

Risk reduction, and

MANY other benefits.

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A provider that is able to articulate this level of understanding gets a gold star for their corporate

culture being an enabler of your project and dedication to your outcomes (See ISO 9001: 2008

– The definitive, global, authoritative, base source on the use of standards)

Capabilities

Your provider’s capabilities should match with the requirements identified when selecting the

methodology relevant to your audiences learning styles.

The following capabilities are deliverable by most any serious provider because they use a

standards based SCORM compliant production process. If these capabilities are not options

the lack of this capability should raise a red flag. Find out why the element is not available. If

the answer that comes back in line with: “it will be available in our next version” or “this will be

available but it is an extra charge” or anything that makes you think this will be the first time they

have included the capability in a project, you should be extremely weary as they may be

inexperienced. This type of provider may have low costs and seem like a great partner but what

is the cost of a botched project, missed deadlines, or the inability to provide what was

promised?

Operational Capabilities Checklist:

SCORM compliance becomes a major issue as it is supportive of many of the following

capabilities. So, even if your provider does not specifically support one of the following

capabilities so long as they are capable of designing a SCROM compliant program you can add

these features later without affecting the ability to deliver training to your students.

Registration capabilities: including curriculum, courses, instructional responsibilities;

straightforward registration process

Course management: management of curriculum and courses

Competency and records management: tracking, reporting, etc.

Administration: proctor assignment and tracking, instructor assignment to courses,

certifications, and regulatory requirements, reporting

Course creation: features, templates, sample of interactivity, output formats

Customizations: detailed overview of any customizations required to the platform to meet

our specific requirements.

Product support: attention to detail, quality, track record with other clients

Modular design

User interface: intuitive navigation and interface

Test and assessment capabilities: online test creation and management

Interface w/ external system: e.g., HR, content management, assessment and enterprise

resource planning systems.

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Is e-learning really saving $ or is it just a transfer of costs?

If an e-learning program follows basic design principles using:

1) Needs and requirements assessment,

2) Mapping of requirements to corporate goals,

3) Definition of deliverables that follow your requirements to goals map,

4) Appropriate Learning Styles,

5) Adequate Training Methodologies,

6) SCORM, and

7) Sufficient measures and assessments during and after development and delivery.

your project is very likely to provide major cost reductions for large or geographically

disbursed projects over that of ILT training programs.

However, reduce costs, cut corners, and fail to follow the rules above and your e-learning

project has an increasingly higher likelihood of:

1) Failure or project restart,

2) Missed program objectives,

3) Underachieved training outcomes, and

4) Increased business costs or lack of cost reduction.

In this case it is not unlikely that your cheap e-learning program will cost exponentially more

than an ILT program with post course SME support and mentoring. The program can be shown

to have a much lower throughput cost per unit but this type of cost per unit calculation is just

another case of “How to Lie with Statistics”. [Darrell Huff]

Expected Costs Based Upon Project Type

As noted at the beginning of this paper this can easily become a trick question: “how much will

my e-learning cost based upon the project we decide to go with”? My apologies for not simply

providing a nice Excel spreadsheet and check list along with a list of those organizations that

have the best track record in producing “the best e-learning”. However, based upon what you

have already read I hope that this expectation has been somewhat mitigated.

Further, I did not intend to discuss how to measure outcomes which are critically linked to cost.

This is a topic that is deserving of its own paper or book and is exhaustively discussed in six

sigma literature and methodology and is widely addressed in professional training forums. For

major training projects, it is my strong recommendation that both six sigma and Project

Management Institute (PMI) based project management methodologies be incorporated into

your planning and delivery. Where training programs are long term and are expected to grow

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organically, I also suggest that a quality management system be utilized (e.g. ISO 9001 or other

ISO industry specific standard).

These systems are easily integrated, incorporate seamlessly into training operations, and cover

your organization form the local to the enterprise level. Better yet; using these systems provide

ready to use templates and how to guides for critical training business functions such as:

Management and client involvement,

Communication processes,

Development process inputs and out comes,

Versioning,

Measurements of outcomes,

ROI justification, etc.

Use of these template and management systems results in enormous cost savings and added

efficiency as you are not creating anything from ground up, have the confidence that the

templates you are using have been globally vetted and are guaranteed to be effective, so long

as they are used correctly,

Unfortunately, the push to reduce costs often translates into most effort being directed toward

measuring the cost of a program in terms of number of “completions” and low unit costs,

especially where training staff can claim substantial cost savings. Just Google “e-learning cost

savings” and you will find hundreds of articles quoting training managers describing how many

hundreds of thousands of dollars their organizations have saved through the use of e-learning.

