DIGITAL LEARNING BUSINESS CASE TOOL

Purpose:

The intent of this tool is to help build robust business cases to quantify and project the impact that a
digital learning program will have on the organization and its stakeholders.

Contents:

a)A list of the common value drivers that are behind digital learning business cases: ORANGE TAB

b)Detailed information around each step in the business case creation process PURPLE TAB

c) Sample Excel spreadsheet templates to fill out at each step of the process: GREEN TABS

- You can use the Excel spreadsheet templates on their own if you are familiar with the
process to follow already. Otherwise, it is recommended that you read the information
around each process step information beforehand to gain a deeper understanding.

- The Excel spreadsheet templates are meant as a starting point. Given that each
organization and digital learning program is unique, the templates will most likely require
some degree of customization to be relevant in any given case.

- As a general rule, it is best to avoid hard-coded data or references to external Excel

spreadsheets throughout the Excel business case model in order to facilitate others
understanding, using, or editing the model.
 Classification of Metrics

- Quantifiable = can be quantified more easily and included in the

Value Driver Overview Value Driver Detail Sample Metrics to Quantify Impact of Value Drivers financial projections of the core business case Notes
- Enhancing = more difficult to quantify and should be included as a
supplement to the core business case in the "non financial impact
assessment" step

Mission-Related Value Drivers

- The ability to reach more learners with the program, across geographical boundaries, is a key advantage of the digital medium.
- The intention to grow enrollments through Internet-supported learning is cited as a key factor in digital learning program success by 59% of respondents in a research study several years ago (Abel, 2005).
# of program enrollments Quantifiable - Online learning has been rapidly growing around the world and has thus been a major driver of growth for educational and upskilling institutions. The growth rate has been 15% in the US for the past several years, but the rest of
Program’s ability to the world has been catching up. The projected 5 year growth rate is 6% in Western Europe, 17% in Asia, 8% in the Middle East, and 15% in Africa, with the world's most rapidly growing e-learning markets being Malaysia and
Program reach serve a wide beneficiary Vietnam (Cournoyer, 2014).
base - In a survey recently conducted by Accenture of its Skills to Succeed partner organizations, the reported average projected growth rate was 12% from 2015 to 2017.

# of program graduates Quantifiable

Diversity of beneficiaries reached Enhancing Digital learning allows programs to segment learners automatically and customize their course through the program, allowing for a broader range of beneficiaries to be served effectively.
Learner outcomes Core content learning In the context of digital learning, this comes down not only to traditional quiz-like assessments but to automated adaptive learning and gamification technology report outputs. As a result, the metrics are more granular and
achieved Average improvement in learner assessment scores Quantifiable indicative of true skill improvements.

Flexibility of access to training Enhancing

Learning efficiency of Customization of content to learner context, needs, learning style, and Digital learning allows learners to acquire content to the same level of proficiency faster than traditional mediums
Enhancing
core content skill level
Immediacy of feedback Enhancing
Practical learning application opportunities Enhancing Scenario-based learning and gamification allow learners to apply the content in simulated environments to reinforce the learning while getting immediate feedback on their performance.
Consistency of content delivery across delivery modes Enhancing Digital learning’s increased level of integration across delivery modes decreases the dependence of content quality on individual instructor proficiency.
Content quality Ease of content updates through the digital medium allows the content to be increasingly current and relevant through more frequent modifications. It also allows for greater involvement from program partners, increasing
Content relevance & update frequency Enhancing
learners’ exposure to diverse expertise.

Learner support
Operational Value Drivers
Ancillary learning Average improvement in learner’s IT skill assessment scores Quantifiable IT skills are critical in the modern job market. Digital learning familiarizes learners with technology tools during the learning process, improving their proficiency in these IT skills.
achieved
Improvement in learner's self-directed learning abilities Enhancing Digital learning often involved a greater extent of self-navigation of content and self-learning which build learner independence and confidence
# of learners that got a job after the training Quantifiable
# of these learners still employed 6, 12, 24 months after training
Learner job search completion? Quantifiable
From a benchmarking perspective, in a survey recently conducted by Accenture of its Skills to Succeed partner organizations, 76% of beneficiaries secured a job within 9 months of program completion.
success
Learner earnings increase post-training relative to their pre-training Quantifiable
earning level.
Learner engagement Average amount of time spent engaging with the program Enhancing
Program drop-out rates Quantifiable
Course re-enrollment rates (students who enroll in other courses upon
Enhancing
completing a course)
Extent of learner Flexibility of learner support Enhancing Digital learning is capable of overcoming the constraints of both training time and place, giving learners access to the materials and support they need anytime, anyplace.
support
Number of alumni accessing the services Quantifiable
Extent of alumni career
Frequency of access Quantifiable The ability to offer continued support to alumni (in terms of ongoing training and career-related aid) at minimal cost is a key advantage of digital learning
support services
Amount of time they spend using the services Quantifiable

