I think I will post the full version of my e-learning story for
Internet World magazine and try and find time to annotate it. Written to conform to the magazine's focus on supply-chain and value-chain management, it still embodies a lot of my preliminary research on the general topic and serves to remind me of some good contacts and resources.
The Learning Curve
The fragmented e-learning industry rallies around a new business case: the value chain as 360-degree learning community.
In Neil Stephenson’s novel
The Diamond Age, or, A Young Lady’s Illustrated Primer, the most dangerous technology in the world is a book-sized virtual mentor designed for children of the ruling elite, which bonds with and educates its user from childhood to adulthood. When a homeless urchin gets hold of the device, it develops her into a kind of Joan of Arc who transforms her world.
Claims about the potential of e-learning to support a wave of “e-transformation” initiatives and to foster both talent retention and managerial efficiency in enterprises have been no less dramatic. Science fiction or fact? In response to that question, a fragmented e-learning industry must form stable value chains and prove that its products can foster agility and the efficient use of knowledge and human capital in the value chains of a number of vertical industries.
There are ample signs that the case has already been proven to the satisfaction of many. As Leigh Kelleher, director of global e-learning at Deloitte Consulting, cheerfully observes, “the stampede is on” for e-learning implementations. The vital signs of the industry as a whole seem to bear this observation out: The number of North American vendors identifying with a distinct e-learning industry has surpassed the 5,000 mark. The WR Hambrecht + Co. E-Learning Index maintained by analyst Trace Urdan has consistently outperformed the Nasdaq—up 20 percent for the year through late August, in contrast to the 20-percent loss posted by Nasdaq. The industry has demonstrated sustained growth even in the middle of a tech spending downturn. Education news is dominated by learning technology coverage, and education equity-investment dollars are starting to follow suit, says Rachel Connell, senior analyst at Eduventures.com. Consensus estimates show revenue from corporate learning initiatives growing to more than $11 billion by 2005 and e-learning’s share of a $60 billion corporate education market and a $40 billion government market growing rapidly.
The numbers for IT training are similar: According to IDC, the sector will grow from $21 billion to $40 billion by 2005, but the proportion delivered as e-learning will increase from 11 to 40 percent. IDC also projects that Web-based training will grow 900 percent between 1999 and 2003. The American Society of Training and Distance Education (ATSD) predicts a 117-percent increase in the use of learning technologies in businesses between 1999 and the end of this year.
What Is E-Learning?
The days of flying the North American sales force to Miami for three days of “death by PowerPoint” are so over. Let them stay home and learn through a browser-based, interactive e-learning course, resolve questions with an real-time online mentor or subject-area expert, and compare notes with fellow learners through peer-to-peer chat, moderated bulletin boards, or live instructor-led sessions. Then let them put what they have learned to work in a task-based simulation that reinforces what they’ve learned, measures and certifies their competency, and qualifies them to move forward along a learning track dictated by specific business needs or by their own career aspirations.
Interactivity, collaboration, practical simulation, measurable performance, and a focus on the learning experience from the learner’s point of view define e-learning and top the list of what adopters and end-users require from it. The National Association of Securities Dealers (NASD), to cite only one example, now requires that online courses taken to satisfy continuing education requirements provide means to interact with instructors, along with certification of attendance and satisfactory performance.
Observers such as Jay Cross of the Internet Time Group and the e-Learning Forum go so far as to predict that the advent of e-learning means the death of traditional corporate training. This model, which at its worst embodies what Paulo Freire called the “banking” model of education—the depositing of factoids and slogans into passive minds—gives way to a “dialogic” model that’s based on active, collaborative learning, enables individual learners to proceed at their own pace and in the mode most natural to them—improving course completion rates and measurable learning outcomes, among other benefits. It stimulates the formation of ad hoc learning communities that use knowledge-management and collaboration tools to network once the structured learning process is complete, capitalizing on the fact, as Cisco’s Bill Souders notes [see “Five Minutes With,” p. xx], that 70 percent of learning is informal.
Yet even the most ambitious early adopters still deliver a only small percentage of learning online. Motorola University, which has set out to deliver 30 percent of learning online by year’s end, and 50 percent by next year, is ahead of the curve. General Motors University, in the first year of its relationships with UNext and technology providers General Physics, and Saba, plans to reach 10 to 20 percent in the near future.
