In-Depth

Maximize Your Certification ROI

With more than 400,000 MCSEs at last count, does it still make financial sense to become one? A long-time MCSE consultant breaks down the costs - course and exam fees, exam preparation materials and your own sweat and blood - and shows you how to calculate certification's return on investment.

• By Harry Brelsford
• 06/01/2001

So, you've decided to get certified. Now, some big questions need answers:

• "What will it cost?"
• "Is it worth it?"
• "How soon will certification pay off?"

I've put together this analysis to help you calculate the cost and benefits over time for obtaining an MCP title, what in financial terms, the certification ROI (return on investment). By the end of this article, you should be able to calculate your own answers to these big questions.

A Tale of Two Candidates
I'll use two "composite" example certification candidates throughout my illustration, based on a compendium of technical professionals I've mentored over the years and systems engineers and developers I talked to. I'll also thrown in my own biases as both an MCSE consultant and card-carrying MBA.

Our first sample candidate, who I'll call Linda James, is a senior LAN manager in a Fortune 100 company. She holds a two-year degree in computer operations and has over eight years of work experience in IS. Linda decides to obtain her Microsoft Certified Systems Engineer credential. She informs her employer, who agrees to pay half the cost of the certification via the company's tuition reimbursement program (this is a key point to my story). Together, they agree that she will attend the seven MCSE courses during working hours without loss of pay or vacation time. These courses will map directly to the five core and two elective exams needed to earn the Windows 2000 MCSE.

Bob Jackson, in contrast, is an independent computer consultant who installs and maintains LANs for clients. He holds a four-year degree in business and a master's degree in music. His company, JacksonLANs, plans to become a Microsoft Certified Solution Provider, and Bob intends to embark on the certification track in late 2001 (when he'll likely hire another Microsoft Certified Professional to meet MCSP requirements). Bob has a loyal clientele and he bills at $125/hour for his consulting services.

Bob intends to embark on a journey that combines self study with classroom attendance. He plans to earn his MCSE by using self-study to prepare for four of the exams, since it's far cheaper, combined with three courses at a Microsoft Certified Technical Education Center. A CTEC is a company "certified" by Microsoft to offer its technical education courses. Microsoft has a formal curriculum of courses; CTECs can offer whichever of these courses they choose, as long as they have a Microsoft Certified Trainer to teach the course.

Starting with the assumptions shown in Table 1, I'll calculate each candidate's initial costs, then figure the payback over time, while factoring in career expectations.

In figuring costs, here are some basic numbers you can use. If you'll be taking courses at a CTEC, budget for a class tuition of approximately $2,000 and an exam fee of $100 per exam. Self-study candidates should budget for $300 to $400 in courseware costs and $200 in exam fees. That's based on the assumption that self-study candidates may want to retake an exam to earn passing marks. That's not a bad strategy, by the way: Using self-study, then taking an exam once to see what's on it, then taking it again to pass, is still far less costly than taking a CTEC course and taking the exam once. Of course, a course presumably offers additional learning for the price - it's up to you. Also, be sure to consider lost revenue days for attending classes.

Tip: Online education is a learning option not explicitly reviewed in this article. To learn more about them, read Barry Shilmover's roundup in the May 2001 issue.

Assumptions
I've made the following assumptions in preparing this table: Linda and Bob study the same curriculum, earn the same MCSE title; and to maintain their certification, Linda and Bob each attend two additional courses and pass two new exams over 36 months.

A large part of the cost of preparing for an exam isn't the cost of the course, but the time spent studying and attending classes. Each candidate must somehow account for this time. Because Bob is self-employed, attending a five-day class means he loses five days of revenue (Bob considers each revenue day to be $1,000 which is his bill rate multiplied by eight hours per day). Since Bob plans to attend classes for the three designing exams, he needs to recognize 12 days of lost revenue (the duration of class days for Courses 1561, 2150, 2162 and totaling $12,000).

Linda doesn't have that cost, as her employer still pays her salary when she's away from the office (now that's a nice hidden job benefit, eh?). Note that for any certification candidate attending all of the courses listed in Table 1 would be in-class for a total of 30-days (note this really amounts to 1.5 months away from the office, as a normal month has 20-business days when weekends and holidays are accounted for).

Based on my certification experience and that of others, candidates who take a CTEC course often pass the exam on the first try. However, I've added one more exam fee to each candidate's costs to account for one failed exam over the life of their CTEC-based Windows 2000 MCSE journey. Candidates like Bob who employ self-study methods, by contrast, more often have to retake an individual exam because they tend not to be as thoroughly prepared as their CTEC-trained counterparts. I assume that they then pass the exam when they retake it. (When I've used self-study methods, I've used the first attempt at a new exam as a study tool.)

Note: Prices for courses and self-study kits are set individually by CTECs. Microsoft says that an average cost for a course is $300 per day. The prices included in Table 1 were determined by surveying several CTECs in the northwest; however, these costs are likely consistent with most CTECs all over the U.S.

Table 2. Initial MCSE certification costs for Linda James (corporate LAN manager). Note that since Linda has been granted time off from work, she doesn't incur lost wages over the 23 work days spent attending classes.

In Table 3, given each business day committed to CTEC training, Bob foregoes $1,000 in gross client revenue. In attending 12 days of CTEC classroom training, he loses $12,000 in client revenue. Also, Bob purchases self-study materials from Microsoft Press to prepare for exams 70-210 and 70-215 and 70-216 and 70-217. Bob attends classes for courses related to exams 70-219, 70-220 and 70-221. Given the Windows 2000 MCSE exams are considered difficult by many candidates, Bob will take each exam twice.

