E-Learning: Does It Make the Grade?

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Understand the conditions in which e-learning should be brought in-house

At Corporate Training High, e-learning is the cool kid, the smart kid and the class bully all at once. It’s better looking than traditional classroom learning, it gets better grades than nerdy computer-enhanced teaching systems, and everyone in the skills-training market is handing his lunch money to the newest kid on the block.

Electronic learning—educating employees using Web-enabled materials deployed via the Net—offers in its most sophisticated incarnations such bells and whistles as streaming audio and video, built-in PowerPoint presentations, hot links to related information on the Web, animation, flip books and self-running screen-capture display programs. E-learning is significantly cheaper and more productive and can be delivered with more timeliness than either classroom learning or traditional computer-enhanced teaching, practitioners say.

For these reasons, e-learning will account for almost half of the projected $16.9 billion business skills training market by 2004, while growth in CD-ROM, videotape and satellite training will slow considerably, according to Cushing Anderson, program manager of learning services research for market analyst IDC (a sister company to CIO’s publisher, CXO Media) in Framingham, Mass. “People are spending a relatively stable amount of money on training,” he points out, “but the outsourcing component of that is growing at 12 percent or 13 percent total, and almost all of that is spent on e-learning. The growth in this market is in e-learning.”

But just like the high school friend with the car and the trust fund, e-learning can be high-maintenance as well. It needs bandwidth and server space that many companies aren’t willing to devote to an activity that makes good sense but isn’t, truth be told, a moneymaker. Many training and HR departments, which traditionally have been the overseers of employee learning, resolve e-learning’s resource demands by outsourcing the entire proposition, including the hosting, delivery, scheduling and tracking of training modules, leaving the IS department completely out of the loop—often with the CIO’s explicit or tacit approval.

Electronic learning is a good teaching tool, corporate training specialists say, but companies shouldn’t be lulled into believing that e-learning can teach all things to all people. When the stakes are high (as with team-building) or the subject is highly personal (as with coaching) then real live teachers are still irreplaceable. And while it works to outsource e-learning, that might not be the case in coming years, according to IS managers. As e-learning systems become more technologically complex and more integrated into other corporate functions like personnel management, in-house IS departments may have to play a heavier role in e-learning deployment and maintenance.

Fast and Flexible

Like many financial services companies, American Skandia uses e-learning to train and reskill its workforce quickly. The U.S. arm of the international savings and insurance company, American Skandia faces a number of training challenges particular to its business, says Rebecca Ray, a senior vice president at the Shelton, Conn., location. The company sells its financial services through wholesalers in the field rather than directly to the public, which poses a special challenge when it comes to educating, certifying and then continually reskilling that decentralized workforce to keep abreast of a portfolio of services that’s continually increasing in both volume and complexity. In addition, Ray points out, the savings and insurance industries are heavily regulated, and most employees must be fluent with the latest regulations.

Rather than spending days away from their desks sitting in a classroom, American Skandia employees can log in to a training website and complete materials at their own pace between assignments, before or after hours or even from their home. Distributing learning electronically lets the American Skandia wholesalers in different locations train simultaneously, eliminating knowledge lags between various far-flung units. And the live nature of Web-based learning means American Skandia can instantly update training materials to incorporate changes such as new product information or new government regulations.

Ray holds the title of director of training at American Skandia University, a project in the making that will centralize various training initiatives throughout the company. The corporate university will offer three educational options: instructor-led classes, self-study and online learning. The e-learning offerings are in turn divided into three formats, scaled for different levels of complexity. On the light end of its curriculum, the company contracted with ElementK, an e-learning vendor based in Rochester, N.Y., to provide training on basic Microsoft business software, advanced IT professional topics and the Harvard Manage Mentor series of business- and management-skills courses. ElementK hosts, tracks, tests and delivers all training data back to American Skandia, which uploads the data straight into its PeopleSoft workforce-management system.

