In another time Dave Lehman would be in another place — and spending a lot more of his employer’s money. Eager to master the subtleties of Microsoft Office, the popular suite of word processing and business applications, Lehman enrolled in a continuing education class. Until recently, Lehman’s going back to class would have meant trekking to a college or hotel conference center. Either way, he’d forfeit time on the job and likely saddle his employer with travel and lodging expenses — to say nothing of a hefty tuition bill.
But Lehman is taking this training course over the Internet. He attends class when and where it’s convenient for him — usually at his desk during his lunch break — and works through the material at his own pace. “This fits my schedule,” says Lehman, an end-user specialist for York, Pennsylvania-based USA Direct Inc., a privately held direct mail operator. Lehman runs the help desk at USA Direct, trains his fellow employees in how to use software, and oversees the company’s computer network.
Although he doesn’t think of it in such grandiose terms, Dave Lehman is part of a revolution in worker training. According to technology research firm IDC, online schooling accounts for about $2.2 billion of the $19.5 billion spent on corporate education and training in 2000 (that excludes training that companies deliver in-house to their own employees). IDC estimates that by 2003, E-learning or Web-based training will account for $11.4 billion of the nearly $30 billion business education market. And in a recent survey of 40 of the world’s largest corporations, Forrester Research found that all but one had online training initiatives already in place.
The big corporate switch to virtual instructors makes sense. Handled properly, distance learning cuts training costs substantially. “The cost-of-delivery savings are enormous, as are the cost-of-attending savings,” notes Wayne Hodgins, strategic futurist and director of worldwide learning strategies at Autodesk Inc., a maker of computer-aided design software in San Rafael, California. “On the delivery side, you get out of having to do everything from paper-based reproduction of content to shifting instructors and equipment all over the world. We used to spend it, now we don’t.”
Online training also offers anonymity — often a plus for senior executives. “If you’re the CFO, no one needs to know you’re taking a course in derivatives to sharpen your skill set,” says Laura Friedman, vice president of the distance learning group at the New York Institute of Finance (NYIF). “For whatever reason, a senior executive may not want to sit in a classroom with someone who’s 27 years old — especially a 27-year-old who works for him or her.”
For human resource heads and training directors, delivering lessons electronically makes it simpler to track the progress of students. Likewise, Web-enabled training programs allow corporate tutors to customize content, fine-tuning programs for the specific needs of workers. “For example, a new salesperson needs different types and amounts of training than somebody making a lateral move from another company,” explains Cushing Anderson, IDC program manager for learning services research. “E-learning allows you to make training relevant.”
This is not to say everybody’s signing up for the revolution. Despite the obvious benefits of cyber-training, companies still spend billions sending employees to off-site locations to learn from human instructors. This raises the obvious question: What gives?
Mostly, online training lacks the human touch. Despite video streaming and narrowcasting, it’s still nearly impossible to duplicate a live classroom over a wire. Even with exponential advances in processing power and bandwidth, Internet interaction between students and teachers is stilted. Many early attempts to migrate education to the Web proved that. “The ugly truth is that initial forays into E-learning were no more than electronic versions of correspondence courses,” says Hodgins. “Now people are focusing on doing things differently to make E-learning more effective, and not just for the 2 percent of the population for whom correspondence work was effective.”
And make no mistake, the new wave of online training tools can be very effective. Typically, programs enable corporate users to break lessons down into smaller pieces so that students can glom on to complicated concepts. Many applications allow easy access to mentors via E-mail or chat rooms, or participation with other students in seminars broadcast live over the Web. Some allow content developers to modify coursework on the fly, either in response to student input or to bring information up-to-date. “In the past, programs were locked down and based on an assumption of what a group of people needed to know,” Hodgins says. “Changes were not easily — or inexpensively — made.”
