IBM, on the other hand, discovered that managers who have been exposed to online chat forums and computer simulations of work situations say they never want to go back to classroom-only training. Not only that, but Big Blue found that using such technology has enabled the company to trim the cost of training by $400 million a year.

    Whether e-learning is currently in a state of boom or bust depends on your viewpoint. The conflicting claims of the e-learning naysayers and proponents can be hard to sort out. Consider, for example, the experience of Express Personnel Services, the world’s largest privately held staffing firm, based in Oklahoma City. Four years ago, during the Internet boom, Express Personnel invested in an expensive streaming-video training system that offered every bell and whistle imaginable and gobbled up so much bandwidth that no one at the company could use it. After junking that system, the company has returned to e-learning with a less expensive system that uses shorter online classes.

    E-learning is making a comeback. While spending for corporate training remained flat in 2003, e-learning expenditures rose by a striking 22 percent, says Michael Brennan, an analyst at International Data Corp. What’s more, IDC predicts that funding for e-learning will rise by an average of 27 percent over each of the next five years. Analysts are quick to add, however, that the e-learning of 2005 will be nothing like the version that crashed and burned with the dot-com implosion. As in the case of Express Personnel, e-learning initiatives now tend to be far more modest and targeted.

    Companies no longer accept the notion that technology and the Internet are the perfect solution for every kind of training. Many firms are still licking their wounds from those earlier efforts. The seven-figure learning management systems that many firms purchased took, in some cases, years to fully implement. Many of the expensive libraries of content remain largely unused. Employees frequently found that big clumps of static material were too dry and difficult to figure out. Many companies bought a three-year subscription to a catalog of courses, put the material up on their intranet, and then found that no one ever logged on, says Jeff Snipes, CEO of Ninth House, a San Francisco maker of online training modules.

    Now companies are treating e-learning strategically, with greater attention to ROI and more awareness of how to use--and not use--online training. The American Society for Training and Development recently released its 2003 state-of-the-industry report, which shows that many companies are avoiding the most cutting-edge e-learning technology. Old-fashioned CD-ROMs represent 46.9 percent of technology-delivered training, virtually the same amount as two years before. Perhaps as a result of the dot-com fallout, networked online delivery of training decreased in 2002. It represented a mere 31.5 percent of technology-delivered training, down from 41.3 percent two years earlier.

Blended is best
    Even the most technologically gung-ho firms no longer promote the notion that e-learning can replace all forms of training. The mantra, more than ever, is "blended learning," which means using technology in conjunction with classroom training. D.L. Karl, vice president of product development for AchieveGlobal, a training firm in Tampa, Florida, says that the blend between new and established methods commonly has been accomplished by guesswork. This mentality has led to disappointing returns for the training dollars. Karl’s experience has been encountered by many others in the same arena, who conclude that e-learning does an excellent job of helping workers learn conceptual subject matter, such as product information or the tenets of customer service, but that developing interpersonal skills requires personal, face-to-face practice.

    Express Personnel, for example, found that managers can benefit from online material about the principles of hiring, but need classroom instruction with role-playing to learn those skills. When personnel go to one of the company’s training centers, they learn a lot from other people doing the same job at a different location. "You can’t package that in a class," says Diana Scott, the firm’s e-learning manager. The company experimented with online forums to promote such exchanges but found that busy workers simply wouldn’t use them. Experts say that the methodology used for each of the various phases of the training process should reflect the desired outcome for that stage, not the cost or convenience of a given technology.

    No one has found an ideal mix of technology and classroom instruction, but IBM seems to have come close. It conducts 48 percent of its training electronically, says Ted Hoff, IBM’s chief learning officer. With 320,000 employees scattered across 76 countries, the company has a special need to quickly and efficiently train its people. But like many other firms, IBM has found that e-learning works most effectively when strategically coupled with classroom training.

    A prime example is "Basic Blue," IBM’s training program for new managers. In years past, the more than 5,000 new managers who are trained each year would be brought together for a five-day event to learn the basics of the firm’s culture, strategy and management practices. That was too much information to absorb in such a short time, so IBM expanded the program to 12 months by adding different types of e-learning to the weeklong live event. Five months before the live event, managers now do self-paced Web learning modules that discuss basic management skills and use simulation modules to handle real-life business scenarios using videos of a fictional colleague or customer. By the time the new managers meet for the five-day event, they have been in the field long enough to discuss actual experiences. After forging those face-to-face relationships with other managers, they continue to do online group simulations and mentor one another for seven months.

    Studies conducted by Harvard Business School and other organizations determined that the program enables managers to learn five times as much material at one-third the cost of a classroom-only approach. Before going through Basic Blue, managers said that they preferred face-to-face training. Afterward, Hoff says, surveys indicated that managers overwhelmingly liked the blended approach better, and in the future always wanted some training delivered electronically.