For industry-specific training in topics like annuities and financial ethics, Ray chose Securities Training Corp. (STC) of New York City, which offers a service to track employees to ensure they’re in compliance with Nasdaq-required training elements. And for company-specific topics such as antifraud policies and internal auditing, American Skandia plans to partner with STC to develop customized e-learning courseware written in concert with various in-house experts at American Skandia.

In all cases, American Skandia employees access those vendors’ sites through an internal learning portal that’s part of the American Skandia website. The portal was developed by a cross-departmental intranet development team, to which Ray’s department had to contribute minimal man power. The role American Skandia’s info services department has in electronic learning is one primarily of advice and consent: “We worked with the folks in IS. I sat down with a pretty firm vision and plan and said, ’This is what I’d like to see happen. Can you come back and tell me what will work and what won’t?’” Ray recalls.

Having made a significant investment in e-learning, Ray still says it won’t replace instructor-led education entirely, now or ever. “E-learning is not a panacea,” she warns. “An information dump on Microsoft Office is perfect for online. And that frees us to deploy experts at the high end of the spectrum. When we need role-playing, coaching, one-on-one feedback, the benefit of sharing best practices still comes from a real person.”

Her opinion is echoed by Dan Bartholomew, national practice leader for e-learning solutions in the San Francisco office of KPMG Consulting. “Different media lend themselves to different learning events,” he says. “If you need a team-building class to launch a project, you need to physically interact, and you won’t get that on the Internet.”

That said, Bartholomew and KPMG are bullish on e-learning for nearly all other kinds of training. “Anytime you need to reskill yourself and learn a new function fast, those are great for Internet learning.” Plus, he points out, instructor-led training is only as good as a given instructor and student are on a given day in a particular classroom. By contrast, e-learning is consistent, controlled and scalable to individual learners’ styles, meaning that students can work in chunks of time that suit both their temperament and schedule. Finally, e-learning is eminently trackable on the back end, so training centers can assess students’ interaction and competency at whatever level of detail they choose. “With e-learning, you can determine a real ROK—return on knowledge—rather than being dependent on the instructor’s or the student’s impressions to know how effective your training is,” Bartholomew says.

KPMG is also bullish on advising its clients to outsource e-learning (with, of course, help from a consultancy like KPMG). That’s a standard stance in the world of corporate training: Companies like Deutsche Bank, People’s Bank and Continental Airlines have partnered with outside companies to develop, host and track part or all of their e-learning initiatives for a wide range of reasons.

Most corporations, even those with larger in-house training sites, don’t have employees with the mix of skills needed for effective online curriculum design. Training departments are often reluctant to take on the administrative burdens of registration, scheduling, tracking and results analysis, features that are included in many e-learning packages, particularly those hosted by ASP-type vendors. Many companies aren’t willing or able to allocate bandwidth to a noncore function like corporate training. And most companies simply couldn’t get a homegrown program up and running in anywhere near the time an e-learning specialty company can.

“We deploy our solutions within a week or two and, in some cases, within a day,” says Pete Goettner, president and CEO of San Francisco-based DigitalThink, one of the larger and more well-established players in the burgeoning e-learning marketplace. “Companies don’t want to be specialists in e-learning. CIOs have their plates full already,” he says. “Training departments are looking for solutions that don’t impact IT, so they turn to a high-level service provider like DigitalThink”—or one of the many companies competing for DigitalThink’s business, including ClickToLearn, NetG, Ninth House, SmartForce and Saba.

Boston’s Northeastern University contracted with vCampus, an e-learning company based in Reston, Va., to host Network Northeastern, its online university that has some 1,200 students enrolled nationwide. Professors rather than Web designers are responsible for the presentation of their classes online. And while the bursar’s and registrar’s offices at Northeastern have some interaction with the vCampus system, the university’s IS department has none at all. “The other computing demands here are massive,” explains Susan Kryczka, the director of Network Northeastern. “I think we’re like most universities, where the information services groups don’t have the man power to handle another project. Their first responsibility is to research faculty and on-campus students.”