Sexy, Yes; Slinky, No
Inexpensive is the key word. As E-learning applications have improved, the price of educating and training workers online has gone down — often well below the tab for more-traditional programs. “Typical instructor-led learning for corporations costs about $300 per hour per student,” says Gordon Macomber, CEO and president of NYUonline, a for-profit subsidiary of New York University. “And that doesn’t include travel and other related expenses. Companies can look at significant cost savings and enhanced learning with a well-designed and managed E-learning program.”
While that may be true for corporations that outsource employee training and education, it’s not so clear for businesses that develop proprietary course content to train employees, business partners, or customers. Developing content in-house can be expensive, as can the infrastructure to support the program. “The cost of creating content for E-learning is probably higher than it is for the more traditional delivery model, and more of it is required,” concedes Hodgins. “A live instructor could make up for a lack of materials, but you don’t have that option online.”
Another small problem: The multimedia requirement of an E-learning program can be so great it can slow a company’s computer network to a crawl. For that reason, managers at Armonk, New York-based IBM have eschewed video in the online training materials they’ve developed for the company’s workforce. “We love video as much as the next person,” explains Nancy Lewis, IBM’s director of management development. “But from a curriculum design point of view, video is sometimes not as effective as other approaches, even though it’s very sexy.”
Beyond hogging network resources, video- intensive applications often require plug-ins. That can turn students off. “We’ve determined that users get very frustrated with the need to download software plug-ins required to use video,” notes Lewis. “And if they’re frustrated, they won’t come back.”
They also won’t come back if they feel they’re getting the short end of the joystick. Because online training can be done practically anywhere or anytime, some employers require workers to take training programs during their off-hours. “Employees often take these online courses at home,” observes Friedman of NYIF, which began offering customized online training a few years ago and launched ready-built “retail” courses for the financial community in 2000. “This presents the issue, especially for nonmanagement employees, of whether you should be paying them overtime.”
Such a concept might spook cost-conscious CFOs. To make sure the price tag for E-training doesn’t get out of hand, finance managers need to get with the program before the program gets with them. Explains Lewis: “CFOs should demand that a strategy and an E-learning architecture be identified before the company begins to offer online training in quantity.”
It Is Balloon!
That done, companies can reap substantial rewards. IBM spent about $1 billion of its $88 billion in revenues in 1999 on in-house learning programs. Managers at the U.S. technology giant estimate that for every 1,000 classroom days converted to distance learning, the company saves around $400,000. Executives at IBM reckon that between cost-cutting and gains in productivity, distributed learning saved Big Blue some $200 million in 1999.
Managers at the U.K. division of Dallas, Texas-based Howard Schultz & Associates International won’t likely see those kinds of balloons. Nevertheless, executives at the accounts payable auditor predict their recently launched online training program will save the financial outsourcer around $160,000 each year.
Prior to rolling out the system, executives at the consultancy’s U.K. operation had been conducting weekly skill sessions at the company’s office just outside London. John Holdstock, U.K. managing director and head of the E-learning program at Howard Schultz, says getting the outsourcer’s 200 far-flung auditors to the meetings was a real pain. Besides the expense, the weekly trip to London cut into the auditors’ auditing. “If workers are traveling to the head office,” explains Holdstock, “then they obviously can’t be working during that time.”
In 2000, Howard Schultz’s management decided to move the brainstorming and training sessions onto the Web. Working with Chrysalis ITC, a U.K. education consultancy, the company began designing an online version of the weekly meetings. The virtual gatherings would be run over an E-learning platform called InterWise Millennium, with a facilitator provided by Chrysalis.
The system, which costs about $50 per user per hour, went live late last year. Prior to sessions, course materials are downloaded onto each auditor’s PC. Once a meeting starts, the facilitator controls what the participants see onscreen and talks them through the process. Associates can ask for permission to speak or to ask questions by sending a note to the facilitator. “What does take some getting used to is the voice delay,” concedes Holdstock. “Sometimes, the two or three seconds you have to wait for a reply can seem like a very long time.”
