Tuesday, May 17, 2011

Calculating Return on Investment and Benefit / Cost Ratio

The university hosted a session by SkillSoft and Knowledge Advisors on learning metrics.

I am going to post this in 3 parts.
The first 2 will be calculations.
The final post will be the explanatory notes.

This is part 1.
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ROI = (Program Benefits – Program Costs) / Program Costs x $100

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Benefit / Cost Ratio = Benefits / Cost

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All of this is in $$$$$

In the example from the SkillSoft / Knowledge Advisor lesson, they just used the cost of the license per user. There was quite a bit of debate over what to include under costs.
- Do you use license cost per active user? Or license cost per all users in the system?
- Do you include the hourly cost of administration of the system?

I’m sure there are other considerations.

What do you think should be included in costs?

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