Eating our own dogfood

Throughout most of 2000, SmartForce was among my marketing clients. I wrote white papers, customer newsletters, and sales presentations on eLearning, and gathered market intelligence. SmartForce occupied the former NeXT headquarters on the Bay in Redwood City. Several times a week I'd struggle with the traffic on Highway 101 to make my way home in Berkeley.

In September or October of that year, a large sign sprouted up alongside 101, stating that Oracle had saved $1 billion by using its own products. Personally, I wondered how Oracle had been able to overlook this spare billion until now, given the nature of its business and its take-no-prisoners leader. Several SmartForce executives wondered what level of benefits we could claim from using our products. I took the challenge. The result appears on the next page.

eLearning boosts revenue by $10 million annually, slashes expenses by $4 million

November 2000

On October 19, 1999, two thousand employees of CBT Systems gathered in offices around the world to participate in a webcast from the firm"s headquarters. Unbeknownst to them, workers outside the offices were simultaneously hanging signs heralding the firm"s new name, SmartForce, the eLearning Company.

The new identify was the tip of the iceberg. The firm was reinventing itself as an e-Business. SmartForce had invested $50 million developing an eLearning ecosystem for the future. IDC recognized SmartForce as the world"s largest eLearning company.

Sales Issues

The salespeople of fourteen year-old CBT Systems were accustomed to selling the firm"s library of CD-ROM and LAN-based IT skills training programs to Fortune 2000 firms. Several hundred reps personally called on senior management, offering a value proposition of low cost, volume discount, fresh content, and single-source accountability. The firm recruited experienced veterans who had earned their spurs at IBM, Xerox, and other traditional bastions of high-performing sales professionals.

The reinvention of the old training company into an eLearning company turned the tables upside down for the sales force. Overnight, they had to switch from selling products to selling solutions. From delivering multimedia training run behind the firewall to providing round-the-clock Internet-based services on a hosted basis. Basic product categories were blown away. A real-time database of more than 20,000 learning objects replaced the former library. Personalized learning paths replaced courses. Like many a business reborn into the new economy, the sales people of SmartForce had to learn new products, new approaches, new presentations " an entire new industry " in order to share the eLearning vision with their customers.

Sales training before eLearning

Two years ago, it took a newly hired sales person nine months to a year to get fully up to speed. For one thing, the firm offered more than a thousand different training programs. Partnerships with Microsoft, Intel, Novell, Cisco, and other industry titans, enabled the company to often be first to market with training in new technologies, so the library of programs was forever growing.

Introductory new hire sales training was accomplished through two instructor-led workshops, eleven days in total, at the company headquarters in Redwood City, California. The sequence of workshops was conducted twice annually. All salespeople attend national, regional, and area meetings for new product introductions and renewal training.

With the sales force adding fifty new people a year, the instructor-led training was at capacity. Management wanted to accelerate growth of the sales force but expanding new-hire sales training would require adding both staff and facilities.

Also, sales managers were reluctant to take people out of the field for the sales meetings or training sessions because it interrupts the flow of business and cuts productivity.

Eating their own cooking

Senior management summed up the situation as,

  • "Our past track-record of 40% annual growth continues. Carrying out our mission requires more and more sales people. We need a sales development process that scales with our business."
  • "We must accelerate the development of new hires. It takes too long to make them fully productive."
  • "We must become more nimble in responding to changing market conditions."
  • "Sales people need to work with one another on global accounts, practicing new presentations, keeping up with the industry " with a torrent of new information."
  • "The major sales conferences are great for morale but don"t suffice for late-breaking news and coordination. We can no longer hold up announcements for the next meeting " which might be six months out."
  • "The instructor-led sessions overwhelm new hires, trying to stuff so much new information into their heads that it pours out of their ears."

Given these conditions, one would expect SmartForce to have adopted the obvious solution " eLearning " right off the bat. This didn"t happen. Creating the infrastructure to support eLearning at PriceWaterhouseCoopers, Deloitte, Dell, Lucent, and other major customers was Job 1. Implementing eLearning internally was Job 2. Job 1 pushed Job 2 out of the picture until the middle of 2000.

eLearning for the sales force

The sales team at SmartForce is adopting eLearning incrementally. New product announcements, expert guidance, and presentations are provided in virtual classrooms. Web-based training modules teach skills that support sales " the Sales Force Automation system, mastering productivity software, even using the in-house email system. Custom modules are being rolled out in text, as instructional objects, and via virtual collaboration. All current reference information is online, covering everything from product specifications and pricing to competitive updates, case studies, presentations, white papers, success stories, delivery dates, press coverage, sales tips, to who-to-call phone lists.

Converting the bulk of what was formerly covered in workshops to computer-based delivery produces these results:

  • Eleven days of instructor-led new-hire training have been reduced to three.
  • Orientation sessions take place five times per year instead of two.
  • Bringing new hires up to speed is scalable, so it no longer constrains corporate growth.
  • Numerous regional and area sales meetings has been replaced with on-line conferencing.

More importantly, the adoption of eLearning has enabled SmartForce to become a fast-paced e-Business.

  • The time it takes for a sales person to reach competence has been cut from eight months to four.
  • The entire sales force has learned to sell solutions instead of point products.

Quantifying the benefits of eLearning


Note: Figures are annualized approximations.

Assumptions:

  • Sales force new hires/year: 50
  • Size of existing sales force: 150
  • Quota per sales rep: $2,000,000
  • Annual revenue = $200 million
  • Travel, food, lodging = $1,000 per event + $150/day.
  • Sales days/year = 250.

Value of cutting new hire development from 8 months to 4 months, half a year.

  • Gain 6 months productivity per sales rep.
  • Revenue increase = 50 x 1/3 x 2,000,000 = $33,000,000
  • Reasonable proportion of revenue attributable to training = 1/3
  • Gain = $10,000,000

Eliminate five days travel associated with sales meetings.

  • Five days = 5/250 = 2% of sales time
  • 2% of annual revenue = $4,000,000

Reduced travel expense = immaterial


More effective sales force, better teamwork, shorter cycle time = incalculable.


Total benefit = $14,000,000+


ROI

It is not feasible to calculate ROI in this example because SmartForce had already built the eLearning infrastructure to host its sales training. The incremental cost of customization has been less than $100,000, and this is more than offset by the staff that SmartForce did not have to hire to increase its sales force development capacity.


That was then; this is now.

Eighteen months later, the press reported "In a merger of corporate e-learning firms, SmartForce is buying rival SkillSoft, of Nashua, N.H., in an all-stock deal." That's not exactly what happened. SkillSoft had acquired SmartForce. The Redwood City office closed; the Dublin Development Center downsized significantly; most of the SmartForce organization was dismembered.

I advice other companies these days, still writing white papers but also helping them gain a strategic toe-hold, making presentations and introductions, and championing the causes I believe in. SmartForce ran off the rails -- It's a complicated story -- but accelerating employee time-to-performance remains one of the biggest paybacks of any investment in corporate learning. Not for nothing my consultancy is named "Internet Time Group." Time is more important than money. Effective learning buys a lot of time.


More articles and rants
Posted by Jay Cross at August 6, 2003 08:14 PM | TrackBack
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cool stuff

Posted by: Photo Of Paris Hilton at June 29, 2004 01:23 AM

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