At least one industry analyst thinks corporate America should follow suit when it comes to the IS staff’s involvement with e-learning. “Most companies shouldn’t be doing e-learning in-house, and IS doesn’t need to know a thing about it,” IDC’s Anderson says. “IS should stick to things that are core to the business, banking applications or e-business initiatives or whatever.”

Involving IS

But as e-learning technology grows ever more sophisticated, some CIOs say they’d be open to bringing some, or even all, e-learning work in-house someday. New York City-based Deutsche Bank, for example, has seen an evolution in its approach to e-learning. When the bank teamed some of its in-house subject experts with DigitalThink consultants last year to develop nine custom courses covering topics like financial products, regulations and compliance, IS’s involvement was minimal. With DigitalThink hosting the courses externally and handling all registration and tracking requirements, IS needed only to contribute a technical liaison who encrypted passwords and checked security issues, bandwidth and connectivity demands, according to Adam Girard, the vice president responsible for the online learning center for the bank’s global technology and services department. “It was a due diligence process. Since 90 percent of what we were doing was external, we needed very few interactions with the technical staff,” he says.

That plan sits well with KPMG’s Bartholomew, who says he tells clients that information services should be involved initially so that consultants and vendors alike can get a good understanding of a company’s long-term infrastructure blueprint and map out their training plans accordingly. “It’s good to know everything you can about the infrastructure: capacity, caching devices, what upgrades are planned and when, and what network distribution traffic controller they have in place,” Bartholomew says.

More complex e-learning projects in Deutsche Bank, however, have proved to need more attention from IS. The bank internally hosts a series of technical and financial modules (with courseware provided by NetG and Intuition Publishing, respectively) that have a dedicated technical staff to deal with server maintenance and other standard support needs. And the bank is now exploring the possibility of rolling all its learning projects, including classroom learning, into a larger, centralized learning center, which could possibly mean that externally hosted learning would one day be administered completely in-house. Deutsche Bank’s rationale for the move is in part financial. “We are paying a slight premium for external services,” Girard explains, “so we may host and track everything internally in the future.”

People’s Bank, headquartered in Bridgeport, Conn., is in the “walk-before-we-run stage with e-learning,” says Manager of Technology Training Ray Zeimet. To test the waters on what Zeimet hopes will become a significant commitment to electronic learning, People’s signed on with SmartForce, an e-learning company based in Redwood City, Calif., to serve up 30-odd courses to teach technology basics such as Microsoft Word, Lotus Notes and Internet navigation.

Because the courses require little in the way of internal resources—a 5K application that needed to be delivered to students’ desktops—Zeimet simply kept the IS department informed of his plans and, prelaunch, put a sniffer on the network to test performance. “We had 12 to 15 people hitting the [SmartForce] site at the same time, and we didn’t see much. It taxed the system in certain areas, in others there was barely a blip. We took those results upstairs [to IS] and made sure they were aware,” Zeimet says. “But plans were already in place to do network upgrading.”

That level of interaction is just fine by People’s CIO Jaci Coleman, who joined the bank last May. “We’re happy with what’s going on. We have a lot of infrastructure built, and what Ray is doing is something that can make use of what we already have in place,” says Coleman. Should Zeimet ask for more network resources, Coleman says she would evaluate the request on a standard cost-benefit analysis.

That may well happen as People’s proceeds with a more ambitious plan to build a corporate university. Initially, the centralized learning department will still skew heavily toward classroom learning, but by 2004 or 2005, Zeimet envisions, much of that learning will have moved over to the Internet. If People’s develops and hosts its custom courseware internally—and Zeimet plans to propose that it does—his relationship with IS will change as well. “Internally it would require a partnership,” he says. “You’re talking constant access to Web servers, security, getting things in and out of databases, getting some standards up across different pieces of software. We would have a lot of talking to do, but that’s still a year or two in the future.”

