eLearning: A risky business?

How risky is current eLearning development?

So how risky is it to develop a new eLearning program? Considering that eLearning has been around for some time it should be pretty straight forward, right? Let’s consider the history of the software industry and then we’ll contemplate the current situation.

For the sake of discussion I am going to use some stats regarding software development. In order to avoid a lengthy debate about the relationship between eLearning and software development I am going to concede that not all software development is related to eLearning. The universe of the software development industry is extremely diverse involving a myriad of software solutions. Having said that, let’s look at what the stats say about software development failures, which eLearning is definitely a part of.

One of the most widely cited and staggering studies was The Chaos Report published by The Standish Group in 1995. The Standish group estimated that a staggering $250 billion was spent each year on the development of software applications. Surprisingly the price tag of $250 billion is not the most astonishing part of their report. The shocking part of the report was the fact that “31.1% of projects will be cancelled before they ever get completed. Further results indicate 52.7% of projects will cost 189% of their original estimates. The cost of these failures and overruns are just the tip of the proverbial iceberg. The lost opportunity costs are not measurable, but could easily be in the trillions of dollars.”

If this is the bad news, what’s the up side? Based on their research a miniscule 16.2% of all software projects are completed on time and within the specified budget. These “successful” projects are further marred by the fact that many of them were a ‘mere shadow of their original specification requirements’.

Based on current research; The Robbins-Gioia Survey (2001), The conference Board Survey (2001), The KPMG Canada Survey (1997); the success rates for software programs remain bleak. I can’t help but wonder whether these studies exaggerate the failure rates. It appears that current failure estimates are still in the range of 40-45%. Can this still be a reality? What could account for these astronomical failure rates? How do potential eLearning customers ensure that they don’t fall into this failure trap? These are the questions that I would like to discuss over the next couple of months with you. I firmly believe that unless we address the failures of the past they will continue to happen. Although many things change in business, the fundamentals remain the same. Based on this assumption, there must be fundamental mistakes that are being made and that have been made well before The Chaos report. Surely, if we can identify and address these fundamental errors we can begin determine where the risk factors are in developing software. More specifically, we should be able to determine how risky it is to development a new eLearning project.