# of staff, time, and effort required to track program performance Quantifiable The automated nature of data collection in digital learning often reduces the cost and effort required to track program performance while increasing the quality of the data (real-time information with minimal human error)
Quality and speed of Learner assessment quality Enhancing Digital learning improves the ability and speed of testing learner skill levels through elements like adaptive and gamified learning.
Program tracking program tracking
Learner progress tracking Enhancing Tracking of “time on task” and program participation (e.g. number and frequency of social platform comments) that digital learning enables through LMS gives a more detailed picture of learner progress and engagement.

Content development # of content development partners Enhancing

Collaboration with program partner collaboration
partners % of content developed jointly with partners Quantifiable
Content delivery partner # of content delivery partners Enhancing
collaboration % of content delivered jointly with partners Quantifiable
Financial Value Drivers
Total funding the organization receives Quantifiable Digital learning allows organizations to access funding across geographical boundaries, growing the pool of potential funders.
How much revenue the Public - private funding mix Enhancing
Program funding learning program brings Geographic constraints on funding Enhancing
to the organization
Revenue per beneficiary Quantifiable The revenue per beneficiary can vary, however, relative to the non-digital learning equivalent depending on the program structure. Generally speaking it is lower for digital learning, but this must be balanced with the size of the
beneficiary base to analyze the net revenue impact.
Program costs Instructor salary cost Quantifiable A recent study found that eLearning typically requires from 40% to 60% less instructor time than the same material delivered in a traditional classroom setting (Evans, 2013).

Instructor training and development cost Quantifiable KIPP LA provides an interesting example of instructor cost reduction through the use of digital learning. In order to deal with severe budget cuts, the program transitioned from a classroom model to a rotational blended learning
model. This allowed them to increase classroom size by 40% (from 20 to 28 students), reducing instructor time allocated per student, while maintaining top-quality students results.
Instructor costs per
beneficiary Two key reasons behind instances where digital learning is more demanding on instructor time, are (Educause, 2003):
- The lack of instructor understanding that digital learning requires a shift in pedagogy and program structure (and a lack of training and support to help them achieve this)
Instructor travel costs (time and expenses) Quantifiable - A lack of social platform as part of the digital learning program. Adding this social interaction too helps to reduce repetition of learner questions and enables learners to help each other in many cases, reducing instructor time
needed to do so.
Instructor-to –student ratio Quantifiable

- Since very few physical learning materials need to be created there are no printing/binding/distribution costs of these materials. Once the content is ready, it can be distributed to a nearly unlimited number of learners at no
additional cost (Epic Learning Group, 2012).
- There is also a multitude of open-source resources online that can be leveraged when developing digital content, leading to less rework from a content creation perspective and thus saving development time and costs.
- However, if content is developed from scratch it can actually sometimes be more expensive to build than traditional content due to the technology that must be put in place to support it. Below is one estimate of the comparative
average times and costs of developing both an in-person training course hour as well as the digital equivalents (Chapman, 2010).

