Value of Investment (VOI) vs. Return on Investment

Perhaps the constant effort to find the ROI of higher education or even training programs is mis-placed, should we be asking ourselves if an alternative exists?

As the competitive landscape of higher education shifts and the training industry changes, using a measurement like Return On Investment (ROI) as the only guide for evaluating information technology investments like an LMS or an audience response system is a mistake.

ROI formulas provide a myopic and overly tactical view of IT initiatives. ROI and cost saving formulas may work well in a situation where dollars invested can be directly and unequivocally tied to sales of product or increases in market share. However, in an educational or instructional environment, directly tying dollars invested to desired learner outcomes such as an increase in grade point average, employability, compliance with laws or rule or fostering higher order thinking skills is difficult if not impossible.

Relying on ROI as the only basis for making technological investments merely allows an educational institution or training department to marginally stay in business—it provides parity with peers not a competitive advantage.[1] To achieve a true competitive advantage in a shifiting educational market, a new approach is needed for evaluating information technology decisions.

As Dwight Fischer, CIO of Plymouth State University in Plymouth, NH states, “What we do doesn’t translate into ROI easily. Even with an MBA, I haven’t been able to figure out how to make ROI metrics consistently apply to our budget process. There are differences between education and business.”[2] And, I would argue between learning with a business and conducting business.

In education and learning organizations, the measure of success is the positive educational and life long learning impact an up-to-date and unified digital campus has on a community college student. Shifting to a “Value on Investment” (VOI) approach provides the necessary forward thinking framework for scoping, prioritizing and initiating information technology projects. VOI seeks to measure the idea of creating a life-long learner, of tying educational outcomes to economic development and of creating value through collaborative learning at every level of the college.

VOI measures the total value of “soft” or intangible benefits derived from technology initiatives in addition to the “hard” benefits measured by ROI. VOI is subjective and difficult to measure with the same precision as ROI. Yet, a VOI approach is critical to allow funding for the information technology decisions that provide the competitive differentiation necessary for the success of community college systems over the next decade.[3]

Systems and schools that fail to offer state-of-the-art online learning opportunities and accompanying services over the next decade will lose students who routinely use commercial applications such as Amazon.com, PayPal and Facebook to browse catalogs, pay bills and network with one another. Digitally savvy students demand these same conveniences from their educational institutions and now have the choice of taking online classes from public and private institutions anywhere in the world..

The result is that collaboration tools, knowledge management systems, student portals, online communities of practice, streamlined and automated back office services and productivity improvements are now essential determinants of value and effectiveness for today’s community colleges. Community colleges must have a unified digital campus to attract and retain students.

Without a shift from ROI to VOI, schools or training departments will not move forward or achieve a competitive advantage. The perspective created by VOI is absolutely necessary if they are going to transform practices, processes, and organizational dynamics to gain a competitive advantage. [4] VOI provides educational systems with the means of justifying the necessary game-changing technology investments required to attract and educate students and employees in the 21st century.

References

[1] Norris, D. M. (2003) Value on Investment in Higher Education. EDUCAUSE Research Bulletin.

[2] Getting the Green Light for IT Funding. Johnson community college initiative

[3] Norris, D. M. (2003) Value on Investment in Higher Education. EDUCAUSE Research Bulletin.

[4] Norris, D. M. (2003) Value on Investment in Higher Education. EDUCAUSE Research Bulletin.