"Return on investment" is more than just a buzzword these days. It's an essential part of any trainer's game plan. Anne Derryberry, ROI specialist and Vice President of Corporate Development of Viviance new education Inc., talks to Technology for Learning about why:

Derryberry is the author of Predicting ROI: Making the Business Case for Online Learning, published this fall by the American Society for Training and Development. She will present a workshop on ROI at Training 2000 in Atlanta Feb. 21-23.

TFL: If it's more important than ever to calculate ROI these days, why?

AD: I think there are at least a couple of reasons for this. First of all, with all the attention that the stock market is receiving, there is an ever-increasing focus on huge profitability numbers. This means that every expense is scrutinized and must be justified. And when a positive return can't be demonstrated, expenses are not approved.

Secondly, the Internet is greatly changing the way we all do business, and that, of course, includes training and support. We all have an intuitive sense that Web-based training (WBT) and tools are helpful for people, perhaps even more effective than more traditional approaches, but there atill isn't a lot of cold, hard data to support our intuition.

Therefore, as with anything new, responsible business managers want to fully understand a project or an initiative before they sign off on it, and that means fully understanding the costs, barriers to success, benefits, and returns.

TFL: Is the process of calculating ROI different for Web-based training programs than it is for traditional training?

AD: The general process for projecting ROI- and remember, requests for determining ROI almost always come before a project is funded, not once it has been completed, hence my focus on ­ projecting ­ is not really different for WBT than with more traditional kinds of inventions.

However, there are certainly unique factors that need to be taken into account and factored into the projections. For example:

What costs, if any, will be incurred to train the designers and developers of the WBT in the new medium?
 Will you have to purchase special equipment or new tools?
How will WBT affect your ability to update your training and distribute those updates to trainees? What are the cost and benefit implications?

It's important to think through the whole project, from analysis through implementation, to make sure you've included everything related to the effort ­ and that includes both expenses and benefits.

TFL: What are the challenges for measuring the ROI of WBT?

AD: The biggest challenge to effective projections making sure you really understand the details of the project. Often, the people who are asked to compile WBT ROI projections are as new to the medium as those who are requesting the information. They are at a disadvantage because of their lack of experience, and often overlook both costs and benefits that are appropriately theirs to claims.

TFL: What is the most common problem or pitfall?

AD: There are three common mistakes people make when dealing with ROI.

Projecting ROI without also doing a post-implementation evaluation. This is like having yin without yang. If you don't do both, you have a hypothesis but you don't have proof. And you've deprived yourself of valuable benchmarking data to use for the next project. It's just not a responsible way to conduct business.
Not determining all the factors, pre- and post- implementation. There should be an exact one-for-one correspondence in each of these studies. If not, you will be measuring apples before the project and octopuses at the end.
Not taking intangibles into account. Projecting a return on investment ­ and evaluating a program after it's been implemented ­ needs to examine a number of outcomes that are very difficult to quantify in dollars. Things like employee morale, feelings of disenfranchisement among the mobile workforce, and many others. These are things that can be either positively or negatively influenced by a program, and need to be acknowledged and addressed, but may not be reflected in a dollars-only ROI calculation.

TFL: What is the most important thing trainers need to know about ROI?

AD: Calculating ROI is an exercise in project, not an exact science. For a whole host of reasons, people's crystal balls are not always clear when they go through this exercise. Informed intuition and calculated risk-taking should continue to be strong components in the ultimate decision-making process.