The Business Case For ELearning [Electronic resources]

The Three Waves of E-Learning at Cisco

The pioneering e-learning effort required years of fine-tuning and adjustment before mainstream acceptance at Cisco. E-mail was available in the late 1970s but could not be sent between systems until the late 1980s. E-mail, as a communications tool, was used for 10 years in research settings before early users adopted it, and another 3 to 5 years before the mainstream users adopted it. At Cisco, generating productivity from Internet learning applications has been an evolutionary process. Since 1997, e-learning has evolved in phases or, what is often referred to as, "waves" of adoption. Throughout this book, the terms Internet learning and e-learning are used interchangeably.

[1]

The benefits from the Cisco Career Certifications program accrued in the form of customer loyalty and industry recognition. By May 2001, nearly a quarter of a million networking professionals worldwide had acquired a Cisco certification. Industry analysts recognized Cisco certifications as the fastest-growing certification program in the IT sector. Customers had begun to rely on the program to identify talent for supporting their networks. Nearly 10 percent of the Cisco-certified individuals in 2001 were Cisco employees, with another estimated 30 percent being channel partners. The remaining 60 percent included Cisco customers, independent consultants, and IT professionals worldwide.

Besides the certifications program, Cisco enhanced its assessment component through the introduction of online testing. Online testing was targeted for use within Cisco sales force and channel to test competencies on certain skill sets. Besides certifications, the online testing has become a means for sales managers to ensure that planning, design, and support teams working on customer networks possess necessary understanding to perform the required tasks.

The learning components coalesced in the third wave, where communication, training, and assessment operated in sync. The organization had realized the value of e-enabling communication, training, and assessment. Employee rewards were tied to online testing and certification accomplishment. Electronically distributed certification-training materials were available for learners to use. The most recent information about product, technologies, and services from Cisco were available on the web through online courses, video-on-demand segments, and white papers.

The productivity benefits to Cisco reached $133 million in fiscal year 2002, a net increase of $100 million. The surge in productivity might be attributed in part to the synergy within the components of Internet learning. An improved adoption rate among learners and improvement in skill management and distribution tools were evident. On the certifications front, more than 400,000 individuals had acquired a Cisco certification, and performance-based simulation questions were now a regular feature in certification testing. On the learning portals, 78 percent of the sales force was acquiring 80 percent of the information it needed from the sales portal. The organization, as a whole, was conducting 400 video-on-demand presentations each month and more than 40 live video broadcasts each month. [2]

The e-learning initiative focused on leveraging employee knowledge and skills through Internet application solutions. It ultimately promised that e-learning solutions could thrive and generate productivity benefits.

The Productivity Imperative

In 2004, the mood was cautious and optimistic, but muted. However, while waiting for business and IT spending to pick up, Cisco did manage market-share growth. The company bounced back practicing what it preached: Leverage the Internet to change the way of doing business.

During this time, the expectation of employee productivity at Cisco remained ambitious and its pursuit relentless. This resulted in a 25 percent to 30 percent productivity increase in 24 months. Cisco leadership remained committed to increasing future productivity through Internet business solutions and employee empowerment. The cornerstone of education and experience is communications, training, and assessment delivered over the Internet: e-learning.

The Net Impact of Productivity

A focus on generating productivity set the stage for understanding and using the Internet as a resource. A study conducted in 2001, called Net Impact, assessed the productivity advantages from existing and planned Internet applications at $528 billion for the U.S. economy alone. (See [3]

Researchers of the study at the University of California, Berkeley, the Brookings Institution, and Momentum Research Group had for the first time quantified the extent to which organizations might be able to benefit from cost savings or revenue increases through the adoption of Internet business solutions. For the purposes of the study, Internet business solutions were defined as IT initiatives that leverage the Internet with networking, computing hardware or software for streamlining business processes, or cultivating opportunities. More than 2500 companies from the United States and Europe participated in the study.

The study clearly demonstrated that economies globally still have a lot of room for productivity growthand when there is genuine productivity growth in economies, stock markets register and reflect the gains eventually. The opportunities appear even more promising than reported, however, because only 60 percent of the U.S. businesses and 44 percent of European businesses reported any ongoing applications. What if the remaining organizations decide to leverage Internet business solutions? What if those that are currently generating the savings go beyond the first round of business solutions to another wave of Internet applications? The estimated savings are a striking $1.4 trillion over a 10-year period if all businesses in the United States implement Internet business solutionsbetter than any stimulus package the government can offer.