Cost of new course material creation and maintenance (time and In-Person Learning:
Content costs Quantifiable
expenses) 43 hours; $6K
Basic Digital Learning:
79 hours; $10K
Intermediate Digital Learning:
184 hours; $19K
Advanced Digital Learning:
490 hours; $50K
Building/facility cost (purchase or lease) Quantifiable
Capital costs While building and facility costs are generally lower for digital learning programs, equipment costs can be higher due to the technology infrastructure requirements.
Equipment cost (purchase or lease) Quantifiable
Program support system
costs Cost of purchasing and maintaining the program support IT Quantifiable Costs can vary tremendously depending on the IT platform’s level of complexity and flexibility. It is important to consider the program objectives and needs against the various available options in detail before making the selection.
NOTE: A major advantage of digital learning programs is their ability to deliver high-quality learning content to a large number of learners at a fraction of non-digital program costs. This has been the key driver of the corporate sector increasingly transitioning to the digital medium for their workforce development programs, with over 42% of Fortune 500 companies having already done so (Cournoyer, 2014). A recent study showed
that by switching to digital learning corporations saved 50%-70% of their training costs (Gutierrez, 2012).
-          Dow Chemical reduced their average training cost per learner (per course) from $95 to $11 by transitioning to online delivery, which amounted to an 88% cost saving (Kineo, 2014).
-          IBM reported that it was able to deliver five times more training to its employees at one-third the cost by switching to online learning, leading to an estimated cost saving of $200 million (Evans, 2013).
-          Ernst & Young reduced training costs by 35% by switching to a blended model, achieving the same learner results while reducing their time spent on training by 52%. The organization was able to condense 2,900 hours of classroom training into 700 hours of web-based learning, 200 hours of distance learning and 500 hours of classroom instruction (Kineo, 2014).
These cost benefits are not restricted to corporate players – they can be equally powerful for governmental and not-for-profit organizations. A recent eLearning Guild member survey of 32K cross-sector organizations reported the following breakdown of ongoing digital learning costs per learner:
- 22% of members reported a cost of <$10
- 31% of members reported a cost of $10 - $49
- 11% of members reported a cost of $50 - $99
- 19% of members reported a cost of $100 - $150
- 17% of members reported a cost of >$150
While the majority of these member organizations are in the US, there is some representation from Canada, Europe, India, the UK, Asia/Pacific, Australia, Middle East, South & Central America, and Africa.

As an additional data point, a recent survey conducted by Accenture of its Skills to Succeed partner organizations showed that 70% of organizations had a cost less than $300 per beneficiary.
Process Step
1. Estimate Digital Learning Operating Impact
a) As-Is State (without digital learning)
b) To-Be State (with digital learning)
Details
The incremental operating impact that the digital learning program will have on the organization is the difference in operating impact that the
organization will experience with digital learning (to-be state) as compared to the operating impact that the organization will see without digital
learning (as-is state).
This requires the modeling of what both the as-is and to-be states will look like in the future - the differences between the two states are generally
driven by Digital Learning Value Drivers (see "driver definitions" tab for details).
Develop a Process Map for the Organization
As you prepare to build the business case, you must identify at a high level which areas and processes of the organization will be affected by
digital learning to define which of them need to be modelled in the business case. To do so, you must examine your organization and stakeholders
to see which ones are most relevant to the digital learning operational impact analysis. Building a process map for the organization may be useful
to gain a deeper understanding of this (it generally includes major process areas, personnel supporting each area and an overview of what is
done at each process step). This helps define which organizational areas will be modelled in the business case.
Identify relevant value drivers, noting how and to what degree the project will affect them
Value drivers are areas of an organization that are key contributors to the organization's performance and impact. The "Driver Definition" tab
includes some of the key value drivers that are often most relevant to organizations introducing digital learning. Not all of them will be relevant to
your organization and some that are relevant to your context may be missing from the list. It is critical that you select the value drivers most
relevant to you from the existing list and add any additional ones that may be needed - reviewing the process map you created in the previous
step will help you do so.
Outline data requirements and assumptions
Those value drivers that are quantifiable should form the core of your business case. For each of these drivers, metrics need to be identified that
will allow you to measure the level of each value driver. Specific data requirements should then be defined for each of these metrics.
Collect data and document sources
Collecting reliable data from credible sources can be challenging, but doing so it crucial to a robust business case. Some possible sources of data
include:
- Company reports / internal resources
- Market / analyst reports, especially for economic trends factored into the model
- Benchmark studies of other organizations
Always be sure to document the selected data sources in detail. Questions inevitably arise. With a ready source list, you can answer them quickly.
Build As-Is Model in Excel (Current + Forecast) for specific time horizon
Columns B through F in the GREEN tab of this document called "Business Case Template Core" provide a possible starting point for building your
as-is state business case model . This will show what the organization's operating impact would look like in the future without digital learning
(status quo mode) year over year.
A very straight-forward model would simply assume that today's operating impact would be replicated in the future. However, realistically
operating impact would change even without the introduction of digital learning due to (e.g. the program may grow, trends could change, etc.)
Assumptions around this must be made (and documented) to get to a realistic picture of what the future would look like for the organization
under the current mode of operating (without digital learning).
Review goals of the digital learning project and proposed new capabilities
Re-affirm that the areas of the organization & value drivers identified in the previous (As-Is state) step will in fact be the ones affected by the
digital learning project

