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Comparing Costs: eLearning vs Traditional

 by: Michele Webb

It is important for managers and organizations to consider a number of different factors when determing the best training delivery approach for their staff or organization. Factors include: efficiency, timeliness, consistency and appropriateness of the delivery method. The key factor for most organizations, however, is program cost. Program cost may be comprised of a number of related sub-factors, too, which may include: development costs, instructor time, materials, travel, and opportunity costs for the students and participants. All these factors can have a wide variance, even in similar programs, due to the delivery method used.

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Managers may want to develop their own mathematical model to better understand the relationship between costs and delivery of their training programs. Many managers have found a common key element when they have analyzed the costs of their learning programs. Their key finding: e-learning is less expensive to deliver almost regardless of the participant population. For example: in populations where the participants number 100 or more, e-learning had clear cost advantages and as the population number increases, so does the cost advantage. Cost advantages were still measureable in groups of 100 or less and even with classes as short as one hour in length. In a corporate study conducted by Catepillar, they determined that e-learning was 40% less expensive than the tradiational classroom models.

When preparing to conduct a cost analysis study, managers should be prepared to understand all the different factors involved with the development and delivery of training programs and then develop a customized list of factors that are applicable to the organization’s training needs and environment. For example, the costs associated with a physical classroom can widely vary depending on the geographic and physical plant characteristics of the company. For some organizations, it may not be relevant to conduct any sort of market analysis if their niche market is highly specialized or small. On the other hand, factors such as timeliness, travel costs or development costs may be very relevant for the organization to consider say, for example, if they are outsourcing their training programs.

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After the manager has created their unique “model” or list of factors or variables for analysis, they are ready to begin the comparison process. Gather data from comoparable organizations or training delivery programs, preferably from those using like and differening models. This will help in benchmarking the organization’s costs to that of comparable companies. If the organization or department has specific regulatory or quality assurance standards, such as Cancer Registry departments as part of a healthcare organization, the costs associated with training (or not providing training) for compliance may also need to included in the analysis process.

e-Learning may not be the best delivery method for all training. For example, programs that require role-playing, individual or group interaction or observation of the participants are not conducive to online learning. On the other hand, the total cost of delivering instructor-led classes to many students must be taken into consideration whenever the organization begins planning a large training program. Cost analysis may reveal that a combination of both e-learning and tradiational classroom can deliver the optimal training delivery needs of the organization. Once the manager has completed the cost comparison process results should be documented carefully and used for future comparative studies or even for training program justification and strategic planning purposes.

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Copyright 2005, M. A. Webb. All Rights Reserved

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You have permission to publish this article electronically, in print, in your e-book or on your website, free of charge, as long as the author’s information and web link are included at the bottom of the article and the article is not changed, modified or altered in any way. The web link should be active when the article is reprinted on a web site or in an email. The author would appreciate an email indicating you wish to post this article to a website, and the link to where it is posted.

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