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The Real Costs of e-Learning. What are they? How can we find out?. Professor Paul Bacsich UK eUniversities Worldwide Limited. Presentation to Venezualan Delegation,16 March 2004 . Contents. Key issues in a borderless world UK Transparency Review Activity Based Costing [CNL2]

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the real costs of e learning

The Real Costs of e-Learning

What are they?

How can we find out?

Professor Paul BacsichUK eUniversities Worldwide Limited

Presentation to Venezualan Delegation,16 March 2004

  • Key issues in a borderless world
  • UK Transparency Review
  • Activity Based Costing [CNL2]
  • Activities for Networked Learning [CNL1]
  • Application to e-learning
key issues and a challenge
Key issues -and a challenge
  • There is now increasing agreement on the methodologies of costing e-learning
  • So why is there a dilemma where education see “No Significant Difference” whereas training sees “Return on Investment”?
  • The challenge is to find a uniform evaluation methodology, including costs, which copes with a world without borders…
  • Borders are not only geographic
uk transparency review
UK Transparency Review
  • HEFCE Initiative - and other Funding Councils
  • Focus on costs of research and teaching
  • Compulsory
  • Reports on 5 main activities: T2R2O
  • Uses “Activity Based Costing” terminology
  • Uses Activity Time Sheets
  • Phased implementation, mainly led by research-intensive universities
transparency conclusions
Transparency - conclusions
  • It has been a useful if painful exercise for universities and funding agencies
  • Pressure is increasing on research funding agencies to raise the overheads they allow as real costs become clear

BUT, in reference to the “eternal dilemma”

  • It does not seem to have led to operational conclusions
  • Because it is not detailed enough?
scope of cnl2 project
Scope of CNL2 project
  • Sarah Heginbotham (SHU then UKeU then Canada)
  • Funded by JISC (Joint Info Systems Cttee)
  • From CNL1: Recommendation that activity-based costing be trialled in a university
  • Chose the School of Computing and Management Sciences at Sheffield Hallam University, UK
  • 6 months project , started summer 2000
  • Transparency Review was going on also
cooper and kaplan abc
Cooper and Kaplan - ABC
  • Developed in 1988 as an alternative costing methodology at Harvard Business School
  • They argued that traditional costing distorted product costs
    • “peanut butter spread” approach
  • There is a cost to all activities carried out within an organisation
    • e.g. transport of peanuts
  • Activity costs should be distributed to products in relation to their use of resources
advantages of abc
Advantages of ABC
  • Gives more than just financial information
  • “Fairer” system of overhead allocation
  • Accountability of central services e.g. IT
  • Highlights cross-subsidisation
  • Recognises the changing cost behaviour of different activities as they grow and mature
  • Can provide data for other initiatives
    • e.g. Transparency Review and Quality
disadvantages of abc
Disadvantages of ABC
  • Data collection can be costly and time consuming
  • Initially it can be challenging to collect the data you want
  • Need to determine appropriate and acceptable cost drivers
  • ABC is a more complex system than traditional management accounting
    • and relies on that being done well !
cnl2 conclusions
CNL2 Conclusions
  • ABC does work in HE and will be increasingly used in institutions, especially “ABC-lite/ABM”
  • It works on different levels within the institution
  • Suitable software and professional support is essential, in the early days at least
  • Academic scepticism can be overcome
  • Costings data needs to be placed in context
networked learning cnl1
Networked Learning - CNL1
  • Paul Bacsich
    • and Charlotte Ash (now in public sector “Best Value” programme)
  • Sheffield Hallam University, UK
  • 6 month study (in 1999-2000)
  • Funded by JISC
  • Aim - to produce a planning document and financial schema that together accurately record the Hidden Costs of Networked Learning
examples of hidden costs
Examples of Hidden Costs
  • Increased telephone call and printing bills for students due to Internet usage
  • Entertainment expenses “necessarily” incurred by academic staff at conferences but not reimbursed by the Institution
  • Administrator time answering student queries
  • Support costs of a new Learning Environment
  • Costs of content - “created in one’s spare time”
  • Costs of institutional collaboration
  • Costs of conformance to standards
mega activities for teaching lifecycle model
Mega-activities for teaching:Lifecycle model
  • Cost items recorded from literature
  • All current educational and training costing models analysed (Rumble, Bates, etc)
  • Traditional financial accounting analysed
  • Consultation with academic staff
  • Various cyclic models proposed, leading to...
course lifecycle model
Course Lifecycle Model