c) Comparison of As-Is State (without digital learning )& To-Be
State (with digital learning)
2. Estimate Digital Learning Investment Outflows
3. Calculate the Net Impact of the Digital Learning Project
Determine the timing that these value drivers will most likely be impacted due to the digital learning program
This is a very important step. If the project promises a 25% reduction in instructor salary expense, for example, should you assume 5% per year
over 5 years or 0 in years 1-3 and then 12.5% for years 4-5? Timing assumptions are made based on your knowledge of the project and the
organizational context/plans as well as the judgment of you and your team.
Build To-Be model in Excel by using the As-Is model as a starting point and incorporating the changes defined in the steps above
Columns J through L in the GREEN tab of this document called "Business Case Template Core" provide a possible starting point for building your to-
be state business case model . This will show what the organization's operating impact would look like in the future with digital learning year over
year.
For every year (or time period) included in the analysis, subtract the total As-Is operating impact from the total To-Be operating impact. This should
give you one final number representing the incremental operating impact per year (or time period).
Columns N through P in the GREEN tab of this document called "Business Case Template Core" provide a possible starting point for modelling this.
Review the results and conduct high level "reasonableness" checks to ensure that all Excel calculations were done correctly.
Identify all categories of investment required by the project
Investment cash flows are expenses incurred (one-time or recurring) in order to complete the project. If the project is not undertaken, none of the
investment cash flows will be required. Categories of investment include:
Hardware
Software
Labor (e.g. opportunity cost of pulling personnel away from regular jobs to implement the digital learning project)
Consulting and other third party services
Marketing/communications/training required for program roll-out and implementation
Fixed assets (e.g. property, plant, and equipment)
Sometimes a gray area between operating and investment impact can exist. For example, if the project includes new hardware and software
(both typically considered investment cash flows), how should you classify ongoing maintenance and repair expenses related to the new hardware
and software? If you anticipate such expenses might only recur for the useful life of the project (e.g. the time horizon of your business case), you
and your team might agree to classify them as investment cash flows. If you reasonably anticipate that such expenses will continue indefinitely
into the future, you might need to classify them as operating cash flows. You should work closely with your client and team to determine the
appropriate choice in each situation.
Estimate the cost and timing of each investment
People who have worked on other, similar projects can be a good source of information. Other potential data sources are:
- Company reports/internal resources
- Benchmark studies (can provide information for what other organizations invested in similar digital learning projects)
- Vendor reports (can provide high level estimates of costs associated with new hardware, software, and other types of investments)
- Analysis from similar digital learning projects undertaken by the organization in the past (if you cannot find similar projects, work closely with
experts or use your judgment based on your understanding of the project and situation)
Build the Investment model in Excel
Rows 61 through 71 in the GREEN tab of this document called "Business Case Template Core" provide a possible starting point for building your
model . This will show what the organization's up-front investment in the digital learning program will need to be.
The net impact of the digital learning project is calculated as the difference between the operating & investment impact of the program without digital
learning (As-Is State) and with digital learning (To-Be State).
This figure is generally expressed as Return on Investment (ROI).
ROI = (Net Operating Impact - Investment)/Investment
ROI represents the number of times a project returns its initial investment over its lifetime. An ROI of 5.5 means that over its life a project returns the
investment plus 5.5 times the investment.
 Generally it takes more than one year to break even and start reaping the benefits of investment in digital learning, so ROI is generally measured over a
3-5 year period
Basing the ROI of the full-scale digital learning program on the results of a pilot (when possible) is optimal in order to increase confidence in the
projections

"Enhancing" impacts include items that may be too difficult or controversial to quantify, yet are important to a full view of the rationale for/against a
digital learning project. They may be linked to the organization’s strategic objectives or represent the desired outcomes of the project. Some examples
are:

4. Examine the impact of "enhancing" value drivers Please refer to the "enhancing value drivers" in the "Driver Definition" tab for more detail on some of the common ones used in digital learning
program business cases.
While the business case should not rest on these "enhancing" impacts, a description of the key ones is often included in the business case as a way to
set context for the financial analysis and complement it.

