Surviving and thriving in the 21st century is very different from the late 20th century. The speed of business has grown dramatically and to compete, a lifelong learning program needs to think in terms of the future. This requires investing in the organization. Spending money now for future paybacks that can be hugely profitable. In the 20th century we were concerned about the profitability of each individual program, but in the 21st century we will be much more concerned about the profitability of the overall organization. This might even mean we lose money for a period of time in order to be positioned for success in the future.
Those programs investing in online learning today are doing so with an eye to the future. Capital and staff time are being allocated to a venture that hopefully in the future will provide significant income.
If you are investing in a web-based management system, you know the cost is significant, but the long-term benefits to both staff and customers should outweigh the costs with reduced expenditures and increased income.
Programs investing for the future are doing the following:
A. Investments into research and development (developing online course capabilities) and building infrastructure (building a webbased management system) are being looked at as capital expenses (spread out over 3-5 years) instead of a cost allocated to that year’s
profit and loss statement. Research and development and infrastructure building are investments much like purchasing computer hardware for the office or building a new building.
B. Time and energy needs to be spent selecting how investment money should be spent.
Being financially prudent means an organization knows how much it can afford to spend on investment. This number will differ dramatically among lifelong learning programs, and the decision on what to spend will depend on the long-term payback, as well as the options for obtaining the money. The money may come from profits/reserves; from grants or allocations; or from partnerships. It is most important to be smart about where the money is spent. For
some organizations that might mean online learning, while for others it might mean the development of a quality brochure or the improvement of classroom chairs.
C. Although the cost of investment is being spread out over 3-5 years, the yearly promotion, production and administrative expenses must meet anticipated benchmarks. It is more important than ever to make sure that the product mix being provided is profitable. Promotion and production should not exceed 60% (you should be striving for 50%) of income and administrative expenses should not exceed 35%.