The recession, time constraints and the fallout from Sept. 11 have left many IT shops searching for thrifty, quick, non-travel-intensive alternatives to traditional management and leadership education. Purveyors of Web-based classes are eager to fill the breach, but many IT managers wonder what they may be missing when they trade in their plane tickets for solo flights at their desktops.
Electronic learning, currently a $4 billion-to-$5 billion market, is expected to increase to $15 billion by 2005, according to IDC, a research firm in Framingham, Mass. Vendors range from Harvard Business School to dot-com start-ups. Offerings vary from simple business primers to accredited MBA programs, and production values run from MTV-slick multimedia to simple text.
Despite their variety, most distance-learning courses have a lot in common, and all have the same downside: a lack of human interaction. However, customers' biggest complaints aren't about the characteristics or quality of the courses themselves, but about the fact that employees aren't using them. They say that the best way to assure success is for managers to make it clear that participation is expected and to designate time for training.
The e-commerce division at Wachovia Corp. in Charlotte, N.C., wanted to include certain core competencies in its leadership development, says Russ Weakley-Brown, the bank's e-commerce alignment leader. Wachovia contracted with San Francisco-based Ninth House Inc. for a dozen courses that use interactive videos to showcase leadership experts such as Tom Peters, Ken Blanchard and Peter Senge.
Courtenay Buchan, interactive marketing and design director of e-commerce at Wachovia, recently took a course called Partnering for Results delivered by Larraine Segil. "We were in [the] middle of a merger, and it was very, very relevant," Buchan says. "I made it a requirement for my whole team."
She took about two and a half hours, over four sessions, to complete the course. "It was very effective, because it went from high-level theory to real-world situational models to illustrate the practical uses of what she was saying," Buchan says. "I use the goal-clarification and negotiation skills every day." According to Buchan, the course compares favorably with traditional live training in terms of content and delivery. There is a lack of human interaction, "but the trade-offs in dollars, time and flexibility mitigate that," she says.
Wachovia likes Ninth House's flexibility of delivery. The multimedia materials are bandwidth hogs, so Ninth House provides the materials via CD to learners who have bandwidth constraints. Wachovia's e-commerce division has championed the courses, and managers support training during work hours, so more than 25% of the staffers have been active users. Buchan says she expects that figure to climb because courses have been linked to competencies required in the division.
Access to the program starts at $300 per seat per year, with discounts for quantity. Wachovia's 200-member e-commerce division alone has saved an estimated $138,000 on travel and traditional learning costs since 2000.
As director of the Office of Organizational Development at the Kansas Department of Social and Rehabilitation Services, Mark Andrews needed to train more than 6,000 employees in 105 county offices. Some are one- or two-person shops with 56K bit/sec. modems, so he needed a program that could run on the lowest-common-denominator technology, with no requirement for sound.
In 2000, the Topeka-based agency contracted with Diaplan Designs Inc. in Tampa, Fla., to license a text-based, 35-course offering for its workforce. So far, about 15% of the department's employees have taken an average of four courses. Use is expected to grow because the state recently approved the courses as a substitute for classroom work required to progress along certain career paths.
Kenneth Morris, director of the agency's operations unit, recently took a four-hour communications course. In 25 small modules over three days, the class covered all types of communications, from phone calls to group presentations and reports.
Morris says the course was a good value. "I am a reader-type learner, so it fits my style," he says. "It's not as effective as a [weeklong] seminar, but from a cost/benefit standpoint, it was highly effective."
However, electronic training's strength - that employees don't need to leave the office - is also a weakness, according to Morris. "I haven't done nearly the number of courses I should," he says. "I keep saying, 'Tomorrow I'll do it,' but there are always so many priorities."
Although the state negotiated a special license, Diaplan's typical fee is $49 per course, per person for one-time use, or $350 for all 35 courses. The price drops significantly for volume purchases. Andrews says his electronic-training costs are "highly competitive" now, but because the state paid a one-time fee, the cost-effectiveness of the courses will increase.
Northrop Grumman Information Technology in Herndon, Va., needed to provide a broad range of consistent training to its 5,000 employees throughout the world. The federal contractor chose Redwood City, Calif.-based SmartForce PLC's SmartForce Enterprise System, a 1,500-course library, at a total annual cost of $67 per employee.
Since last spring, employees have completed 4,000 courses and 8,000 hours of training, says Jeanette Hohlstein, operations manager of Northrop Grumman's organization and workforce development group. Employee surveys have been "overwhelmingly positive," she says, and 37% of employees have taken at least one class or used a module from a class as a just-in-time learning tool.
Bruce Friedman, a senior IT manager, has taken several leadership courses, including most recently Diversity Training for Managers. He says the content was comparable to classroom training that he has received on the same subject. "Well thought-out, put together nicely and easy to navigate," Friedman says, adding that he found the modular makeup useful because he could test out of areas he already knew.
The weaknesses, he says, were the lack of interaction and the inability to "go off on a tangent that could turn out to be useful."
For more complex subject matter, Friedman says Web-based training would be best as a basic primer to get people ready to deal with complexity in a classroom setting. Hohlstein notes that Northrop Grumman often uses that approach.
NEC America Inc. wanted to cut costs and the inevitable drain on productivity that comes from traditional off-site training, says Wim Wetzel, manager of the training and education organization at the Irving, Texas-based manufacturer of advanced communications products. In May of last year, NEC signed a three-year contract with Columbus, Ohio-based Pathlore Software Corp. for 2,500-seat access to more than 100 online courses.
Joe Aschauer, executive vice president of NEC Infrontia, a research and development division, has taken several of the courses, including Energizing and Empowering Employees. He has done all the work at home. Aschauer finished the course in just over an hour and says the quality of content is similar to the short management training courses that he has taken in the past, but more flexible.
"I can start and quit when I want," Aschauer says. "I can download it and take it on the plane."
The downside, he says, is that "there's no live instructor I can ask for clarification. No interaction with other students. It's a solitary learning experience."
But practical considerations outweigh those shortcomings, Aschauer claims. "Honestly, I don't have time to take time from work for training, so this is better than anything I have found," he says.
Unfortunately, Aschauer is the exception at NEC. So far, despite a barrage of in-house advertising, only 88 people in the company have taken courses, Wetzel says. NEC has been downsizing, and feedback indicates that employees fear it doesn't look good to be training during work hours, that some managers prohibit it and that many staffers resist the option of training at home. "It's a shame because the courses are very good," Wetzel says.
As a result, while NEC is still spending less money than it would on traditional training, it's not getting the economies of scale it counted on. Currently, the actual cost is about $800 per seat, compared with about $2,000 to go off-site, Wetzel says. But pumping up the volume would slice the per-seat costs.
Wetzel says NEC's culture has to change to bring training into the workday. Meanwhile, unless Pathlore restructures NEC's contract to a pay-as-you-go system, NEC won't renew its contract. "Companies can't afford to pay for training that's not used," he says.