The Net Impact study offered insight on productivity based on Internet applications that offer promise of generating true value for businesses worldwide. The study indicated three types of productivity advantages accruing to organizations as a result of Internet business solutions:

Productivity gains through cost savings In the United States, organizations that have adopted Internet applications realized cost savings at an average of 2 percent to 4 percent per year with an expected savings of 5 percent to 9 percent on average annually.

In Europe, organizations that have adopted Internet applications realized cost savings at an average of 2 percent to 6 percent each year with an expected savings of 5 percent to 16 percent on average each year.

Productivity gains through revenue Internet applications help attract and retain customers over the long term. More than 50 percent of the organizations involved in the study reported attracting customers as a result of their Internet applications. Another 50 percent reported improving customer satisfaction as a result of these applications.

Productivity gains through compounding Organizations that adopted two or more Internet business solutions for business applications realized double the cost savings, a clear indication of synergy across applications.

Employee Productivity Through Internet Learning

In economic terms, productivity is defined as the rate at which goods or services are produced, as measured by output per unit of labor. In today's high-tech economy, however, clear and consistent communication and the flow of knowledge and information within an organization often profoundly affect a company's ability to be productive. A better-trained and better-informed employee returns the investment in training and development multiple times over through improved performance for the organization.

To create high achieversnot only for the company, but also for the resellersCisco created (in the year 2000) an e-learning portal for 400 worldwide reseller partners and another for 4000 systems engineers. The users included groups that ensured not only the sale of Cisco products but also the deployment of those products. (See [4]

The more learners that used the e-learning portal, the higher they reported their satisfaction with the tool. The use resulted in Sales & Marketing Management magazine rating the Cisco sales team as the "best-trained sales force" in the United States across all industries in 2002.[5] In the fourth quarter of fiscal 2002 alone, Cisco achieved a 40 percent to 60 percent cost savings through increased use of e-learning over in-class training. [6]

The return on investment (ROI) analysis conducted on the e-learning portal for resellers, called Partner E-learning Connection (PEC), has validated the business benefits of the portal. For each dollar spent on the PEC in fiscal year 2003, the e-learning portal yielded $16 of value for Cisco. (See Chapter 3, "E-learning Under the Microscope," for more details on the analysis.)

A C-Level Perspective: Banking on the Knowledge Worker

As noted earlier, the problem of doing more with less leveraged the idea that you could use Internet applications to sustain productivity. So how do C-level decision makers, such as a chief information officers (CIOs), respond to a call for "doing more with less?" The answer is simple: by leveraging Internet applications to sustain productivity gains over the long run and by cultivating knowledge workers within the organization. A knowledge worker is one who efficiently and effectively delivers mission-critical applications and projects for the organization. Research, such as the Net Impact study, and experience has shown that 2 percent to 6 percent annual productivity gains are entirely attainable over the course of the current decade.

Fiscally minded organizations seek to increase their economic return on employee investment. The talent needed to implement, integrate, and perform critical projects has always been at a premium. In an economic slowdown, workers are expected to perform with even fewer resources. In turn, these workers need increased information, authority, and skills development to keep pace with trends, technologies, and innovations around them. Knowledge workers have a way of returning rich dividends to companies that invest in them. These dividends include the following:

Reduced cost and time Demonstrating high levels of competence, knowledge workers reduce the cost of maintenance and time to market with development and implementation. Qualified expertise on project teams naturally helps a company reduce the time and cost required to meet project- or product-development goals.

Increased success with customers Organizations involved in consulting and reselling, with highly skilled individuals on staff, often enjoy a competitive advantage when competing for projects.

Revenue generation Value-added products and services improve revenue stream for those in the business of reselling, consulting, manufacturing, and information services. Teams that design, develop, and deliver such products and services form a revenue-generating source for companies. [7]

The Promise of E-Learning: Learning in Lean Times

If during a slower business climate organizations focus on improving productivity, investments in developing knowledge workers follow. However, with cost pressures, organizations often must cut the budgets that support the learning needs of their employees. With limited budgets for skill development, decision makers tend to assess learning options on the basis of time, cost, and learning effectiveness.