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The Enterprise System Spectator

Saturday, January 11, 2003

E-learning ROI isn't a slam dunk. Earlier this year, I wrote about a study that found a strong return on investment from e-learning initiatives. I still believe that the business case for e-learning can be strong, but getting the payback takes more effort than vendors of e-learning solutions like to admit.

Achieving e-learning benefits.
First, companies should devote more effort to ensuring that employees actually use the system and learn something. Simply implementing Web-based training is not enough. E-learning is a whole different type of experience than live classroom training. If this fact is not recognized, companies may replace classroom training with e-learning but find that employees are not learning anything.

For example, Web-based training tends to shift responsibility for learning from the trainer to the trainee. E-learning simply requires more self-discipline on the part of the student. One study indicated that only 25% of students who start an e-learning course actually complete it. When Bob goes off to classroom training, he leaves his office and faces a live instructor who, if he or she is any good, holds his attention in the classroom. But when Bob stays at his desk and participates in Web-based training, it's too easy for him to answer the phone or read e-mails on the side. It's also too easy for his manager to pop in with a quick question, or ask him to defer his lesson in order to deal with some crisis. Of course, sometimes the Web-based content is simply boring. Therefore, CIOs and HR professionals must remind themselves that the goal of e-learning is not merely to save training costs, but to more effectively train the workforce. Those responsible for e-learning must continually assess how well learning objectives are being met.

Finding the sweet spot.
Second, decision makers must remind themselves that e-learning is just one element of a comprehensive employee development program. Web-based training is good for some things — it is not good for others.

For example, Web-based training often does not accommodate labs or hands-on exercises as well as classroom training does. I saw this first-hand about a year ago while working with a Fortune 50 technology firm that has already made a huge investment in e-learning. I was helping to manage a program to develop classroom material along with hands-on exercises involving this firm's products. Our charter was to conduct a series of instructor-led classes, refine the material, and then convert it for Web-based delivery. Although we could see how to translate the lecture material for the Web, the courseware authors (all highly experienced system engineers) could not imagine how the lab exercises — where most of the real learning occurs, could be delivered over the Web. Therefore, the best approach for many technical subjects would be a combination of Web-based training with in-person labs or practical exercises.

Web-based training, or distance learning, is not going to replace all classroom training. More likely, it will be useful for basic subjects that must be taught to a large pool of employees, such as new employee orientation, EEOC training, HIPAA compliance, or basic user training during an ERP or CRM rollout. It also may be useful to cover prerequisite subjects prior to classroom training, or to provide follow-up. Training professionals have already discovered that computer-based training is useful for measuring the effectiveness of any kind of training. Nevertheless, for some subject matter, classroom training is simply the better vehicle. The challenge for companies will be to find the best combination of training formats to develop employee skills most cost-effectively.

Per-user Pricing Can Be Costly.
Finally, buyers should check their assumptions on the cost side of the equation. E-learning solutions can be expensive. Vendors often price their solutions based on total employee headcount or total named users. But this assumes that a large percentage of the employee population will adopt Web-based training. Companies that have signed up for such deals often find that actual adoption, or use of the system, lags far behind the total number of seats the company has licensed.

Typically, a lack of system usage does not play into building a solid business case for most other types of IT investments. For example, end users of a newly implemented transactional system, such as ERP, have little choice when it comes to using the new system. Because the end users can't do their jobs apart from the ERP system, assumptions regarding the user count in an ERP business case tend to be accurate. However, employees or entire departments can choose not to take advantage of an e-learning system. Therefore, when building a business case for an e-learning initiative, buyers should try to structure the deal to specify a conservative base number of users, with terms that allow additional users to be added on a per user basis.

Vendors like to justify the cost of their e-learning systems by pointing to the huge savings in travel costs that will result if much of the live classroom training in central locations is replaced with distance learning. But, as noted, this benefit may be overstated. I believe that there is already a backlash developing against unreasonable expectations for e-learning.

I still believe that the business case for e-learning is strong. I also believe that we are still early in the life cycle of adoption, as companies learn how to leverage the unique strengths of Web-based training. But ultimately, it has to be much more than simply avoiding travel costs. It comes down to how much knowledge is effectively transferred and to what extent employee skills are actually enhanced. By focusing on the objectives, as well as the cost savings, executives can achieve a more reliable business case for e-learning.

E-Learning vendors.
For companies considering development of an e-learning capability, there are dozens of niche vendors offering solutions, some on a license basis, others on a hosted basis. Some of the current vendors include Click2Learn, Docent, Element K, GeoLearning, Intralearn, KnowledgePlanet, NETg, Pathlore, ReadyGo, Saba, Skillsoft, and Skillview Technologies. In addition, many of the enterprise application vendors, such as SAP, PeopleSoft, J.D. Edwards, Oracle, and Siebel have introduced e-learning capabilities as part of their suite of products.

by Frank Scavo, 1/11/2003 07:54:00 AM | permalink | e-mail this!

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Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

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