Identify non-financial impacts that should be included in the business case

Decide with the team how to position these impacts within the business case (e.g. how important each of these drivers is to the organization's
strategy)
The GREEN "Enhancing Value Driver Analysis" tab of this document can serve as a starting point for this.
BUSINESS CASE SUMMARY:
Cummulative Return on Investment 2014 2015 2016 2017
Mission-Related ROI
Enrollments - 0.0017 0.1234 0.1620
Graduates - 0.0014 0.1104 0.1566
Improvement in average learner assessment score - 0.0000% 0.0005% 0.0005%
# of learners that got a job after the training - 0.0012 0.1051 0.1465
# of learners still employed 12 months after training
completion - 0.0012 0.1034 0.1434
Learner earnings increase post-training relative to their
pre-training earning level - 0.0000% 0.0015% 0.0015%
Alumni supported - 0.0001 0.0098 0.0157
Alumni support hours delivered - 0.0026 0.2846 0.5014
Financial ROI - 34% 89% 149%

BUSINESS CASE DETAILS:

As-Is Scenario (No Digital Learning) To-Be Scenario (With Digital Learning)
Actual As-Is vs. To-Be Scenario Comparison
Operating Impact Forecast Forecast Forecast Forecast Forecast Forecast Source
2014 2015 2016 2017 2015 2016 2017 2015 2016 2017
Mission-Related Value Drivers
(NOTE: Mission value is not cumulative. The units of each metric and value driver vary so they must be analyzed individually and never added)
Program Reach
# of program enrollments 1000 1080 1166 1260 2000 2400 2880 920 1234 1620
% change in program enrollments 8% 8% 8% 100% 20% 20% 92% 12% 12%
# of program graduates 700 756 816 882 1500 1920 2448 744 1104 1566
Graduation rate 70% 70% 70% 70% 75% 80% 85% 5% 10% 15%
Learner Outcomes
Average learner assessment score 60% 63% 67% 77% 68% 72% 82% 5% 5% 5%
# of graduates that got a job after the training 600 665 735 811 1350 1786 2277 685 1051 1465
% of graduates that got a job after the training 86% 88% 90% 92% 90% 93% 93% 2% 3% 1%
# of graduates still employed 12 months after training
completion 550 643 694 794 1290 1728 2228 647 1034 1434

