Training can reduce real costs and have a positive impact on an organization in numerous ways. Too often however, IT professionals are not equipped to justify training. The examples presented in this post can be utilized in real-world settings to illustrate and justify the value of training.
Cost avoidance is an excellent way to justify training, as the education provided by Infoblox Education Services can be immediately put to use on initial implementations as well as on managing subsequent changes due to evolving business requirements. Without training, organizations are left to rely on outside implementation services, which, while providing immense value on large projects, will considerably add to project expense. An investment in training from Infoblox Education Services will reduce these expenses and provide a compelling ROI that will meet the scrutiny of financial decision makers.
Avoiding or lessening the costs of using external resources is a very reasonable approach to justifying training. Using trained internal FTEs over outside contractors is usually significantly more cost effective for many projects, especially projects that will require additional work after the initial implementation.
The Infoblox model is based on costs for ILT Infoblox training taken from the 2016 Infoblox Catalog for U.S.-based public training. The numbers, except for training course costs, are illustrative and can be used without modification. However, license, support, implementation costs, project NPV, and T&E costs can be modified if greater scrutiny is required. Additionally, the amount of training can be modified to match the organization’s requirements as the model uses the most basic, entry-level training for Infoblox roles of Administrator.
Implementation costs are assumed to be from Infoblox Professional Services or a third-party system integrator.
Our model uses the following numbers:
Scenario One: 63% ROI During Initial Implementation
Our first justification scenario is a reduction in cost for an initial Infoblox implementation, using $65,000 for the implementation cost. The implementation will involve administrative activities such as Infoblox installation and configuration as well as the development of business logic and workflow that act on the data.
On the initial implementation, using a trained internal employee to assist in the administration for even a small amount of their time can provide a compelling ROI. Training one administrator will cost $8,000 according to our model above. A simple reduction of 20% of the $65,000, or $13,000, in the implementation costs by using trained internal resources to perform 20% of the project implementation would yield an ROI of 63% (calculated as $13,000 / $8,000 x 100).
Presenting the ROI number of 63% and the new implementation cost of $52,000 to senior management should be enough to justify training, but we can continue to expand the model over 18 months.
Scenario Two: 363% ROI over 18 Months of Production Use
Consider that over the next 18 months of production use of Infoblox, there are two small business requirement changes and one minor upgrade. For the sake of simplicity, we will assume that each of these activities will require 40 hours, or approximately $8,000 of outside consultant services, for a total of $24,000.
Adding the avoided costs of the outside services from using trained employees to the original savings of $5,000 in scenario one, the ROI is calculated as 363% ($5,000 + $8,000 + $8,000 + $8,000 / $8,000 x 100).
Summary of Cost Avoidance
ROI Cost avoidance is a simple to use yet powerful tool to justify training. Cost avoidance results in a very tangible and quantitative benefit: reduced budgets.
In our example of a small implementation where initial administration and development training was used with an investment of $8,000, the savings over 18 months was $29,000. This represents an outstanding ROI of 363% of real savings – money that can be removed from the budget and allocated elsewhere.
Using the model with organization-specific numbers will yield different results, and using two or three different training and savings scenarios may be required to determine a ROI that management requires to justify the training expense.
The examples in this post can be used to facilitate a business discussion with the decision makers who approve budget for training. While the model and cost examples used in this post should be adequate for getting the funding approved, using real-world cost examples should be an even more powerful argument and can easily fit into the model.