When investing in learning technology, look at value, not just ROI

By Dan Kossman / June 2004

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In French, le roi means "king." And in today's business world, ROI—an acronym for return on investment—is king as well. Companies must now make sure that IT investments have clear value, whether in increased revenues or decreased costs.

In recent years a growing number of organizations have shifted from a single dogged focus on ROI to a more complete analysis called ROV, or return on value. These companies have been able to paint a more accurate picture of the overall impact of investments on their businesses. ROV broadens the analysis of ROI to include financial costs and hard returns as well as intangible benefits like having a scalable business, or increasing employee competence and customer satisfaction.

ROV is realized through improved operational efficiencies and effectiveness, and enhanced customer, partner, and employee value. A variety of improvements come together to create more value for organizations, even though not all of the returns are easily quantified. For example, there is tremendous value in keeping customers happy through good experiences with knowledgeable customer-support representatives, though it is difficult to measure in dollars.

ROV can be applied in the learning and training fields as well. When companies purchase learning technology, return on value should be the key factor in making purchase decisions. Direct cost and resource savings alone may or may not justify the purchase of learning technology. In any case, one must also consider the impact that learning technology can have on the performance of learners in order to evaluate the purchase.

The emergence of the "knowledge worker" means that when workers with specialized skills depart an organization, the cost of replacing them goes up. Good learning technology is a corporate asset, since it makes it possible to capture an employee's unique know-how before he or she departs, and enables that information to be accessed by and shared with others throughout an organization. There is tremendous value in keeping that knowledge within a company.

As learning technology ROI analysis moves higher up in the organization, it gets closer and closer to ROV analysis, as senior executives consider initiatives more strategically and less tactically. Training managers care about metrics like individual performance, while executive management measures ROI through top-line growth, time-to-market abilities, and shareholder value.

The addition of ROV into the business mix does not mean that ROI should be abandoned. It merely means that companies should bring an awareness of intangible costs and benefits into their ROI-centric business cultures. The result will be the best possible analysis of an investment's potential for delivering a return—a return on value.

ROI may be king today, but ROV will soon assume the throne.

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