Still wary
    BM, of course, sells e-learning technology and has a vested interest in its success. Other companies remain more wary. Four years ago, when the Internet was still considered miraculous, Express Personnel looked for an e-learning system to help save its franchise owners time, travel and training costs. An Express Personnel vice president checked out some programs and was wowed by the setup at a real estate company where e-learning was provided 24/7 through streamed video delivered by satellite. Soon afterward, Express Personnel purchased a similar video training system. Problems started immediately. Creating content was expensive and time-consuming. Worse, many franchise owners didn’t have enough bandwidth to view the videos over the Internet. "The videos would get stuck all the time, and the presenters looked distorted," Scott says. "We bit off more than we could chew."

    The experience was not uncommon. In the first go-around of e-learning, many companies had a follow-the-leader mentality. They installed state-of-the-art learning systems with 3-D simulations, but never considered whether the systems were necessary or cost-effective.

    "In the past, people used a lot of crazy metrics and spent hundreds of thousands of dollars to build e-learning systems with a lot of gratuitous functionality," says Dave Palumbo, head of the learning practice for Sapient Corp., a Boston consulting firm. Those kinds of approaches have been scaled back, he says, along with high-flying e-learning providers that could charge whatever they liked for support. What remains are crisp, clear solutions that solve well-understood problems.

    Express Personnel got rid of the expensive Internet video system, and the vendor that sold it, in 2002. The second time around, the company’s training department involved the IT department in choosing a simpler e-learning system that wouldn’t tax the franchises’ computer systems. Now, franchise owners and their employees can log on and, instead of being confronted with a mountain of videos, are directed to shorter online classes designed for their specific job functions, such as inside or outside sales.

    If an e-learning system overwhelms the users with too much information, they will not come back. "The new system has a lot of capabilities that we turned off and are not using," Scott says. "In e-learning, more is not better."

Briefing and debriefing
    Many companies believe that how employees are prepared for e-learning has a big effect on the training’s outcome. Kathy Harris, an analyst at Gartner Group, notes that student-managed learning is a radical change for most people, and companies must provide incentives to use it. Before IBM inaugurated a series of Web seminars for salespeople on how to sell e-business technology, a vice president of sales sent a message to all salespeople about why the information was important to their jobs and to the company’s future. Like many other successful e-learning initiatives, the seminars were well attended because they were mandatory. But it is important to send the personalized note about why this is valuable so the participants have the right mind-set, Hoff says. The training won’t be effective if people are doing it only because it’s required.

    Granted, IBM has tremendous resources. Still, even small firms with modest e-learning programs are finding that the same principles apply. Windsor Frozen Foods, a tiny division of the Keebler Company, finds that few employees are interested in attending training after work, especially if the course is held at a remote location that requires additional transportation time. George Young, Windsor’s corporate director of human resources, thought e-learning was a perfect solution, so he purchased learning modules on management practices from Ninth House about subjects such as how to ask better questions at meetings. The key to the success of the self-paced modules, he found, was setting up sessions afterward for the users to discuss what they had learned and how they could apply the information to their jobs.

    Given employees’ past lack of interest in additional training, Young approached the program with trepidation. But the employees had a lot of lively discussions, and he now frequently sees situations in which people apply some of the things they’ve learned from the modules, even if they don’t realize that’s what they’re doing. A crucial aspect of the self-paced training was letting people know in advance that these discussions would be held, so they had greater focus and a sense of accountability. Despite the success, Young is taking the go-slow approach that now characterizes many e-learning initiatives. The first modules were done by 14 company officers, and e-learning is being rolled out to the rest of the workers gradually.

Less is more
    The ASTD report shows that learning technology is rapidly taking the place of much of the training traditionally presented in a classroom. Overall, 15.4 percent of corporate training in 2002 was conducted through learning technologies, compared to 8.8 percent two years earlier. Among Fortune 500 companies, learning technology constituted 25.5 percent of all training, up from 18.7 percent two years before.

    Not surprisingly, the more advanced forms of e-learning are much more popular among larger firms and companies that are technology-savvy. At Fortune 500 firms, 73.6 percent of technology-delivered training comes through networked, online methods. This has increased steadily even during the dot-com collapse. However, most firms are looking at more modest technology and smaller initial investments.

    Companies are still trying to find the right balance to make the e-learning experience engaging but not overwhelming. In many cases, experts say, workers will be happy with the new generation of 10-minute training modules that address a specific need. "The content doesn’t have to be so flashy that it looks like Steven Spielberg produced it," analyst Palumbo notes.

    Companies are also grasping for better metrics to measure e-learning, such as increased satisfaction and reduced turnover, as opposed to what Palumbo calls the previous "smiley-face metrics like ‘I liked it better.’ "

    Too often, experts say, companies have looked to e-learning as a cheaper solution, without considering whether it is an effective solution. Successful e-learning starts with a commonsense practice that is often overlooked: carefully thinking through the purpose of a training initiative. Brennan of IDC still sees companies set arbitrary e-learning goals, such as planning to have 80 percent of training online in four years, without thinking about how receptive the audience will be, what the business drivers are, and how they will combine e-learning with other forms of training. "When I hear numbers thrown out without business arguments other than ‘we’ll save money,’ I’m skeptical," he says.

    Analysts say that skepticism about e-learning is a good thing. Remembering and avoiding the sins of the past will enable a firm to reap the many real business benefits that can come with careful purchases and sound planning.