Not quite as long as waiting for an employee to bus in from Northumberton, however. “The whole process now takes two or three hours,” notes Holdstock, “instead of an entire day.”
As managers at Autodesk recently discovered, online training can shorten learning curves for nonemployees, as well. In spring 1999, the software vendor came out with an updated version of its AutoCad software. There was just one hitch: The revised plotting feature in the application was confusing the hell out of resellers and customers. “The problem wasn’t due to a bug in the software,” explains Carrie Bustillos, senior manager, business development for learning and training activities, at Autodesk. “It’s just that there was a change in the way the plotting function worked.”
E-Train in Vain?
Pretty soon, managers at Autodesk noticed a dip in sales of the software. Rather than try to personally visit each of the company’s 450 or so resellers and authorized training centers in North America, Autodesk managers hosted instructor-led seminars in eight regional offices. The seminars, which reached about 150 people, were followed by an online training initiative that attracted more than 600 users. The plotting feature demystified, sales of AutoCad jumped back up. “This was a case,” notes Bustillos, “in which we were actually able to measure our success by a change in sales.”
Still, some education specialists believe virtual training will never fully replace more tried-and-true methods. “The finest training you can receive is in a class with 10 people who are awake and ready to learn, with a fabulous instructor to lead them,” says NYIF’s Friedman. “But,” she grants, “that’s very expensive to produce.”
Hence, scores of companies augment costly traditional instruction with cheaper virtual training. “The real growth in online training is as a complement to instructor-led lessons,” notes Andy Hasoon, CEO at CourseLeader, a U.K.-based training specialist. According to Hasoon, scores of companies rely on online material to get members of a group to the same level of knowledge before in-person training begins. Adds Autodesk’s Hodgins: “The magic is in the mix.”
Rebecca Nelson, director of training programs at the Internet advertising specialist DoubleClick, which has tested virtual management training in a pilot program initiated by New York University, believes HR directors at startups need to be particularly careful about rolling out entirely virtual training programs. “They have a high population of first-time managers,” she explains. “First-time managers need to get in a physical room with more-experienced executives for some coaching and some role-playing, done real-time and in person. There’s no substitute for that.”
Not an Ottoman
Maybe not. But corporate managers ready to embrace E-learning will find no shortage of programs — or hawkers of programs — to chose from. Among content providers, the list includes colleges and universities, for-profit companies (both traditional providers and Internet startups), as well as consultants. Many have marquee names: from NYUonline to consulting boutique Stern Stewart & Co., which offers a series of online training programs built around the economic value added performance metric. Typically, employers can either rent or purchase Web-based instructional materials from course providers.
Costs vary quite a bit, depending in part on the format of instruction. The Microsoft Office class Dave Lehman is enrolled in costs employer USA Direct only $150. The program, administered by York College of Pennsylvania, includes 53 modules, each one roughly equivalent to a four-hour class. Why so cheap? Mostly, because it is entirely virtual, with no instructor support whatsoever. According to Leroy Keeney, director of special programs for York College, the cost for all 53 modules, if presented in a traditional classroom setting, would be about $6,500.
By contrast, prices for continuing education classes at NYUonline are substantially higher than $150. Tuition ranges from about $60 to $150 — per hour — depending upon the level of the course and its length. But students also get more. In almost all cases, they have access to a professor by E-mail. Some courses feature a real-time, online chat room with the professor and other students. And sometimes, students can actually listen to a lecture while simultaneously watching a PowerPoint presentation. “We provide students with a $15 headset and microphone that they plug into their computer, and they’re off and running,” says Macomber of NYUonline.
