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The Absent Professors - Brief Article

CFO, Magazine for Senior Financial Executives - December 22, 2000

The good news: the virtual corporate classroom is finally making the grade. The bad news: no chalk smell.

IN ANOTHER TIME, DAVE LEHMAN would be in another place--and spending a lot more of his employer's money. Eager to master the subtleties of Microsoft Office, the popular suite of word processing and business applications, Lehman enrolled in a continuing education class. Until recently, Lehman's going back to class would have meant trekking to a college or hotel conference center. Either way, he'd forfeit time on the job, and likely saddle his employer with travel and lodging expenses--to say nothing of a hefty tuition bill.

But Lehman is taking this training course over the Internet. He attends class when and where it's convenient for him--usually at his desk during his lunch break--and works through the material at his own pace. "This fits my schedule," says the 32-year-old Lehman, an end-user specialist for York, Pennsylvania-based USA Direct Inc., a privately held direct mail operator. Lehman runs the help desk at USA Direct, trains his fellow employees in how to use software, and oversees the company's computer network.

Although he doesn't think of it in such grandiose terms, Dave Lehman is part of a revolution in worker training. According to technology research firm IDC, online schooling accounts for about $2.2 billion of the $19.5 billion spent on corporate education and training this year (that excludes training that companies deliver in-house to their own employees). IDC estimates that by 2003, e-learning or Web-based training will account for $11.4 billion of the nearly $30 billion business education market. And in a recent survey of 40 of the world's largest corporations, Forrester Research found that all but one had online training initiatives already in place.

The big corporate switch to virtual instructors makes sense. Handled properly, distance learning cuts training costs substantially. "The cost-of-delivery savings are enormous, as are the cost-of-attending savings," notes Wayne Hodgins, strategic futurist and director of worldwide learning strategies at Autodesk Inc., a maker of computer-aided design software in San Rafael, California. "On the delivery side, you get out of having to do everything from paper-based reproduction of content to shifting instructors and equipment all over the world. We used to spend it, now we don't."

Online training also offers anonymity--often a plus for senior executives. "If you're the OFO, no one needs to know you're taking a course in derivatives to sharpen your skill set," says Laura Friedman, vice president of the distance learning group at the New York Institute of Finance (NYIF). "For whatever reason, a senior executive may not want to sit in a classroom with someone who's 27 years old--especially a 27-year-old who works for him or her."

For human resource heads and training directors, delivering lessons electronically makes it simpler to track the progress of students. Likewise, Web-enabled training programs allow corporate tutors to customize content, fine-tuning programs for the specific needs of workers. "For example, a new salesperson needs different types and amounts of training than somebody making a lateral move from another company," explains Cushing Anderson, IDC program manager for learning services research. "E-learning allows you to make training relevant."

This is not to say everybody's signing up for the revolution. Despite the obvious benefits of cyber-training, companies still spend billions sending employees to off-site locations to learn from human instructors. This raises the obvious question: What gives?

Mostly, online training lacks the human touch. Despite video streaming and narrow-casting, it's still nearly impossible to duplicate a live classroom over a wire. Even with exponential advances in processing power and bandwidth, Internet interaction between students and teachers is stilted. Many early attempts to migrate education to the Web proved that. "The ugly truth is that initial forays into e-learning were no more than electronic versions of correspondence courses," says Hodgins. "Now people are focusing on doing things differently to make e-learning more effective, and not just for the 2 percent of the population for whom correspondence work was effective."

And make no mistake, the new wave of online training tools can be very effective. Typically, programs enable corporate users to break lessons down into smaller pieces so that students can glom on to complicated concepts. Many applications allow easy access to mentors via email or chat rooms, or participation with other students in seminars broadcast live over the Web. Some allow content developers to modify coursework on the fly, either in response to student input or to bring information up-to-date. "In the past, programs were locked down and based on an assumption of what a group of people needed to know," Hodgins says. "Changes were not easily--or inexpensively-made."

SEXY, YES; SLINKY, NO

Inexpensive is the keyword. As e-learning applications have improved, the price of educating and training workers online has gone down--often well below the tab for more-traditional programs. "Typical instructor-led learning for corporations costs about $300 per hour per student," says Gordon Macomber, CEO and president of NYUOnline, a recently launched for-profit subsidiary of New York University. "And that doesn't include travel and other related expenses. Companies can look at significant cost savings and enhanced learning with a well-designed and managed e-learning program."

While that may be true for corporations that outsource employee training and education, it's not so clear for businesses that develop proprietary course content to train employees, business partners, or customers. Developing content in-house can be expensive, as can the infrastructure to support the program. "The cost of creating content for e-learning is probably higher than it is for the more traditional delivery model, and more of it is required," concedes Hodgins. "A live instructor could make up for a lack of materials, but you don't have that option online."

Another small problem: The multimedia requirement of an e-learning program can be so great it can slow a company's computer network to a crawl. For that reason, managers at Armonk, New York-based IBM Corp. have eschewed video in the online training materials they've developed for the company's workforce. "We love video as much as the next person," explains Nancy Lewis, IBM's director of management development. "But from a curriculum design point of view, video is sometimes not as effective as other approaches, even though it's very sexy."

Beyond hogging network resources, video-intensive applications often require plug-ins. That can turn students off. "We've determined that users get very frustrated with the need to download software plug-ins required to use video," notes Lewis. "And if they're frustrated, they won't come back."

They also won't come back if they feel they're getting the short end of the joystick. Because online training can be done practically anywhere or anytime, some employers require workers to take training programs during their off-hours. "Employees often take these online courses at home," observes Friedman of NYIF, which began offering customized online training about two years ago and launched ready-built "retail" courses for the financial community in March. "This presents the issue, especially for nonmanagement employees, of whether you should be paying them overtime."

Such a concept might spook cost-conscious CFOs. To make sure the price tag for e-training doesn't get out of hand, finance managers need to get with the program before the program gets with them. Explains Lewis: "CFOs should demand that a strategy and an e-learning architecture be identified before the company begins to offer online training in quantity."

IT IS BALLOON!

That done, companies can reap substantial rewards. IBM spent about $1 billion of its $88 billion in revenues last year on in-house learning programs. Managers at the US technology giant estimate that for every 1,000 classroom days converted to distance learning, the company saves around $400,000. Executives at IBM reckon that between cost-cutting and gains in productivity, distributed learning saved Big Blue some $200 million last year.

Managers at the UK division of Dallas, Texas-based Howard Schultz & Associates International won't likely see those kinds of balloons. Nevertheless, executives at the accounts payable auditor predict their recently launched online training program will save the financial outsourcer around $160,000 each year.

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