Reduce the Budget and Improve the Offerings
We had seen the numbers reflecting the potential cost savings associated with e-learning versus learning in the classroom. The hard numbers were obvious. The savings on travel costs alone from satellite offices to Cedar Rapids would be significant enough to cover the cost of our initial investment in self-paced training software. Here is where you take action and begin calculating your costs from the bottom up. Applying all the research and assumptions you have made to each action, you begin to develop the overall cost of the strategy. It is helpful to have project-management skills in developing the resources, cost, time, and estimates to the plan. This could be another place where you may want to call in an outside resource.
We also knew there would be intangible cost benefits related to the improvement in performance and time to train. Saving money wasn't a primary goal of the plan, but it was a happy result.
We further added to the savings by categorically eliminating waste from the process. For example, our research showed that in the curriculum-development process, the first-time yield on courses in the beta phase was only 70 percent. Lost SMEs, incomplete content knowledge, and inefficient development procedures added lag and gaps to the development cycle, requiring developers to spend significant time on the back end updating or correcting content ”adding days and dollars to the process. By implementing the SME criteria checklist and contracts along with defined processes, we would improve the first-time yield and reduce the cost and the time to market.
Another way our team saved money was by managing our custom vendors by establishing the "standards for buying training" guide. Most vendors make their money on templates ”building a format for the look and feel of every page. To control costs, we limited the number of templates developers were allowed to make for each course we outsourced. For example, a vendor would be allowed to build thirty templates for the first custom course, fifteen more for the second, and fifteen more for the third. By the third course we had sixty templates to work with, and the cost goes down with each course. We estimated that the cost per hour of custom courses, using this template model, would be reduced from $38,000 per course hour to $23,000, which is atypical for a custom-designed e-learning course. Our ultimate goal is to get costs below $20,000 per course hour on high-end content, and we were actually able to reduce development costs to a fraction of that for some low-end custom development. The courses, called QuickLearns, use a truncated instructional-system-design approach and have an established process driven by predefined requirements. No course is greater than twenty minutes in length; the total time to design, develop, and deliver a module is not to exceed three weeks; and the total cost is not to exceed $2,500 per unit.
These are just a few examples of the cost savings we were able to realize within the existing process. In any company you should be able to eliminate 30 to 40 percent of the budget without much effort.
We ultimately reduced Rockwell Collins's training budget by 40 percent ”$23 million ”while increasing the amount of training offered by 400 percent over three years . We mapped those savings through 40 separate ROI formulas, which gave us detailed hard data to support our proposals. For example: If training time utilizing CBT is 50 to 70 percent less than traditional classroom time, that metric should be factored into the overall equation related to specific conversion costs.
While we were crafting the strategic plan, we decided to include dramatic savings to ensure that the project would be an undeniable success in the eyes of executive management, but in retrospect, we would have done it differently. Corporate memory is very short. Management was thrilled to take the money back when we offered it, but within months they forgot it was ever there. Later, when many business units were asked to cut back their budgets as the economy changed, we were on the list, even though we'd already "cut back" millions just a few short months before.
Our advice is to sell the plan for what it is: a profound change-management initiative that will cause your company to work better, faster, and smarter in a world in which knowledge is the only true commodity. But keep the savings to yourself. Redirect it into other efforts that will further benefit the company's learning priorities.