Three-phase model of course development

Planning and Development


and Evaluation


conclusions from cnl1
Conclusions from CNL1

In order to accurately record the Costs of Networked Learning you must have a sectorally-accepted method of what costs to record and how, in place from the start, which takes into account all stakeholders and uses Activity Based Costing within a framework of phases of the course development life cycle

what are the true costs
What are the True Costs?
  • Q: What is the rate per study hour?
  • Different kinds of study hours:
    • Active engagement with specifically created “teaching” material (expensive)
    • Thinking, conversation
    • Doing assessment
    • Studying “resource” e-content (cheaper)
    • Surfing the open web (cheapest, but worst?
rough guide rule of thirds
Rough guide - rule of thirds
  • 1: Study of “engaging” multimedia
  • 2: Study of existing or slightly modified learning resources
  • 3: Working on assignments (maybe in collaboration)
  • Costs (US, UK and Germany)
    • average $12000 per m/m hour, but v. large 
    • 10% of this for simple material
    • could one aim for $1000 per hour?
content development 1
Content development 1
  • Determine the level of demand
  • Produce an outline plan of the courseware
  • Conceptualise the subject knowledge
  • Structure and design the learning experience to be provided by the courseware materials
  • Decideinteractivity with the learner, the level and ways of building tutorial support into the material itselfand the links with other materials.
content development 2
Content development 2
  • Decide the formative assessment exercisesand the ways of providing feedback to the learner (and to the tutor if appropriate)
  • Decide the summative assessment associated with each module
  • Establish a range for the possible levels of on-line tutor support for each module.
  • Consider the interface between the learning programme and its sub-parts and the administrative support software tools
consortia critical success factors
Consortia - Critical Success Factors
  • High “binding energy”
    • may come from top-down or funding-driven
    • but more likely from friendship or shared vision
    • does not depend much on legal aspects
  • Organisational homogeneity or managed diversity
  • Linguistic and cultural similarity
  • Stratification
  • “Safely far away”

[Source: TL-NCE, UNESCO report]

other topical questions
Other topical questions
  • Will research advances reduce costs?
  • Will Open Source reduce costs?
  • This may be too much of a personal view
  • I have been conference organiser, evaluator, reviewer,...
  • Look at impact from EU research work
  • Look at impact of work elsewhere
    • UK
    • TL-NCE (Canada)
    • US
    • Australia, New Zealand, Singapore Hong Kong….
research conclusions
Research conclusions
  • European research: FP3 set the scene; FP4 added little, FP5 more promising
  • Canadian work credible and integrated, but lacks evidence of scalable approaches
  • Too much gap between computing theorists and industrial-strength pedagogic practice
    • few theorists in universities are seriously active in e-learning services
  • US is very synchronous and transmissive, paradigms that do not fit a time-poor world
what research might reduce costs
What research might reduce costs?
  • Focus on co-operative learning
    • Start with basic asynchronous “BBS” model
    • Allow new models to be supported, especially those with business potential
  • Develop scalable approaches
    • more focus on automated assessment?
  • Support multiple media and devices using same content
  • Develop more effective learning esp time-effective
can e learning save time
Can e-learning save time?
  • travel time
  • reduce “time on task”
    • by “better” training (25-40%)
    • by individualised training...
    • by using “time of the 3rd kind”
      • Time1 : on duty - used to be called “at work”
      • Time2 : off duty (not at work)
    • by consolidating time fragments
open source issues
Open source issues
  • Exemplars:
    • Linux, MIT, Canadian, Finnish, IMS, UK interest
  • Purpose:
    • Challenge commercial vendors
    • Facilitate research by providing flexible system
  • Cheaper?
    • Yes, to buy
    • No, to support (scalability, robustness?)
    • Few successful large e-learning players use “pure” open source, but several use modified
features of a uniform cost aware evaluation methodology
Features of a uniform cost-aware evaluation methodology
  • Costing basis must be clear
  • To gain political buy-in and breadth (multi-sector, etc), depth will be small
  • Students treated as people not only learners
  • Focus on level of knowledge and skill gained
  • Focus on time issues, not only time on task
    • time 1, time 2, time 3 - and differential value?
  • More feasible when there is a more uniform curriculum or exams (as in schools)
details about cnl costings projects

Details about CNL costings projects -

At to support from SHU and JISC

Professor Paul