The Learning Curve.
COLIN BRAYTON

10/01/2001
Internet World
18
Copyright 2001 Gale Group Inc. All rights reserved. COPYRIGHT 2001 Penton Media, Inc.

THE FRAGMENTED E-LEARNING INDUSTRY RALLIES AROUND A NEW BUSINESS CASE: THE VALUE CHAIN

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 dramatic. In response, a fragmented e-learning industry must 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. 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.

Replacing Corporate Training?

The days of flying the North American sales force to Miami for three days of "death by PowerPoint" are over. Let them stay home and learn through a browser-based, interactive e-learning course, resolve questions with a 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 have 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. Observers, such as Jay Cross of e-learning consulting firm 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 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.

Yet even the most-ambitious early adopters still deliver only a 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 Internet-education company UNext and technology providers General Physics and Saba Software, plans to reach 10 percent 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.

E-Learning's Champions

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 it has found strong champions. Training and human resources managers are no longer the most-likely audience for sales pitches.

Leigh Kelleher, director of global e-learning at Deloitte Consulting, for example, 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-transformation" initiatives-a process that Deloitte itself completed in the last 18 months in partnership with Internet-learning company Smart-Force PLC.

A second major audience consists of enterprise e-learning task forces, Kelleher says, typically made up of a senior business sponsor and representatives from IT, the business division, and human resources, 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.

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 technology-research firm 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, the eLITE group predicts, more than half of e-learning implementations will consist of "supply-chain e-learning," focused not on internal staff training but on such external constituencies as customers, distributors, partners, regulators, and suppliers.

Anticipating this shift in the market, leading e-learning vendors, such as Digital-Think Inc., Docent Inc., KnowledgePlanet.com Inc., Saba, and SmartForce, 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.

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 certification and Shareable Courseware Object Reference Model 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 Inc., whose clients include Coca-Cola, Lockheed-Margin, Volvo, and Whirlpool, boasts that its Pinnacle 4.3 system, which sits atop an LMS, provides complete cross-platform compatibility with any learning content, as demonstrated at Plugfest 4 recently.

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. A case in point is Procter & Gamble's adoption of the Saba Learning LMS to automate employee training and certification auditing in its pharmaceuticals division, enabling it to certify compliance to federal regulators as well as to manage enterprise learning initiatives.

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. SmartForce introduced its Contact Center SolutionSets in late August, the first in a series of vertical industry-oriented learning-object libraries.

But the most frequently cited cases of customer-facing e-learning are what is called "educommerce," a sometimes uneasy marriage of customer education and marketing. The investor-education program at brokerage Charles Schwab Corp. and instructor-led courses offered through the Barnes & Noble University feature of the bookseller's Web site--built by Powered Inc., the former notHarvard.com--are the most-prominent examples. Rachel Connell, senior analyst at Eduventures.com, points to consumerfacing learning offerings and knowledge bases as a "stickiness" solution that fosters customer trust and community.

However, as Marc Rosenberg, senior principal at technology-solutions firm DiamondCluster International Inc., 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," 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 aren't 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 calls the "people value chain." Learning management, he 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 e-learning customers. 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 e-learning company WBT Systems is a case in point. An audit of Dow's training budget revealed $34 million in annual savings attributable to WBT's TopClass e-Learning Suite--a return on investment of 20 times the initial investment, says Dow HR information-technology director Jon Walker.

Saba 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 is driven by a focus on enterprisewide e-learning initiatives driven by executive-level mandates, which afford it a mean deal value of $800,000--four times the industry average. The fact is, however, that much of Saba's current sales traction still comes from traditional training stake-holders, who must justify such initiatives upward to superiors, according to traditional measurements of ROI.

Though Martin is careful not to say it in so many words, the result is an "adoption gap" that 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 and cited as a deal-maker by others.

Kelleher says 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 isn't suitable for the client's current needs and depth of strategic vision.

Margaret Driscoll, director of strategy and ventures for IBM MindSpan Solutions, says Big Blue's e-learning systems offers a "Chinese menu" of components, services, and instructor, combinable in any number of ways and on any scale. "We don't expect companies to want to thoroughly reengineer their business processes, though we can certainly provide that if they do," she says.

Perhaps the most-significant challenge for learning implementations is the inculcation of a learning culture in the enterprise, as 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, Cross says; 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 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 has a lot to do with how people feel about their employer," Daniel (Donnee) Ramelli, president of General Motors' University, agrees.

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," Kelleher says.

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. It may be, however, that the most-profound organizational changes will rise up through the ranks instead of trickling down through management-driven "e-transformation" initiatives.

Colin Brayton is a freelance writer based in New York.