The Return On Investment (ROI) of training and development has long been a topic of discussion, with many organizations struggling to quantify its value. Completion rates and satisfaction scores are easy to collect, but they don’t necessarily translate to business outcomes. Revenue impact, cost savings, and productivity gains are more meaningful, but they’re harder to isolate, especially when a learning platform touches many parts of an organization.
One recent study by IDC set out to quantify the ROI of the CYPHER Learning platform, conducting in-depth interviews with nine organizations using the platform. The study built a three-year total cost of ownership model for each organization and paired it with a before-and-after assessment of specific, quantifiable benefits.
The study calculated net present value by discounting future benefits against what that same investment could have earned elsewhere, using a 12% discount rate to account for opportunity cost. The results showed that organizations in the study achieved an average discounted three-year benefit of $1.72 million against $232,500 in discounted investment costs, translating to a 640% three-year ROI and a payback period of just five months.
These organizations varied considerably in size and industry, which adds confidence to the averages. The benefits weren’t concentrated in one narrow use case but showed up consistently across different types of organizations. Roughly 61% of the annual benefit came from higher revenue, driven by organizations’ ability to better monetize training content and expand their reach through scalable delivery.
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Revenue gains depend on a different mechanism. Organizations that deliver training as, or alongside, a monetized product benefited from being able to convert previously live or in-person sessions into scalable, on-demand digital offerings. This kind of conversion tends to compound over time, which is part of why the revenue gains in the study averaged 6.4% rather than a smaller figure.
For organizations evaluating a new learning platform investment, the lesson from this kind of study is that ROI claims are verifiable, and buyers should expect vendors to substantiate them with methodology that holds up to scrutiny. Asking a vendor how their ROI figures were calculated, and whether an independent third party validated the methodology, is a reasonable part of the evaluation process.
As training and development continue to evolve, there will likely be more emphasis on measurable, data-driven approaches to evaluating the effectiveness of learning platforms, including understanding the learning gap. With the right methodology and a willingness to scrutinize ROI claims, organizations can make more informed decisions about their investments in training technology, which could potentially lead to better outcomes and more efficient use of resources.
Organizations can make more informed decisions.
