Knowledge Base - Custom

How to build a business case for a Learning Management System (LMS)

Like it or not we are now living in the 'YouTube generation'..... People LOVE to self serve, enjoy the learning point and quickly move on. GREAT news for organisations. 

At its highest level, a well implemented LMS will transform any organisation because it is the one tool to rapidly distribute and track the consumption of (quality) content, amongst many other useful tasks.

So how do you go about building the business case for an LMS?


Step one - Understanding the size of the cash-cow (the elephant) in the room?

The sole reason for implementing an LMS is the cost benefits and employee engagement you will enjoy.

A VERY compelling reason to buy when you know the numbers. A no-brainer!

Almost every organisation tracks KPIs but I have never met one yet that can provide me with this data set. If you can - please email me to say hello :-)

Most business leaders will argue that these costs are a fact of ‘business life’ and pop their heads back in the sand without recognizing the cascading impact/cost of not addressing these.

With a little homework on your part and collaboration with senior managers and the finance team, you will be able to agree a range of averages for your argument. You are looking to understand and agree the ‘average’ fair/reasonable numbers for:

  1.   The average cost of hiring an employee (Average is circa $4,000)₁

           -  The % of miss-hires. (The number of employees who leave before 6 months)
           -  The % of staff turn over
           -  Time to fill an open position
  2.   The average time to effectiveness - This is when people are comfortable in the role and performing profitably without being a burden to others. (Average is circa 6 months but can be as long as 1-2 years)

  3.   Average cost of training per employee - time out of the business and off-site costs for lodging etc (Average is $1,208 to $1,500)

  4.   Engagement - (Average US employee engagement in 2015 was just 32%)₁

  5.   Your average Customer Acquisition Cost (CAC)

  6.   Your average Customer Lifetime Value (CLV)

  7.   Cost per employee - This is total costs of the business Profit & Loss (P&L) divided by the number of employees

  8.   Revenue per employee - The total sales in the P&L divided by the number of employees

  9.   Profit per employee - The profit divided by the number of employees

The numbers don’t need to be perfect or out to x decimal places as there are a lot of variables.
What is most helpful is gaining general agreement on what your numbers look like and how they track. Just looking at this generally delivers rapid improvement and a desire to address these issues.

Step two - Calculating the benchmark number

Once you have the baselines agreed. It's a simple case of doing the maths and adding it all up.

This is your own organisations benchmark for future return on investment calculations.

  1. How many people will you be hiring next year due to?

          -   The number and cost of miss-hires
          -   Staff turn-over
          -   If you increase engagement - how will this number reduce?
  2. The average cost of time to effectiveness = average salary x months

  3. The number of employees x the training cost.

  4. By improving engagement you can triple or quadruple profits.₁  Imagine just improving profit by 25% what is this number? It also impacts #5,6,7,8,9

  5. If Customer acquisition costs were reduced by 10% what is this total number?

  6. If Customer Lifetime value was increased by 10% what is this?

  7. If cost per employee were reduced by 10% wayt is this? What would the sum total be?

  8. If revenue per employee was increased by 10% what is this? What is the sum total be?

  9. If profit per employee was increased by 10% what is this? What would the sum total be?

These numbers can be huge and almost unbelievable. Get agreement with the team of stakeholders on what the future could look like and nail that as your goal and objective.

Then compare this to the LMS investment and additional resource to support smarter working

That is your business case and rational.


Step three - How will you secure the return on investment for your LMS?

When properly implemented and with stakeholder support the following aspects will improve.

Pre-hiring content - helping you find stronger fits and encouraging bad fits not to apply.

  • The LMS can track candidates time invested in consuming your content.

  • You might run competency tests and gather files from candidates such as CV’s presentations etc

  • Defining skills needed for the role and measuring/scoring the candidates skill levels moves gives less socially skillful but highly capable candidates a level playing field.

On-boarding - Build once and use over and over. Make onboarding self serving and easy.

  • Start onboarding the second the offer is accepted. For example:

  • A welcome video. Showing the site, what to expect on day 1 and the onboarding process

  • An onboarding class/quiz: Do you have your laptop yet? If yes what's the serial number. If no. Please speak to Bob in IT Phone +111 111 1111 or email for help

  • How to guides, staff handbooks, and informational videos

  • Compliance based elearning and migrating your training investment to the platform

Systems, process, skills training for the role.  Get your super-stars involved, create an expansive team and a teach first culture.

  • Get people building short, to the learning point content, for example: vlogs and how to videos made using a GoPro or use screen recordings. This massively increases engagement and encourages the organisation to share wisdom and best practice.

  • Buy ready made off the shelf elearning.

  • The LMS will track progress.

  • By using quiz functions you can check back on comfort/progress levels and provide support to those most in need

Invoke a coaching and mentoring culture. Increases engagement, staff retention and knowledge transfer.

  • It’s easier than you think and if all managers are taught how to coach and to leverage the LMS tools to do this you will see the skills list grow and people turning up for work highly motivated because it is a human need to feel valued and want to grow.

  • When this stimuli comes in a simple form from work it is highly valuable.

Tracking adherence, compliance and helping those that struggle

  • The LMS will give you great insight to who is compliant with content consumption.

  • You can map the skills to roles and see where investments need to be made.

  • By tracking the volume of activities and measuring this against your benchmark numbers in step 1 and 2 you will see positive progress.


Step four - The senior team just do not care.

While 90% of executives understand the importance of employee engagement, fewer than 50% understand how to address this issue.
Hopefully the links in this article will give you the ammunition you need to start the ball rolling.

We are skilled in helping you address these issues. The CreateLMS platform makes this journey easy. You will quickly see many people getting onboard and using it to solve their own local issues.

CreateLMS - Transform people (build engagement), increase efficiency and profits.

If this article has helped please share internally or on social media. Thank you!   Mark 


Reference links:

1.  Top HR Statistics

Author background

Mark Taggart is the CEO and founder of CreateLMS

Reach me on:  Cell +447754933180  

During his 15 years serving the Global clinical trials tehnology industry, he needed to train tens of thousands of patients, Doctors and site staff in 67+ langauges and Countries to ensure adherence and compliance with Good Clinical Practice and regulatory bodies such as FDA and EMA.  

The reason for building the CreateLMS business was that LMS platforms were incredibly expensive, hard to use,  set-up and maintain. 

In 2013 CreateLMS was born after the succesful exit from his Patient Reminders business. He wanted to build the most afforable, easiest to use LMS platform.
Our mission is to help our clients transform people, efficiency and profits.