Table 3. Initial MCSE certification costs for Bob Jackson (the independent consultant). I've assumed that while attending courses and studying, Bob loses 12 revenue days at $1,000 per day.

On-going Re-certification Expenses
Certification, unfortunately, is an on-going process. As with maintaining real estate, certified professionals must continually plan for "capital additions" to their skill sets. At a minimum, you'll need to plan regular study and exams to keep your existing title current; you may also want to acquire new skills and certifications. Making capital additions extends the useful life of certification. MCSEs, since that's whom we've discussed in this article, should plan for one ongoing certification requirement every 18 months, on average. It has been my experience that the call for ongoing education requirements is a function of three events:

• Microsoft product cycles
• Major product revisions
• Individual student choices

In our examples, we'll estimate $2,100 for on-going expense for each 18-month period - that's $2,000 for a CTEC class and $100 for an exam fee. Over a 36-month certification useful life, that would add up to $4,200. Note that in Table 4 I have Bob attending two five-day courses in this 36-month period, which means he loses ten billing days during that time (that is, while he sits in class). Also in Table 4, Linda's ongoing recertification expenses are only $2,100 over 36-months, because her employer will again pay for half of her certification expenses.

What's Your ROI?
Now that I've shown you a return on investment model for each candidate's certification process, let's calculate the ROI for our candidates. We'll assume that Linda and Bob determine the useful life of their certifications to be 36 months.

Based on my experience, the experience of IS placement professionals, and MCP Magazine's annual salary survey, let's make the following assumptions: Linda enjoys a $5,000 increase in her salary after earning the MCSE title. Bob enjoys an additional $7,500 annually in gross consulting revenues (resulting in perhaps an additional $5,000 net income before taxation after his consulting overhead).

The results in Table 4 show a positive ROI for either candidate. The numbers suggest that investing in the MCSE title was a good financial bet for Linda. Bob needs to take a long look at his financial decision to become an MCSE. He needs to increase his consulting bill rate to make more money with the premium MCSE title or lower his certification costs (more on that later). Note that the model used in this story is based on assumptions for two candidates (factors like geographic location may affect your ROI outcome).

In my assessment, given the numbers, Linda would be well-advised to start on her Windows 2000 MCSE certification track right away! Bob, on the other hand, needs to consider staying where he's at, using the MCSE to increase his revenues or take his MCSE courses at night so he doesn't lose billing opportunities. Note that if Bob took all of his courses at night and lost no billing time over the 36-month time period, his ROI would jump to a positive 35 percent! Then the MCSE certification makes sense for Bob.

Table 4. ROI for Linda James (corporate LAN manager) compared to ROI for Bob Jackson (independent consultant). Note for Bob, the $7,500 gross consulting figure is being used to keep the ROI model conceptually correct.

Bear in mind that, for simplicity, this analysis ignores "time value of money" considerations used in advanced financial modeling. Readers with finance backgrounds may elect to perform the analysis using a discount rate that penalizes cash flow the further "out" from time period zero (today) the cash flows are received. We all know a dollar received in five years is not as valuable as a dollar received today, but I'll leave that to you as you construct your own ROI model (and select your own discount rate - always a controversial step!).

Certification Benefits and Issues

Increased compensation. Based on the feedback from industry observers, a LAN engineer in today's marketplace with the MCSE certification would enjoy an additional $5,000 in annual compensation compared to not having an MCSE (again this varies by region and your own personal situation). That compensation might come in any of several forms:

• You keep your existing position and enjoy a $5,000 raise.
• You are promoted to a more senior position that pays an additional $5,000.
• You change jobs, upgrading your position in the process, and earn an additional $5,000 per year.
• Consultants, based on my company's experience, can increase rates and solicit additional business, resulting in an additional $7,500 per year in consulting revenue, which I suggest results in $5,000 in net consulting revenue before taxation.

MCSE certification is more than a financial decision. Many people seeking to advance their careers are life learners who enjoy seeking knowledge in new areas. Potential employers like certified candidates for this reason also - the title demonstrates not just technical knowledge, but someone with a commitment to his or her education and career.

MCSE designation is not the end of the road. Once you've joined the MCSE ranks, consider pursuing additional certification designations: MCSD, MCDBA or even MCT. Heck, there's even a trend for some MCSEs returning to college to earn an MBA!

The MCSE title is valued. Some technology vendors have established certification programs that have grown in popularity until the designation has lost market value. That's apparently not the case with the MCSE designation. But granted, the program has grown dramtically over the past few years, so factor in the fact that there are currently over 400,000 MCSEs as you make your decision to get certified. Whereas some marketplaces might start to see an MCSE glut at some future date, you may live in a small town where you can be the only MCSE within miles.

Cost Control Last and not least, don't forget you can dramatically boost your ROI by lowering your costs. Costs can be lowered by using self-study courses. You might also consider training centers for classes where you learn at night and still earn a paycheck by day (maybe Bob Jackson should consider that to boost his ROI into positive territory for all he intends to take as a student in-class - you'll recall that he could potentially turn his ROI into +35% using this approach). Someone that gets certified for free has an infinite ROI. Someone that pays over $30,000 to get certified would have a much lower, if not negative, ROI. It's all in the math!