Building the LMS Business Case: How to Assess Your External Training Business

Michael Daecher
Jul 22, 2019 11:02:26 AM

As the project leader, you are responsible for building the business case for an LMS (learning management system) for external training, and you must accomplish this critical analysis – assessing the current state of your external training business.

If you are to ultimately convince management that the adoption of a new LMS is essential, you must prove that the current state of your training business is lacking both in the current state, and as the foundation for future growth.

From our experience, here’s the best way to make it happen.

Step 1 is to assemble the cross-functional team 

The people on this cross-functional team are the usual suspects, the same as on the LMS search team. They were originally recruited because of their subject matter expertise (e.g., Sales, Manufacturing, HR, IT, etc.) or constituency. It is their unique background, perspective and part of the business that is so important to this assessment.

Step 2 is to decide on the format of the assessment -- we suggest a SWOT analysis.

The SWOT analysis as a process that is both easy to implement and produces actionable results. It is designed to help a corporation identify the S=strengths, W=weaknesses, O=opportunities and T=threats regarding a specific tactic or project.  

Here, the project is the adoption of a new or replacement LMS. The assessment of the current state of your external training is a critical contributor to the business case.

The format is designed for collaboration

 A SWOT analysis is recorded in a grid. 4 boxes, 2 over 2. Discussion points, conclusions, answers, and opinions (such as how we can overcome this specific threat) are recorded in the appropriate box.

SWOT-Graphic-Blog-Post-1

The matrix is designed this way because strengths and weaknesses tend to be interrelated, so they are next to each other. On the next line, any discussion of opportunities must take place alongside that of the threats which may undermine the opportunity.

 Looking at this data on one surface helps you to really understand the health of your external training business, to more deliberately uncover the strengths, weaknesses, opportunities and threats, to better and more urgently make your business case so the scales tip in favor of the new LMS.

Step 3 is selecting the topics that comprise the assessment

Here are 5 essential topics to probe:

1. How scalable is your professional training business?

If your company’s strategic vision is to grow, your training business must be scalable. According to the Economic Times, “Scalability refers to the ability of a company to sustain or better its performance in terms of profitability or efficiency when its sales volume increases.” That’s why the vast majority of Fortune 500 companies have at least one LMS.

If you’re like so many training businesses, you rely primarily on instructor-led training, but it’s not scalable. The ceiling for growth is low and you will bump your head. As you grow, delivery must migrate to eLearning, video and other types of self-paced training, which are scalable and tend to be more profitable. Your business must become a portal for multiple media that can be accessed any time and any place, and on any device.

Only a powerful next-generation LMS can deliver this. For a more detailed discussion read How to Build a Professional Learning Business that Scales.

2. What is the ROI of your training business, and how is that trending?

There’s a lot to assess here – Overall cost, top line, bottom line and ROI. Then, the same by product line. How these important metrics are trending by quarter and by year.

Also, look at projections for the upcoming quarter and year. Are you seeing growth (or lack thereof) and is that growth in line with your company’s goals? Are you outpacing or lagging your competition?

There’s no doubt that e-learning, video and self-paced learning has the potential to financially outperform instructor-led training.

If you are already running a subscription-based training business, what is the re-subsciption rate? It should be in the 90’s.

Use this part of the assessment to also identify inefficiencies, pain points and errors in creating, delivering and tracking training that would fuel the argument for an LMS. Two hints:

  • Mistakes cost money;
  • If you are tracking training on a spreadsheet, your business is not scalable (see topic 1).

3. How thorough and up to date is your content?

Training content must drive profitability. Your business must have the content and training topics that learners want to buy. By definition the content must be thorough and up to date, which is made easier with an LMS. What in your library is old and needs refreshing? Are there product gaps that need to be bridged?

It’s also important to map the workflow for content authoring. How quickly can you update content, build a new course? How easy and fast is it, because time-to-market is a real issue in the hyper-competitive training market.

It’s important that each of the learning management systems that you evaluate include integrated content authoring, so that you’re not dealing with a 3rd party authoring tool.

4. What’s changing in the marketplace and how does this affect your competitiveness?
 

This is where you document the risks and challenges, the threats and opportunities of moving to eLearning, video and self-paced learning, all supported by the new or replacement LMS.

Conversely, what are the risks and challenges, the threats and opportunities of NOT moving to eLearning, and of NOT adopting the LMS.

5. What is your stakeholder satisfaction?
 

I’d argue that the most important stakeholders are your customers learners and students, because that’s who pays the bills, and without revenue nothing else matters.

Learner satisfaction begins with learner engagement. You should look at learner engagement by product line.

 Are you gaining customers or losing them? Are they pursuing additional training? What is lifetime value and how is it trending?

Do we have the content and courses they want? Are they delivered in the way they want it and are they engaged during and satisfied after?

For more ideas, read 5 Tools to Improve Online Learner Engagement

Here are three critical success factors:

  • Know who will be reviewing and who will be approving the business case. Hopefully you know them well, but if you don’t, go introduce yourself. See if you can get time with them to ask what they look for in the business case, what is their criteria for a positive decision
  • As you are moderating the assessment and asking the hard questions, don’t let anyone off the hook easily. Ferret out the risks, challenges and rewards that are under blanket statements. Badger the team until you reach a level of bottom-line specificity.
  • Identify requirements for transition to new LMS. How long will it take, who must be involved, and what has to happen? Have a complete plan because it’s 100% certain that if things go well with the business case presentation, you will be asked.

An important source of information for the LMS business case

As stated at the beginning of this article, the reason for this analysis is to assess the current state of your external training vis-à-vis your current LMS, or without an LMS. That is the starting point for the evaluation of the business case. The detailed outcome of the analysis should be an appendix to the LMS business case.

For insights and tips on how to prepare a business case specifically for the adoption of a new or replacement LMS, read How to Build an LMS Business Case for External Training.

59 Questions to Consider Before Selection an LMS for External Training 

Download this free guide will help you identify and prioritize the software features you'll need to maximize the success of your online external training experience.

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