Even with that amount of work on his plate, Zeimet is still convinced it’s more prudent to develop custom courses in-house rather than outsource. “Outsourcing may ultimately be cheaper than training an internal [courseware developer] but then you lose the ability to make [courseware] changes instantly”—which is one of e-learning’s biggest benefits, he points out. Financial services companies like People’s change their product offerings frequently in response to market moves and regulatory rulings, and training materials need to reflect those changes as swiftly as possible, he says.

Like People’s, Continental Airlines is both in the beginning stages of adopting e-learning and simultaneously building a larger university, with one significant difference: “Our relationship to IT is we’re joined at the hip,” says Karen Warkentin, managing director for policies, procedures and training for airport services at Continental in Houston. “We work extremely closely with the IS people,” says Warkentin, who has a specific IT business partner assigned to her. “We want to ensure we are in sync and not doing anything outside of what they can support. I would classify it as a very strong working relationship. They know everything we’re doing and vice versa.”

Currently, Continental uses registration services from Saba, an e-learning vendor based in Redwood Shores, Calif., to schedule and track students’ progress on internally developed modules, both Internet-based and desktop-based. These teach technology basics as well as operational airport topics such as gate management, serving the disabled and handling dangerous goods. But Continental is in the beginning stages of a much larger learning initiative that will likely include more electronic learning and significant amounts of infrastructure, which is one reason for the IS group’s close involvement with the training departments.

Continental’s plan is to centralize many disparate learning projects into three regional schools, thereby connecting all computer-based training labs to the airline’s intranet and pushing more Web-based training out to users’ desktops. The Cleveland school is due to be online by the first quarter of next year, with Houston coming up in the third quarter and Newark, N.J., following in the first quarter of 2002.

For the e-learning portions of the school, Warkentin anticipates that Continental’s “subject-matter experts,” as they are known, will script and write the course content, which will then be polished and made Web-ready by a third-party vendor. Unlike some other corporations, which plan to electronically enable as much as 90 percent of their curriculum, Warkentin estimates that only 30 percent to 35 percent of Continental’s training will take the form of e-learning, at least in the short haul. “My anticipation is you can never take instructors out of training totally,” she says.

The Boomerang Effect

Even if e-learning is off the CIO’s plate, and happily so, it could very well bounce back to the department in the next couple of years as a new wave of second-generation, technology-heavy improvements hits the market.

Because of bandwidth and desktop limitations, most companies shy away from the high end of the market, which features streaming audio and video, high levels of interactivity and animation, and synchronous learning (where teachers and students interact in real-time over the Web or a classroom-type session is broadcast to students in remote locations). But that won’t be the case for long as students respond to and then demand more sophisticated offerings online, warns Scott Pope, an analyst with The Delphi Group in Boston.

In addition, e-learning will increasingly become integrated with, or morph into, larger knowledge- and learning-management systems that companies should keep tabs on in-house. “Ultimately the idea is to tie these e-learning systems in with workforce performance management tools that HR can use to make some correlation between student readiness and ROI,” Pope explains.

In the end, it’s those kinds of incipient changes, coupled with inborn respect for innovation wherever it’s occurring, that prompts CIOs like Anders Soderstrom to keep their eye on the e-learning trend. Soderstrom, for many years the CIO at American Skandia and now president of Skandia Innovation and CIO for Skandia New Markets, says he is happy to leave training decisions, including those that directly involve technology, to department heads like American Skandia’s Ray—but he still wants to keep abreast of developments.

“[E-learning] is not one of those things that I would fight to hold on to, but if I’m involved a little then we can try to replicate work over the entire company and build global prototypes when we see something good,” says Soderstrom. “It would be nice for our employees in other countries to benefit [from Ray’s work], and that makes it interesting for me to stay involved.”