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Cashing In on Smarts

eWEEK - February 4, 2002

An Excel spreadsheet. A pad of paper and a Bic pen. And a total of seven—count 'em, seven—disconnected systems containing training information. Is this any way to keep track of employees' course registrations and transcripts and do everything else that it takes to run a training program for 30,000 worldwide employees, partners and customers?

No. But that's how EMC University—the training division of storage products company EMC Corp.—managed the spectrum of its training initiatives until a year ago. That's when the company migrated that mess to Saba Software Inc.'s Learning LMS (learning management system), which takes over tracking and administration of everything from in-person courses taken by employees and customers at EMC University, in Westboro, Mass., to various flavors of live e-learning and self-paced materials.

Now, everything is in one place. Not only can all forms of employee training be tracked so EMC officials can learn what works and what doesn't, but training professionals such as EMC Program Manager of Distance Learning Susan Sheehan can also forecast what training needs will be, based on learner performance and demand for courses. Using that data, EMC has been able to wean learners off expensive classroom training and onto more affordable e-learning, which, experts say, can offer an 80 percent savings.

Getting a handle on where training dollars are being spent—and whether they're being well-spent—is increasingly important, given the current recession. That's particularly true since, recession or no, companies are spending more on training. So enterprises such as EMC, Halliburton Energy Services Corp. and NEC America Inc. are deploying LMSes that manage training history information and allow training managers to analyze what works and forecast what will be needed.

The systems, which increasingly are being integrated with ERP (enterprise resource planning) and other enterprise systems, can help control overall spending on training by helping to accelerate the migration to e-learning and even by providing enterprises with information they can use to negotiate better deals with training providers.

Indeed, reining in training costs was what drove NEC recently to adopt Pathlore Software Corp.'s Learning Management System to handle training of employees, from forklift drivers to senior executives. The tactic worked: Now that Manager of Training and Education Wim Wetzel has a handle on what his training needs are, he said he's managed to reduce training costs by 46 percent in the 15 months the system has been running.

LMSes streamline administration of training programs by bringing together all the information about enterprise training. Using an LMS, learners can assess and map out what their learning objectives should be, as well as schedule and enroll in the proper training venues. Training administrators can use LMSes to analyze and report on employees' training status, assess learners' training needs, and schedule various forms of training as necessary.

LMS applications are available as hosted services from application service providers or as licensed software. Deploying and maintaining an LMS as licensed software can cost between $250,000 and $700,000 per year, depending on the size of the enterprise and the degree of customization and integration needed, according to Jennifer Vollmer, an analyst with Meta Group Inc., in Stamford, Conn. Hosted LMS applications can cost as little as $30,000 per year for between 2,000 and 3,000 seats, plus any customization and integration costs.

LMS users said the systems are helping them to accelerate one important cost-cutting strategy: migrating learners from instructor-led classrooms to much less expensive e-learning environments.

At Halliburton, based in Houston, Director of Human Resources Development Steve Abernathy projects that going live with Docent Inc.'s Learning Management Server earlier this month will allow the company to reduce classroom time by 30 percent to 50 percent. Abernathy has already targeted five of about 300 largely in-house-developed courses for conversion to e-learning. Savings will come from reduced travel and entertainment costs as well as restored productivity as employees spend less time in classrooms or traveling.

But the LMS will deliver return on investment in another way. (Abernathy said it will pay for itself within 12 to 16 months after its launch.) It will help get new employees into the field faster by supercharging their training. About 150 to 200 students currently go through Halliburton's curriculum per year. Depending on any given employee's job, initial training alone takes anywhere from three weeks to six months. Using the LMS, Halliburton learning specialists were able to target which courses to move to online, self-paced study, which spares employees travel time and allows them to skip over training material with which they are already familiar.

"We saw our instructors were doing a lot of pontificating," Abernathy said. "They'd spend a great deal of time conveying basic geology and reservoirs knowledge, just basic physics. We saw an opportunity where we felt e-learning could provide base-line knowledge before they came to classrooms, and we could make it available 24-by-7, and we could cut down on classroom time. ... Cutting down on the amount of time to train them [means] they're out in a productive manner much faster."

But it's not good enough just getting employees out onto oil rigs and into laboratories faster. They also must be kept up-to-date with various countries' regulations as well as the requirements of Halliburton's clients, which include the likes of The Royal/Dutch Shell Group, ChevronTexaco Corp. and BP plc. All of that takes training.

The LMS can help there, too, but only if it's integrated with HR, ERP and other enterprise applications that maintain employee information. Fortunately for businesses such as Halliburton, integration between LMSes and other enterprise systems has grown easier. LMS vendors have begun enhancing their products to interact more easily with key enterprise systems so that, for example, employee information normally kept in HR and ERP systems—such as identification numbers, employee status, certification status, job titles, job status and contact information—can be shared by applications and centrally updated. Pathlore, for example, started doing this two years ago by releasing LMS versions that use XML to more easily import data from any enterprise system.

That means enterprises can meet regulatory requirements and prove it with easily generated transcripts and reports. At Halliburton, for example, the company's SAP Version 4.6C ERP system feeds HR information to the Docent system nightly, ensuring that if an employee's job role changes or if an employee is terminated, training records will reflect the fact. "We have to know who the employee [taking advantage of training] is," Abernathy said. "If it's an open university, where you just go in and register and take a course, we wouldn't be able to ... validate and assure we were [delivering the appropriate training]."

Similarly, NEC's training agenda also includes the need to keep track of which employees have completed federal- or state-mandated training relating to subjects such as Occupational Safety & Health Administration or the Americans with Disabilities Act. Hence, NEC has a one-way feed from its PeopleSoft Inc. HR modules into Pathlore's LMS.

This tie alone will pay for the LMS if it keeps NEC from running afoul of workplace laws, Wetzel noted. With harassment violations costing companies anywhere from $10,000 to $200,000 or more per incident, it's easy to see his logic.

Squeezing the Vendors

Another slice of the 46 percent NEC has shaved off its training budget can be attributed to the knowledge with which Wetzel is now armed when he negotiates with training vendors. Now that he knows the specific objectives as well as the training audiences—that is, how many learners and exactly what type of material they require—his requests for proposals have become razor-sharp in their precision.

While the push to cut training costs and better integration have made LMSes more attractive to many enterprises, there's still room for improvement in the technology, experts say.

Specifically, many LMS vendors so far have conformed only loosely to training data definition standards such as the Shareable Courseware Object Reference Model and those created by the AICC (Aviation Industry CBT Committee). Those standards were created to ensure interoperability and smooth interchange of data among systems. Without widespread support for the standards, some IT managers worry about what would happen to them if, once they deployed an LMS, their vendor folded.

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