Both organizations advocate the “blended learning” strategy, which uses asynchronous online learning to prepare for and measure outcomes from classroom sessions. Given this preparation, classroom meetings can be focused on the kind of face-to-face group processes that the e-learning user experience, still limited by bandwidth constraints, is not yet suitable for. Advances are being made in live online instruction and collaboration, however, which should grow to a $750 million market in the next few years, according to new research from Eduventures.
Why E-Learning?
As offerings from major vendors have evolved into hosted and behind-the-firewall end-to-end solutions, responsibility for e-learning initiatives has migrated up the chain of command from traditional training-budget managers to the executive suite, where e-learning has found influential champions. Training and human resources managers are no longer the most likely audience for sales pitches. Deloitte’s Kelleher, for example, says she finds herself pitching to several distinct clienteles these days. The most important consists of top-level executives seeking curriculum and delivery support for enterprise “e-tranformation” initiatives—a process that Deloitte itself completed in the last 18 months in partnership with SmartForce. Based on a e-business curriculum developed by in-house instructional designers, the 32-hour program was made a prerequisite for promotion in order to ensure uniform compliance with the company’s shift from a focus on enterprise resource planning (ERP) to a more comprehensive e-learning--based strategic outlook.
A second major audience consists of enterprise e-learning task forces, Kelleher says. These typically comprise a senior business sponsor and representatives from IT, the business division, and HR, with HR often assuming ownership of the project. A third consists of second-tier, division-level project managers concerned with a fast implementation in support of a particular initiative, such as a product rollout or the nuts-and-bolts implementation of a corporate merger. Among numerous examples is the Sun-Netscape Alliance, which used DigitalThink to coordinate knowledge about the iPlanet line of products among the new set of internal and external constituencies the merger brought into being. Less significant is e-commerce learning, or “educommerce,” which Deloitte does only “opportunistically,” Kelleher says.
Many analysts and strategists feel that this market shift requires that the e-learning business case be justified in high-level strategic terms. E-learning is now to be understood as “just-in-time education integrated with high-velocity value chains”—as a recent white paper from the Delphi Group defines the term—or as “critical chain learning,” a term coined by an eLITE Think Tank working group to describe the deployment of learning technology and methodology in support of both demand-chain and supply-chain business processes. By next year, predicts the eLITE group, over half of e-learning implementations will consist of what leading expert Elliot Maisie calls “supply-chain e-learning,” focused not on internal staff training but on such external constituencies as customers, suppliers, regulators, distributors, and partners.
Anticipating this shift in the market, leading e-learning vendors such as Saba Software, Docent, SmartForce, Knowledge Planet, and DigitalThink, now focus mainly on forming e-learning value chains through partnerships and acquisitions, with content, technology, and integration services providers on the back end and Big Five consulting firms out in front, advising large enterprises on how best to integrate e-learning solutions with existing business processes and systems. A striking example of a complex learning value chain is EarmyU.com, the $450 million online university developed for the United States Army by PricewaterhouseCoopers with the participation of nearly 30 third-party vendors. Docent, with an e-learning platform called Docent Enterprise, has one of the most elaborate web of partnerships in the industry, including four of the Big 5 consulting firms. Industry consortium LearnScape, which conducts Webinars with and compiles learning best-practices research from 13 noncompeting Fortune 500 companies, including General Motors, Easton Corporation, 3Com, Northwest Airlines, and John Deere, looks to exert a great deal of influence on the competitive landscape as well.
The result of this market strategy is the evolution of integrated, end-to-end e-learning solutions, or learning management systems (LMS). These feature state-of-the-art multimedia instructional design, authoring tools such as Macromedia’s Authorware and Coursebuilder, and extensive libraries of courseware modules, or “learning objects.” The latter are becoming increasingly platform-independent as standards initiatives such as Aviation Industry Computer-Based Training Committee (AICC) certification and Shareable Courseware Object Reference Model (SCORM) compliance become more influential, and as the repurposing of content becomes an important part of revenue models for content players looking to participate in multiple e-learning value chains. LMS vendor Learnframe, whose clients include Coca-Cola, Volvo, Whirlpool, and Lockheed-Martin, boasts that its Pinnacle 4.3 system, which sits atop an LMS, provides complete cross-platform compatibility with any learning content, as demonstrated at the recent Plugfest 4.
