IBM Corp. faced a difficult problem teaching nonfinance personnel about finance recently. A new sales methodology being introduced to its 5,000 far-flung global sales managers involved some basic finance concepts— like cost justification and payment options—that were unfamiliar to them. And the White Plains, New York-based computer maker knew that sales executives traditionally found finance tedious.
Online training seemed an efficient solution, but previous Web- based attempts in the finance arena were “basically E-books,” recalls Sarah Cliff, learning development manager of IBM’s Global Sales School. “They were very dry and difficult to relate to.”
For an approach that would be effective, IBM turned to Chicago- based online learning specialist Cognitive Arts Inc., which assigned computer scientists to work with a team of internal IBM finance staffers to develop an interactive course. The final product offered the sales executives simulations of common problems in financing IBM’s packages, such as helping customers link their own budgets to the actual cost of the packages they were buying. Since the program was introduced last February, its success rate has been 90 percent among new hires, who must pass a test to earn certification. The IBM sales people also get a disk version of the course as a desktop reference tool. “It allows you to learn and test yourself, and it’s something you can go back to anytime,” says Cliff.
Many in the training profession have noted the slow growth of online business trainings in general—and finance-related programs in particular—despite such obvious advantages as cost and time-saving, flexible scheduling options, and the ability to provide uniform instruction at distant locations. In 1998, the American Society for Training and Development (ASTD) projected in a report that within two years, 23 percent of all training would be done online. That didn’t happen, and today, ASTD’s expectations have been considerably pared back. In a “state of the industry” report, it suggests that one reason is that online training is “difficult to do well.”
Blended Is Better
For advanced finance courses useful in the corporate finance department’s training mission, the market is especially narrow, leaving companies to scramble together expensive live programs, often in conjunction with university finance professors. But more general- finance online courses are available these days, giving CFOs options for the training they sometimes must provide for nonfinance personnel.
And these courses are getting better. One reason, says Mark Van Buren, the ASTD’s director of research, is development of a “blended” training approach, combining live teaching with self-paced online exercises. This has helped significantly boost training completion rates, which often were below 50 percent for purely-online programs that often were plagued by poor quality and format. Today’s online training, though, engages students with interactivity and sophisticated graphics. And much of the training has been sensitized to languages and cultural differences among trainees, making programs more useful globally.
NYUonline Inc., a for-profit business created by New York University, uses blended training for its corporate clients, including many large financial-services firms in the New York area. Live portions of the courses, Webcast using NYU professors, cover such topics as business accounting, statistics analysis, and business math.
The blended approach unlocks the potential of online training, NYUonline CEO Gordon Macomber says, while completion rates for classes have soared from 40 percent, in some cases, to 85 percent. “I think the benefit of live teaching gets forgotten,” he says, “because [purely Web- based training] is so efficient, and it saves so much money.”
Zoologic’s Approach
A few inroads are being made in developing advanced finance themes for online delivery. For some clients, New York-based Zoologic Inc. offers courses on such topics as fixed-income securities and risk management. Zoologic, founded in 1997 with seed money from two former Bankers Trust executives, now is backed by Deutsche Bank. This pedigree makes the company uniquely qualified to administer certain kinds of finance training, according to CEO David Samuels, because “we started out trying to meet the education requirements of Deutsche Bank.”
Clients for various finance offerings now include Koch Industries Inc., Pacific Gas & Electric Corp., Metropolitan Life Insurance Co., banks, consulting firms, and universities. Available courses in the course library include bond-price sensitivity, futures instruments, valuing swaps, and probability distribution of returns.
Zoologic doesn’t customize courses for companies. Instead, customers select from course offerings to design a curriculum suited to their objectives. Companies can, however, create “custom links” between course exercises and actual corporate data, so that students can learn using examples from their own company. Instructors from the client companies get involved at the classroom end, to help make the training more relevant. Groups including the National Association of State Boards of Accountancy, Association for Financial Professionals, Certified Financial Planner, Professional Achievement in Continuing Education, and Chartered Property Casualty Underwriters accredit the trainings.
Zoologic’s Samuels says the power of the online portion of its trainings is its simple design and interactivity, with Web-based simulations giving students some taste of possible on-the-job situations. Online exams mix multiple-choice and “open-ended” analytical questions, although at the highest difficulty levels exams use open-ended questions almost entirely. Exercises throughout the courses let students introduce variables, experimenting with interest rates in pricing long-term debt, for instance.
Some other training companies “misconstrue what ‘blended’ is about” and “use the blended approach as an excuse for why their online component isn’t interactive [enough],” he says. Samuels thinks blending should create a “funneling effect,” in which live instructors on the scene give students a tailored, more sophisticated understanding of subjects that an initial Web-based portion has introduced to all participants.
Lloyd’s Bank tried to create such an understanding as it taught some basic finance principles to account executives working in its wealth management business recently. With executives and clients spread around the world, the London-based bank faced both logistical problems and language and cultural issues in delivering the training. Using Zoologic’s courses, Lloyd’s product and investment specialist, Paula DeAzevedo, and its vice president and head of investment advisory services, Anabel Reid, put together a curriculum for the account executives that included an introduction to securities markets, the time value of money, and portfolio risk and portfolio returns.
While the rapid growth of the staff being trained has made it difficult to measure the success of the courses, Reid says that staffers now “speak the same language” about the needs of their clients.
Meanwhile, more top business schools are collaborating with companies to design both tailor-made and off-the-shelf online courses to help senior executives bone up on financial topics. Massachusetts Institute of Technology’s Sloan School of Management recently designed a Web-based course for Merrill Lynch investment banking executives, taught by stock-price expert Andrew Lo. And Cognitive Arts, the company that designed IBM’s course, will soon release “Finance for Managers,” a collection of Web-based classes through Harvard Business School Publishing. The courses, which include ratio analysis, pro forma forecasting, and use of discounted cash flow, are intended to be integrated with specific company finance-training efforts.