% of graduates still employed 12 months after training

completion 79% 85% 85% 90% 86% 90% 91% 1% 5% 1%

Graduate earnings increase post-training relative to their pre-

training earning level 40% 45% 50% 55% 55% 65% 70% 10% 15% 15%

# of alumni served 20 21 22 23 80 120 180 59 98 157

% change in # of alumni served - 5% 5% 5% 300% 50% 50% 295% 45% 45%
Alumni support hours delivered 1500 1575 1654 1736 3000 4500 6750 1425 2846 5014
% change in # of alumni support hours delivered - 5% 5% 5% 100% 50% 50% 95% 45% 45%
Financial Value Drivers
Funding
Total funding the organization receives $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 2,050,000 $ 1,500,000 $ 1,500,000 $ 550,000 $ - $ -
Revenue per enrolled beneficiary $ 1,500 $ 1,389 $ 1,286 $ 1,191 $ 1,025 $ 625 $ 521 $ (364) $ (661) $ (670)
Revenue per graduate $ 2,143 $ 1,984 $ 1,837 $ 1,701 $ 1,367 $ 781 $ 613 $ (617) $ (1,056) $ (1,088)
Costs
Instructor salary cost $ 900,000 $ 936,000 $ 973,440 $ 1,012,378 $ 780,000 $ 648,960 $ 607,427 $ (156,000) $ (324,480) $ (404,951)
# of instructors 30 30 30 30 25 20 18 -5 -10 -12
Average instructor salary $ 30,000 $ 31,200 $ 32,448 $ 33,746 $ 31,200 $ 32,448 $ 33,746 $ - $ - $ -
% change in average instructor salary - 4% 4% 4% 4% 4% 4% 0% 0% 0%
Instructor training and development cost $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 2,500 $ 1,500 $ 1,350 $ (12,500) $ (13,500) $ (13,650)
Average training and development cost per instructor $ 500 $ 500 $ 500 $ 500 $ 100 $ 75 $ 75 $ (400) $ (425) $ (425)
Instructor travel costs (time and expenses) $ 12,000 $ 12,000 $ 12,000 $ 12,000 $ 5,000 $ - $ - $ (7,000) $ (12,000) $ (12,000)
Average travel costs per instructor $ 400 $ 400 $ 400 $ 400 $ 200 $ - $ - $ (200) $ (400) $ (400)
Cost of new course material creation and maintenance (time $ 60,000 $ 72,000 $ 78,000 $ 84,000 $ 135,000 $ 180,000 $ 225,000 $ 63,000 $ 102,000 $ 141,000
and expenses)
# of courses 10 12 13 14 15 20 25 3 7 11
Average cost of new course material creation and $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 9,000 $ 9,000 $ 9,000 $ 3,000 $ 3,000 $ 3,000
maintenance (per course)

Cost of tracking program performance (# of staff & time) $ 150 $ 150 $ 150 $ 150 $ 25 $ 25 $ 25 $ (125) $ (125) $ (125)

# of staff hours spent tracking program performance 3 3 3 3 0.5 0.5 0.5 -3 -3 -3

Average per hour cost of staff tracking program $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ - $ - $ -
Building/facility maintenance cost $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 20,000 $ 20,000 $ 20,000 $ (80,000) $ (80,000) $ (80,000)
Equipment maintenance cost $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 10,000 $ 10,000 $ 10,000 $ 5,000 $ 5,000 $ 5,000
Program support IT system maintenance cost $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 4,000 $ 4,000 $ 4,000 $ 2,000 $ 2,000 $ 2,000
Total Incremental Financial Value $ 405,850 $ 357,850 $ 314,410 $ 269,472 $ 1,093,475 $ 635,515 $ 632,198 $ 735,625 $ 321,105 $ 362,726

Forecast Forecast Forecast

Capital Investment Source
Capital Investment Source
2015 2016 2017
Facilities (purchase or lease) $ - $ - $ -
Equipment (purchase or lease) $ 50,000 $ 10,000 $ 10,000
# of additional devices needed for the program 100 20 20
Price of each device needed for the program $ 500 $ 500 $ 500
Digital learning software platform $ 500,000 $ - $ -
TOTAL $ 550,000.00 $ 10,000.00 $ 10,000.00
 Ability of Digital Learning
Importance of Value Driver to Program to Deliver Against This
Organization's Strategic Mission Value Driver
Enhancing Value Driver
Enhancing Value Driver Project Impact (5 = high, 1 = low) (5 = high, 1 = low) Importance
Diversity of beneficiaries reached 5 5 25
Flexibility of access to training 5 5 25
Customization of content to learner context, needs, learning style, and
skill level 5 4 20
Practical learning application opportunities 5 4 20
Consistency of content delivery across delivery modes 5 4 20
Learner assessment quality 4 5 20
Total funding the organization receives 5 4 20
# of content development partners 4 4 16
% of content developed jointly with partners 4 4 16
Content relevance & update frequency 3 5 15
Program drop-out rates 5 3 15
Course re-enrollment rates (students who enroll in other courses upon
completing a course) 5 3 15
Learner progress tracking 3 5 15
Immediacy of feedback 4 3 12
Flexibility of learner support 3 4 12
# of content delivery partners 4 3 12
% of content delivered jointly with partners 4 3 12
Average improvement in learner’s IT skill assessment scores 3 3 9
Improvement in learner's self-directed learning abilities 3 3 9
Average amount of time spent engaging with the program 2 2 4
Public - private funding mix 2 2 4
Geographic constraints on funding 1 2 2