On the back end, a typical LMS offers performance assessment and analysis tools, indexed “learning-object” management, integration with knowledge management and human resources management systems, and learner-facing personalization tools. An LMS may be integrated into an enterprise information portal (EIP) or legacy ERP system, taking advantage of role-specific user profiles to measure learning needs and manage learning requirements by business role. The system SmartForce developed for Unisys, for example, presents users with a menu of current required learning that can be managed centrally based on strategic business needs and individual learning-need assessments. In the wake of a mid-July strategic alliance with PeopleSoft, meanwhile, LMS vendor THINQ has already integrated its LMS with PeopleSoft’s human resources management system (HRMS) for such customers as American General Life Insurance, Alltel, Lockheed Martin, and WorldCom.
Learning: Supply and Demand
What does “critical chain learning” mean in practice? For one thing, the ability to measure learning performance and certify competence will rationalize supply-chain relationships. It will, for instance, allow skills assessment, standards compliance, and certification provisions to be written into SLAs with supply-chain partners of various kinds. A case in point is Procter & Gamble’s adoption of the Saba Learning LMS to automate the auditing of employee training and certification in its pharmaceuticals division, enabling it to certify compliance to federal regulators as well as to manage enterprise learning initiatives. Another is the LMS from Click2Learn used by real estate giant Century 21 to serve, track, and manage the training and licensing of its agents.
The demand, or customer-facing, side of the value chain will be enriched by e-learning as well, especially in the areas of e-commerce, marketing, and customer relationship management. SafeHarbor [Company To Watch, Sept. 15, p. TK], a self-service CRM provider, pushes multimedia tutorials to users in response to FAQs, reducing the load on human contact-center reps by as much as 80 percent. Along similar lines, SmartForce introduced its Contact Center SolutionSets in late August, the first in a series of vertical industry–oriented learning-object libraries. GE Capital’s CSR training program, implemented by Cognitive Arts, decreased training time by 50 percent and time to competency by 30 percent. And CRM giant Aspect Communications, with 74 percent of the Fortune 500 among its clientele, used e-learning from DigitalThink to quickly launch its strategically vital new CRM portal business, reduce the sale force training cycle to meet its time-to-market needs, double the size of its sales organization, and spin off an indirect sales channel.
But the most frequently cited cases of customer-facing e-learning are cases of what’s called “educommerce,” a sometimes uneasy marriage of customer education and marketing. The investor education program at retail broker Charles Schwab and instructor-led courses offered through the Barnes & Noble University feature of the bookseller’s Web site—built by Powered, the former notHarvard.com—are the most prominent examples. In June, THINQ announced a redesign of CompUSA’s Power2Learn.com customer-education Web site that aspires to the level of Dell Computers’ highly-regarded learning content and interactive knowledge base for customers. Rachel Connell of Eduventures.com points to consumer-facing learning offerings and knowledge bases as a “stickiness” solution that fosters customer trust and community. However, as Diamond Cluster International principal Rosenberg points out, a clash of values can occur between marketing and learning. Both involve conveying information to customers, but learning provides that information from the learner’s point of view and according to the learner’s needs. “You have to give stuff away,” Rosenberg says. If “in an age of universal publicity, language based entirely on truth simply arouses impatience to get on with the business deal it is probably advancing,” as Theodore Adorno says, learning and knowledge-base resources must be viewed as unbiased, comprehensive, and useful if you wish to induce cynical customers to visit your e-commerce site even when they are not shopping.
Finally, e-learning represents the point of convergence of two critical business objectives in the current market: employee recruitment and retention, on the one hand, and knowledge-sharing and collaboration on the other—both aspects of what Cross likes to call the “people value chain.” Learning management, Cross says, can enable you to identify top talent anywhere in the organization on which to focus your professional development efforts. Fine-grained tracking tools enable you to challenge and inform every member of the organization appropriately in a way that increases job satisfaction and encourages the exchange of ideas across organizational boundaries.
The Adoption Gap
In many ways, however, the cost-savings rationale remains a more important pitch to the majority of SME e-learning customers, which trail the bleeding edge. The savings in travel costs and lost productivity alone from delivering mission-critical learning materials online is making a comeback as a major selling point.
A late-August announcement by Dow Chemical and WBT Systems is a case in point. An audit of Dow’s training budget revealed $34 million dollar in annual savings attributable to WBT’s TopClass e-Learning Suite—an ROI of 20 times the initial investment, says Dow HR information technology director Jon Walker. In lean times, Internet Time’s Cross says, “Money talks, and the more intellectual cases for e-learning get dropped from the pitches.”
