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How to Build a Business Case for a Learning Initiative

Condensing an intricate, lengthy strategic plan into a brief, convincing business case is a bit like trying to pack for a long trip using only a small suitcase: it’s tricky, but with a little work and some careful preparation, you can get everything you need in there.

Before You Build: Define Tasks, Actions, and Budgets
Before you write the final business case, define the tasks required to implement each element of your strategy and then break each one down into minute detail. For each action item, record what it will take to achieve that action, including time, materials, training, roles, and any cultural issues that will affect your ability to complete the task.

Cultural issues can be a significant impediment to the successful completion of a task, so look closely at the potential obstacles that lie in your way. For example, through our cultural assessment at Rockwell Collins we discovered that most managers believed that employees at their desks should be working—not training. Because we identified this issue early on, we had a plan to work around it by building training resource rooms where employees could get self-paced e-learning outside the office.

Within your task definitions, include a separate budget for each element of the plan. Set roles and responsibilities for your team, adding a budget for new members if necessary. Include time and costs for maintaining the legacy system while you implement the new system. Marketing is also a relevant budgetary factor. It won’t be enough just to launch your project; you need to sell it throughout the company with giveaways, posters, mailings, and events.

Using this information, build an overarching work-breakdown structure—a comprehensive list of the tasks you need to complete in order to achieve each goal, and how those tasks will affect the others, moving from today to your vision of the future state of training. The more detail you can provide, the more accurate your work-breakdown structure will be, which will give your final budget request legitimacy. The work-breakdown structure will give you a road map that delineates how and when you can achieve each goal.

Calculate ROI
Financials are a critical component of this step. It’s the easiest part of the process to understand and the most attractive selling feature for executives. In our business-case document we included details about the necessary up-front investments, long-range expectations, savings to be realized, and comparisons with present costs. For example, we compared the costs of conducting business as usual for four more years—roughly $73,000,000—with the cost of supporting our initiative—roughly $41,000,000. These figures captured management’s attention in a way that an explanation of instructional-design theory never could.

To craft your own budget comparison, begin with your assumptions about the state of learning and your strategy. Assumptions come from industry trends, benchmark studies, and observations of the current environment. For example, based on what you’ve read about the cost savings associated with e-learning, you may assume that if you replace classroom training with Web-based training your cost of delivery will drop by 50%. That assumption of savings is where you begin to build your ROI projections.

Be sure that your assumptions are useful, enticing, and provable. If your assumptions are wrong, if your audience disagrees with them, or if your assumptions hold no appeal, you won’t be able to sell your plan. For example, if you build your strategy around the idea that Web-based training can reduce the time to train by 50% but executives don’t care how long employees spend in training, the proposal will be of little interest to them.

Before you delve too deeply into the building of your financial presentation, get an outsider’s opinion of your assumptions. A financial specialist without ties to the company can give you a fresh perspective on your numbers, evaluating whether they are legitimate, provably valid, and tied to the needs of the organization.

If you are accurate, use your assumptions to create verifiable ROI formulas. For example, at Rockwell Collins our research of the training industry suggested that e-learning takes 20 to 80% less time than classroom courses. Taking a conservative approach, we estimated that the learning and development department would save 50 percent of classroom time, which translates to a reduction in hours of lost productivity. Based on that assumption, we built a simple ROI formula that showed what 50% less time spent learning was worth to the organization. For example: If an employee had to learn project-management skills, our classroom version took twenty-four hours of work time to complete. That meant the online custom course would take twelve hours and would also contain more content and skill building through simulation. To demonstrate the ROI, we used the average number of students who completed the instructor-led course in the benchmarked year.

This is another reason to gather accurate and complete baseline data. We realized that there would be more completions with the online course than with the instructor-led course, but we chose these comparisons to eliminate controversy over numbers and savings. That twelve hours of time savings is worth a fixed burdened rate multiplied by the baseline average classroom population minus the cost of development and continuous updating. Notice that we took credit only for the hours saved.

After calculating the saved hours, we factored in the elimination of travel time, which in this case was one hour per day times three days, again applying the burdened cost. The burdened cost is a figure you can get from your finance group. Burdened cost is an employee’s salary plus benefits, vacation, facilities (brick and mortar), and a hodgepodge of other fixed business expenses.

We had identified a number of high-cost core competency courses our team was going to convert to CBT. We used this same calculation for each one over the length of the three-year program. There were more than a hundred of them. For example, our first year the learning and development team converted more than fifty classroom courses to alternative delivery, and each one was factored into the plan. An important point to mention is that after calculating the budget required to accomplish this project, we gave 40% back to the organization up front, which meant the only money available for funding the initiative was contained in the execution. Simply put, if our team didn’t execute the plan, we would not have the needed savings to funnel back into the project and would come to a grinding halt. Based on that proposition, the learning and development team began the first year of the project with a 40% smaller budget, so we never had the money to make mistakes. We promised to deliver significantly more with significantly less, and management took us up on the offer. It was a risky proposition and may not be a strategy you want to use; however, it did motivate us to execute the plan.

Set Yearly Goals
When you have your budget broken down into details and your savings calculated, you can set overall and yearly goals for your project, including what you intend to do and what impact your efforts will have on the company. These are the high-level details you will share with executives when you present your business case. Stick to big-picture numbers to give them a sense of the vast impact your project will have on the company. For example, at Rockwell Collins our overall goal was to provide 400% more learning with 24/7 global accessibility for 40% less cost to the company within three years. Then we broke that down into yearly goals.

Implement Marketing and Communication
The last step before you build the business-case document is to create a catchy or sexy name for your project. Naming your project is critical. A name gives it life and creates a picture in the minds of end users about what it is and what you are trying to do with it. The name should represent the transformation you are trying to effect at your company. Once your project is named, you can build images and campaigns around that theme. Create a marketing and communication plan outlining how you intend to promote the new system, involve learners, and keep the company abreast of the changes and impact your efforts have had at the company.

Our team named our initiative Project Oasis, because it would give employees “relief from the routine . . . an oasis of learning.” We crafted an island logo with palm trees against a blue ocean. Because Rockwell Collins is in the midwest and thus landlocked, we thought that theme was different enough to catch the eye of employees. That became the theme for our project, and we used the imagery liberally throughout the strategic plan and business case. That island would come to represent the changing face of learning at Rockwell Collins.

Adapted with permission of the publisher from Built to Learn by Cliff Purington and Chris Butler with Sarah Fister Gale. Copyright 2003, Cliff Purington and Chris Butler. Published by AMACOM, a division of American Management Association. Click here for more information about this title. For information about other AMACOM books, visit http://www.amanet.org/books/