How to build an LMS business case

If you’re working in the L&D space, you undoubtedly understand the importance of a robust learning management system and the ways it can empower your employees. If you’re looking for a more powerful system or don’t have one to begin with, doing the research will likely show you just how beneficial it will be.

However, key decision makers within your organisation may not be as easy to convince. When it comes to budget  restrictions, specific figures and cost savings need to be discussed and proven. An LMS business case will help to present all of this information in a way that is factual and easy to understand.

With this in mind, let’s look at 3 key points to include:

1. Presenting facts and figures:

Implementing an LMS can yield substantial cost savings and productivity improvements. By streamlining training processes and automating administrative tasks, an LMS can reduce training costs by 25% to 40%. Additionally, it facilitates personalised learning plans, real-time notifications, and remote access, resulting in efficient and effective learning experiences. Highlighting this as a starting point will showcase immediately that an LMS can bring the organisation value.

2. Identifying Relevant LMS Key Performance Indicators (KPIs):

In order to demonstrate the potential ROI of your LMS investment, you need to be able to track and analyse key performance indicators. Consider incorporating the following LMS KPIs into your business case:

• Onboarding Efficiency: Predict the time and costs associated with onboarding new employees.
• External Training Expenses: Evaluate the expenditures related to outsourced training services and show possible reductions for transitioning to in-house training via an LMS.
• Training Consumption Efficiencies: Calculate the hours spent on mandatory training per year and estimate time savings through diagnostic assessments and learning pathways.
• Training Team Productivity: Assess the time spent on manual processes and administrative tasks by the training team, and set expected time reduction targets.

To further enhance these saving efficiencies and to make a stronger case for an LMS, consider assigning cost savings and calculating possible return on investment for the KPIs overall.

3. Selecting the Most Suitable Learning Management System:

Your choice of LMS will determine your ROI, as certain factors will influence how much impact this will have. Consider user experience, functionality and flexibility. If you are creating a business case for implementing a general LMS then these points may not be as important (but still worth bearing in mind), whereas if you have a specific LMS from one provider that you would like to use, then this information is key. They should be discussed with the provider to find out how their LMS works and ways it can benefit your business.

If you’re having trouble choosing a learning management system, we’ve put together a handy guide which will talk you through the relevant steps and considerations you need to think about.

When building a business case for implementing an LMS, it's important to structure your arguments and present the information clearly, whilst making your reasonings persuasive and easy to understand. Below is a template that can assist you in pulling your LMS business case together.

1. Executive summary

Your first step is creating an overview of the business case in the form of an executive summary which will be presented to the board/approvers. This should include:

• Summary of proposal (i.e. why are we doing this and what are the benefits)
• Why do we need this (and  what happens if we don’t do this)
• Total cash impact and P&L impact
• Risk/opps (additional benefits and risks not included in the summary)

2. Introduction

Talk about your current learning efforts and how this is impacting your organisation. Include challenges and limitations which will then be solved with the new LMS. Explain why a learning management system should be implemented and how it can help both the organisation and its employees.

3. Objectives

Your objectives should align with your organisation’s strategic priorities and address pain points that your current LMS (or lack of one) brings. Explain the need for a robust and efficient learning management system to address these issues and encourage employee development.

4. Benefits

List the expected benefits of implementing a learning management system. Focus on both tangible and intangible benefits including cost savings, increased employee engagement, effective training, and enhanced compliance management. Provide relevant data and case studies where possible to support each of the points.

5. Scope and requirements

Specify the scope of the implementation. This includes target audience, number of users and desired features of the new LMS. Depending on your current system, you may also need to think about integrating previous data into the new system.

6. Cost analysis

A cost analysis should cover both upfront and ongoing expenses that will come with the implementation of an LMS. This can include costs relating to licensing, infrastructure, customisation, training and support. Compare these with the expected benefits that the new LMS will bring to predict the return on investment (ROI).

It is also important to consider within this section the impact of capitalising the costs (i.e. spreading costs over time) and how this will influence your budget. Find out how much an LMS will cost.

7. Implementation timeline

A high level timeline will outline key milestones, deliverables and estimated timeframes. This needs to showcase the feasibility and practicality of the LMS implementation process. We have put together a handy article outlining the implementation process.

8. Risk and mitigation

Outline potential risks and challenges that may impact the success of the implementation. Propose mitigation strategies to reduce the effects. This will showcase your forward-thinking mindset to key decision makers and make them aware of not only potential roadblocks but how you plan to navigate them.

9. Stakeholder analysis

Document the key individuals or groups will be affected by the implementation process. Find out how they may influence the projects success, including concerns and interests. From here, you can develop a robust strategy which will engage with them and gain support throughout the implementation process.

10. Conclude

Summarise the key points of the LMS business case, making sure to talk about the benefits, objectives and expected ROI. Emphasise how the LMS implementation will align with the organisation’s overall strategy and the ways that it will positively impact employees. 

Building a business case for your LMS requires a comprehensive understanding of its potential ROI and alignment with your organisational objectives.

By including key details such as an ROI assessment, the importance of choosing the right LMS provider, suitable KPIs and showcasing the benefits an LMS will bring, you can get the right information to important decision makers and create a compelling business case.

If you follow the steps outlined within this article, you are more likely to secure the resources, approvals and funding to implement an LMS.