Saba Software offers a different perspective on the problem as it relates to the company’s market strategy and product-development cycle. John Martin, vice president of product management, says that Saba’s market strategy focuses on enterprisewide e-learning initiatives driven by executive-level mandates, a strategy that affords it a mean deal value of $800,000—four times the industry average. The fact is, however, that much of current Saba’s sales traction still comes from traditional training stakeholders, who must justify such initiatives upwards to superiors, according to traditional measurements of return on investment (ROI).
Though Martin is careful not to say it in so many words, the result is an “adoption gap” which may account in part for the lengthening sales cycle for Saba’s end-to-end solutions. The company’s response has been to build a suite of sophisticated, nontraditional ROI metrics into its LMS, a feature derided by some observers and cited as a deal-maker by some customers.
Deloitte’s Leigh Kelleher notes that her company also quickly learned that its e-learning strategy, developed in partnership with SmartForce, had to take into account a fundamental distinction between “enterprise e-learning” and “project e-learning.” Deloitte’s learning need assessment methodology can even lead to the consultant talking clients out of an LMS implementation, if it is not suitable for the client’s current needs and depth of strategic vision.
Internet Time’s Jay Cross is a blunt proponent of the bottom-up strategy for implementing learning. “Ignore the Saba sales guy,” he says. “Don’t try to boil the ocean. Choose a vital business problem where the payback from implementing learning is a no-brainer; do that right and just use the parts you need to do it.” E-learning guru Brandon Hall concurs. In the same vein, THINQ recently announced Learning Manager, a mid-tier version of its TrainingServer LMS, an inexpensive hosted solution aimed at SMEs that find the up-front cost and long-term strategic commitment required by an enterprise-scale LMS prohibitive.
Margaret Driscoll, director of strategy and ventures for IBM MindSpan Solutions, says Big Blue’s e-learning systems address this issue by offering a “Chinese menu” of components, services, and instructor, combinable in any number of ways and on any scale, to facilitate the process Cross describes within the context of blended learning model. “We don’t expect companies to want to thoroughly reengineer their business processes, though we can certainly provide that if they do,” Driscoll says.
The case of General Motors University typifies the situation of many enterprise early-adopters. For Daniel “Donnee” Ramelli, president of General Motors University, for example, the value proposition of the automaker’s partnership with e-learning provider UNext and its content aggregation partner, Cardean University, boils down to a simple formula: fast, action-based learning, with measurable outcomes and a focus on specific organizational goals. GM’s long-term plan calls for extending that capability to all its employees, including its UAW hourly workers (though this will require union approval and contract renegotiation) and value-chain partners. In the meantime, Ramelli says, the first thing to accomplish is to build a core of e-skilled true-believers in upper and middle management. GM University and UNext currently offers an e-MBA program and management development courses for 88,000 managers, with content provided by top-line academic institutions.
Perhaps the most significant challenge for learning implementations is the inculcation of a learning culture in the enterprise, as IBM’s Driscoll observes. Studies show that employees tend to react negatively to the performance-measurement aspect of learning management, suspicious that it will be used to justify layoffs and to micromanage salary and performance matters. Learners must be treated like customers, says Internet Time’s Jay Cross; the same trust issues that challenge customer-facing learning programs affect employee acceptance of managed learning. SmartForce, for example, includes an internal marketing package in its implementations to help make the case to employees. The gist of that case, says Brandon Hall, is to persuade employees that there is meaningful overlap between organizational and personal goals, which entails engaging workers in collaborative processes that are personally empowering as well as productive. “Investment in employee development as a lot to do with how people feel about their employer,” concurs Ramelli.
Managers, meanwhile, tend to engage in “knowledge hoarding,” a resistance to knowledge-sharing that stems from a belief that ownership of knowledge constitutes power. However, learning management allows them a new kind of power over their employees in the form of detailed personal and aggregate performance statistics. “That’s why
managers love e-learning and employees hate it,” says Deloitte’s Kelleher.
In many ways, the utopian vision of e-learning echoes that of the open-source movement, with its emphasis on collegiality, open exchange of ideas, free-form collaboration, and informal, reputation-based functional hierarchy. The next couple of years should demonstrate whether that kind of cultural change is workable, much as they will prove whether New York mayor-elect Michael Bloomberg can make the transition from CEO to democratically-elected political leader. It may be, however, that the most profound organizational changes will continue to rise up through the ranks instead of trickling down through Big Brotherish, management-driven “e-transformation” initiatives.