Where metrics are included you will find that these savings generally come from reduced travel,

lower staff costs and fewer hours spent in training and have no association with the actual

outcomes, success or lack of success of the training program itself.

If you are counting costs simply based upon the size of the check you write to pay for the

development and delivery of an e-learning program you have already lost. The critical elements

to be considered in determining and preparing for cost need to include:

Rigorous measurement of outcomes (benefits, efficiencies, performance increases,

actual revenue produced),

Refusal to accept anecdotal accounts of success and sunk cost in determining costs

Sunk costs – actual planning costs and price for development and delivery,

Infrastructure (new systems, IT, bandwidth, upgrades, platform requirements, delivery,

etc,

Objective based cost reduction or revenue generation,

All elements contained within your project scope..

The important thing to take away from all of this is that so long as your planning is accurate and

if you understand the variables involved in determining costs, you can take the magic right out

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of the process. You just have to be rigorous and uncompromising in pealing back all the layers

of the “project onion”.

An accurate cost model can be developed through involving your project members. Forecast the

time, resources, and sunk costs by using examples of similar courses, lessons and/or topics.

Ask project team members to forecast their own hours and to provide a basis for the forecast.

Use their forecasts as project planning elements so that they are motivated to control their own

costs

Each of the variables listed below (interface, content and compression rates) should be

considered when determining costs. In fact, to accurately determine the cost of an e-Learning

program, it is important that you also understand the implications of each of these variables.

And, it is highly likely that there are several additional variables that must be considered by your

department or company. Create a check list of the big ones that you can share with your

providers. This will help get you closer to creating an accurate costing methodology.

If you need animation throughout the program, in a live interactive game play environment, you

need to be aware that interactive business game designers are vastly more expensive than

HTML programmers. And unless the programmers are also the owners do not expect the high

end simulation wizards to work for HTML coder pay.

Remember what we discussed in “Commoditization” and “Price vs. Cost”: ‘You get what you pay

for” and “there ain’t no such thing as a free lunch”.

Interface

This is straight forward. The more customized the interface the more costly. To mitigate costs

use templates where available and when they meet your needs. Better to pay a bit more for

customized elements than to have to come back aftermarket to have them installed. Just think

of buying options on a new car, the same principle holds true in developing e-learning.

Aftermarket add-ons are more expensive and usually of lower quality than those from the

manufacturer.

Content

How much of the program is based upon pre-existing content, what is the condition of the pre-

existing materials and how much must be custom developed by your SME? The farther you

move toward custom development the higher the cost and slower the speed of development.

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Compression Rates

Another major flaw in many cost computations is due to misapplied or overzealous application

of compression rates. Compression rates are linked to the student’s level of familiarity with the

material. You can forecast this but until the beta is taught do not bank on this number as it is

very much keyed to individual prior existing knowledge for which most organizations have no

data. Also, self assessments can be flawed due to individual’s tendencies to inflate their own

abilities when polled. The most accurate way to estimate compression rates is to test similar e-

learning material your provider may have in order to set a baseline expectation tied to actual

performance data.

Other major cost sensitive design elements

Interactivity requirements,,

Assessment requirements (pre course, intra topic, and post course),

Playback capability,

Systems integration (Web delivery and or LMS delivery),

Quality assurance, beta and go live testing,

Cost of project failure or required restart,

ROI based upon lower operational costs or revenue produced based upon your e-

learning meeting its objectives.

Summary

So, back to the original question; who is the best e-learning provider and how much will my e-

learning program cost?

I promised an easy answer so here it is:

It will cost exactly as much as your budget will allow and will be based upon the training

methods critical to supporting the learning styles of your audience,

Creating an Excel spreadsheet that tracks multidimensional project costs is not difficult.

It is very easy to graph your e-learning ROI vs. ILT programs by using the following

formula:

Total Cost = (Fixed Cost + Variable Cost) x Participant license cost where variable

costs can be closely estimated by working with your provider and based upon the

requirements you define.

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AND

The provider you choose will be the best suited for the job if you use them as a

consultant, know your environment and requirements and do not allow them to sell you a

commodity.

Just remember to stick to your PMI based Project Management methodology, Six Sigma based

analytics and quality control. And remember to peel back one layer of your project at a time

without skipping anything just because there are a lot of elements to keep track of.

After all, that is what we have technology for in the first place.

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