Learning is Evolving (Quickly), and So Must the L&D Budget

Companies have struggled mightily with the perennial challenge of learning’s ROI. Corporate leaders shutterstock_390084256want to know just what they are getting with all the money they are spending on L&D, and, historically, it has been difficult to provide the answers. Even as companies move away from providing true ROI and focus more on the performance outcomes of learning, it is critical that organizations have a fundamental understanding of the learning budget first – before they try to figure out what it is producing.

It can be hard to wrap your arms around the learning budget, as it draws upon resources throughout the entire organization and beyond into external resources. Technology, people and content are just the major areas that account for the L&D budget. Brandon Hall Group’s 2016 Training Benchmarking Survey looks to help organizations get a handle on all of this by showing how companies of all different sizes and industries spend their learning dollars. For a deeper look at the numbers in the 2016 Training Benchmarking Survey, register for our Research Spotlight Webinar on Nov. 29.

It is an interesting time for the learning budget. In the past, the line item for “learning technology” basically meant the LMS. There was no room for other technologies. Now, there are a vast array of technologies available to complement, supplement, and even replace the LMS. The learning content universe is also expanding rapidly with new authoring tools and aggregated sources. All of this is occurring at a time when the L&D budget is feeling somewhat constrained. In 2015, 43% of companies said their L&D budget would increase in for 2016. Now that we are here, only 26% say their budget will increase. Companies will have to be creative with how they allocate these stagnating budgets.

This evolving learning landscape has another effect on budgets. As companies move away from traditional course and classes and embrace new learning experiences, the way we measure learning is changing. We used to be able to measure learning in hours and calculate how much it cost to create “an hour of learning.” But in the modern ecosystem, learning experiences could be a three-minute video or 10 minutes spent playing a game. Therefore, an hour of learning no longer carries the same value.

Instead, we can look at what it takes to create these experiences. Organizations invest varying amounts of time and money to create different types of content, but an hour of creation will essentially cost the same regardless of modality. In contrast, an hour of ILT could cost vastly more than an hour of eLearning to create. By looking at learning hours in terms of creation rather than consumption, we get a clearer picture of what it actually costs.

As an example, the average hourly cost for a large organization to create any type of learning in our study is $362 (including people, technology, resources, etc.). By figuring out how long it takes to create different experiences, we see their true cost. It takes an average of 111 hours to create an in-person ILT class, bringing its average cost to a little more than $40,000. An eLearning course takes 138 hours ($50,000) and a game takes 76 hours ($27,500).

As learning continues to evolve, the way we look at budgets needs to change as well. Just as traditional learning technology cannot deliver more modern, diverse learning experiences, an outdated budget strategy cannot keep up with the demands of the modern learning organization.

David Wentworth, Principal Learning Analyst, Brandon Hall Group


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