Companies looking to develop their own online educational materials can enlist the aid of a wide variety of vendors, or more aptly, technology enablers. Software companies such as Docent, Isopia (acquired by Sun Microsystems), and Saba make administrative tools for registering and tracking students, while application makers like Centra, HorizonLive, and PlaceWare produce online collaboration tools, including online whiteboards, display software, and chat programs. Meanwhile, Web conferencing specialists such as Evoke (now Raindance), InterWise, NetMeeting, and WebEx allow companies to deliver real-time video and audio to users’ desktops.
Although developing custom content can be costly, it’s not nearly as costly as buying a prepackaged program that doesn’t make the grade. “The best online training is as good as the best instructor-led training,” says IDC’s Anderson. “But it’s easy in both cases to do a bad job.” Anderson believes it’s crucial that prospective buyers of shrink-wrapped software see the app in action. Toward that end, he advises corporate managers to actually visit the users that vendors offer up as references. “Buying online training is not like buying furniture,” he cautions. “You are committing a lot of energy to this, and your learners are going to see the value — or lack of value — in your choice. You want to get this one right.”
Several years ago, the management development group at IBM Corp. began taking a hard look at the merits of online training. At the time, executives at the Armonk, New York-based technology giant — which spends around $1 billion annually on employee training — were considering moving 60 percent of IBM’s internal learning program onto the Net.
Their decision? Porting traditional workshop content to a CD-ROM or a Web-based training program was not sufficiently compelling to merit the wholesale replacement of human trainers. Instead, IBM developed a four-tier strategy to employee education — an approach that matches the delivery system to the educational objective.
That matching-up of message with messenger permeates the 12-month manager-training program IBM calls Basic Blue. The first learning tier, information, covers the sharing of knowledge — and is distributed over the Net. “We’ve put things like management concepts and best practices information onto the Web in the form of what we call QuickViews — short courses built on a reusable template,” explains Nancy Lewis, director of management development at IBM. “They’re written in a pithy way to give managers our best thinking and practice in a particular area. They’re written for managers who are in a rush.”
The second learning tier is understanding. Here IBM uses the Web to see if employees have mastered the concepts in tier one. “The courses are highly interactive,” says Lewis, “and put managers in real-life scenarios that have been simulated on the Web.” Once a manager has worked through IBM’s QuickView on employee coaching, for example, that manager might proceed to the coaching simulator. “Based on how you respond, the simulator will take you down a certain path,” Lewis explains. “You can stop at any point, undo your answers and ask questions, and the simulator coaches you through each step.”
IBM’s third learning tier is collaborative learning; it’s intended to facilitate learning from peers or experts via online virtual classrooms. IBM produces those classrooms using software marketed by its Lotus subsidiary. The fourth learning tier is face-to-face learning, a traditional format designed to allow IBM managers to polish higher-order skills and proficiencies.
Lewis says the Web-enabled program packs a real financial wallop. Basic Blue covers five times as much material as IBM’s old five-day workshop — and at one-third the cost. “With the old workshop format, our student day cost was about $350,” Lewis notes. “We’ve been able to reduce that to $136 per day.” —R.M.
Learning about E-learning: A Poll
|What is the greatest benefit you perceive from E-learning technology?|
of 696 responses
|Access to externally developed educational resources||
|Ability to communicate complex concepts not perceptible through other means||
|Means to capture, record, and reuse presentations||
|Real-time broadcast of training material||
|What is the greatest hurdle to expanding current skills-development initiatives?|
of 706 responses
|Employee time away from the job (lost productivity)||
|Lack of available or relevant training resources and content||
|Cost and time of travel||
|Employee interest and cooperation||
|What is the greatest impediment you perceive in E-learning technology?|
of 695 responses
|Difficulty and complexity of development environments||
|Lack of network bandwidth or other computing resources||
|Lack of sponsorship by management||
|Lack of perceived need||
|Which of the following resources are available within your organization?|
of 621 responses
|Computer-based training (other than online)||
|Online conferencing (other than audio)||
|Testing and measurement||
|Online presentation, capture, and recording||
|Streaming media (broadcast)||
Source: The Delphi Group