Running a business, watching every cent you spend becomes second nature. Ensuring you get an ROI (or ROA) is critical. Building a business case is about the reality of making hard decisions about where to invest your resources. There are a lot of resources out there to support the development of a business case, so I thought I’d put some examples together to get you thinking.
A few years ago, I managed a learning materials development project. When I started it was focused on paper-based learning materials and it was a natural progression to move into the online environment. However, we didn’t have a significant amount of resourcing, so I had to identify priority areas of development and ‘pitch’ this to the project sponsors (for them to release the resources).
Here is what I did:
- Consider the tactical benefits (cost savings, competitive gains, productivity improvements) – In my case, the tactical benefits were about maintaining the sales of our products and ensuring competitive advantage. What learning resources were our best sellers? They were obviously our best sellers for a reason, so by expanding the offering to include online products would act as a way to keep those sales up. Developing online products was also a way of increasing the ‘stickiness’ of our customers. If we provided additional value-adding products, then this would increase the barriers to them leaving and purchasing a competitor’s product.
- Align to the strategic position of the organisation – In this case, the strategic position was to be the market leader, alignment to this was a no brainer. To be the market leader, we needed to be in the online market. Talking to our customers reinforced this is what they wanted.
- Identify the costs involved (over an agreed time period) – The costs of online development can be very high up front and then they decrease as a product is on the market (this is also described as a decreasing marginal cost – the cost of production decreases the more you ‘sell’). This doesn’t make things easy when trying to work out where to prioritise development. In my case, I looked at the ‘quick and dirty’ development that I could knock out cheaply and quickly, while we invested in more interactive and media-rich components. When we went to the market, we had a range of both ‘simple’ and complex multimedia in our online offering.
- Conduct the cost benefit analysis – What benefits will you gain from your costs? This is always a hard part. It is critical to be in constant contact with your market to ensure you are developing a product that meets their needs (ie what are the benefits for the customer and will they purchase the product to receive those benefits).
When I read through this post, it seems like a simple process. I can tell you it wasn’t! It took a lot of work to work through these processes to ensure we were going to get the return on our investment (ROI). Fortunately, we knew what our budget was and we had good development partners. We were able to work together to realise our business goals.
It is also important to consider all of the costs associated with an e-learning project. Don’t forget:
- Hidden costs: Which is an expense not normally included in the purchase price of an equipment or machine, such as for maintenance, supplies, training, and upgrades.1
- Opportunity costs: Which are the costs of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.2
These costs are often overlooked, especially in the excitement of the project. So when you are putting your business case together, don’t forget to look at the different costs that you might incur in the future.
How do you do develop a business case? If you’d like to talk about how to build a business case for supporting your staff or students with technology, send us an email at [email protected].
(This was adapted from an article written to support the QVDC workshops Get Started in E-learning)