Learning and Performance Go On-Demand
By Tom Starner

In growing numbers, HR and training professionals are flocking to Software as a Service. Three years ago, the Utica National Insurance Group was challenged by its employee performance management and learning management environments. To be blunt, it had no truly effective performance management or learning management systems in place.

In fact, it had little more than a home-grown patchwork strategy, built upon Access and Word, the off-the-shelf database and word-processing applications found within the Microsoft Office suite.

Utica, a mid-sized (1,400-employees) regional commercial property and casualty insurer headquartered in Utica, N.Y., knew it needed to change the way it managed performance and learning among its employees. That much was certain. But how to get there with as little cost and technical complexity as possible presented a fairly daunting challenge.

Fast forward to September 2006 and shift 1,426 miles across the country, to the city of Sidney, Neb. There, another mid-sized (2,000 employees) but very different type of company faced a similar issue. In this case, Cabela’s, a $2 billion retailer that provides a wide variety of sporting goods for outdoor recreation, fishing, hunting and camping, was growing its bricks-and-mortar retail operations and needed an integrated e-learning platform and retail training solution.

In the end, these two very different companies, with completely different business models, found the same learning technology solution. The companies decided to try out an increasingly popular software-delivery method known as on-demand, Software as a Service, or SaaS, combining it with a “best-of-breed” software approach to learning, learning management and performance management.

Compared to traditional on-premises software, the SaaS delivery model is appealing to HR and training professionals for several reasons, says Josh Bersin, CEO and founder of Bersin & Associates, an Oakland, Calif., provider of best practices, trends, and vendor and benchmarking research in the learning and performance management markets. Those key advantages include lower start-up costs, reduced total cost of ownership and rapid deployment. And, according to research completed by Bersin & Associates, on-demand solutions also are scalable, which means an easy adjustment for shifting employee populations in either direction.

Bersin says his firm has also found that the actual functionality available in a traditional, on-premises suite can be much more limited than that available from focused best-of-breed vendors.

“The main problem with installing an LMS suite on-site is training typically is at the bottom of the list for many employers,” Bersin says. “As a result, the IT department has little or no interest in building and supporting it, unless there is nothing else to do. So, if an HR executive wants to buy an LMS, he or she has to offer an extremely strong business case. For many companies, especially those in the small-to-medium space, that kills it.”

According to numerous experts and recent statistics, SaaS is quickly catching on as the preferred way for organizations to acquire access to business applications.

For example, the adoption rate for on-demand learning management systems is skyrocketing, according to a report from Gartner, a leading IT research and advisory firm in Stamford, Conn. According to Gartner, SaaS technology has grown significantly and will continue to grow in coming years. In fact, Gartner predicts that in 2007, SaaS revenue will surpass $5.1 billion —a 21 percent increase over 2006 revenues. In terms of total market share, Gartner reports that SaaS adoption is close to 70 percent of the total in the e-learning and Web-conferencing space.

And to demonstrate the adoption of the Software as a Service concept across the software industry, in mid-September, German software giant SAP AG introduced “Business by Design,” its Web-hosted business-management SaaS. According to the company’s product information, Business by Design will run on SAP’s servers and will be accessible over the Internet. With the announcement, SAP joins a host of large tech companies—including IBM, Microsoft and others—in the race to build and expand Web services-based SaaS product offerings. It also supports the notion that the SaaS delivery platform is getting the big tech companies to sit up and take notice, not to mention the attention of customers such as Utica National Insurance Group and Cabela’s.

Utica Needed Help

That trend doesn’t surprise Cherie Mullen, director of learning at Utica National Insurance Group. Mullen’s company initially sought a solution for pre-hire assessments and performance management.

At first, Utica’s HR organization looked to build an in-house assessment tool. As it explored the complexities of the application and looked at vendor products, the company decided a learning management system made sense as well.

When the company explored the LMS market, says Mullen, it found very few providers that could offer a complete solution for employee assessment, performance management and employee development. At the time, many of the LMS companies were selling only learning solutions, and only a few of those vendors had the expertise or software to support the entire employee lifecycle.

After reviewing 14 LMS solutions, Utica quickly realized it needed a provider that could offer a solution that would include employee assessment, performance management and learning management, as well as services to assist in the development of competency models and the performance-management process.

Utica selected a solution delivered by West Des Moines, Iowa-based GeoLearning, that included a wide variety of components, including:
  • The GeoMaestro learning-management system from GeoLearning,
  • A performance-management system from SuccessFactors (a GeoLearning partner),
  • An insurance competency model provided by ITG,
  • Virtual classroom capabilities provided by WebEx (also a GeoLearning partner),
  • Training content from NETg/SkillSoft, MindLeaders and Kaplan Financial, and
  • A set of authoring tools to enable the company to develop its own training content.

While Utica may have been able to identify, select and implement each of these components separately, the company realized that it needed an integrator to select, implement and support each of these integrated elements.

“Before this, we had no LMS, no performance-management system,” Mullen says. “We used Access to keep track of courses for employees. It was a real home-grown approach. It certainly wasn’t an LMS.”

Mullen says the company’s thinking was to create a plan for ways to easily track issues such as when an employee was ready for promotion, where new employees fit in, how to measure performance, etc.

“We also went to a conference and heard some LMS presenters say they also offered some performance-management capabilities. We thought that would make sense,” she says.

Mullen and the HR team also turned to Utica’s own IT department, asking the latter whether performance-management and learning-management systems were something it could build.

“Our IT people just didn’t have the time,” she says. “And even if it could build the systems, IT also didn’t have the capabilities to maintain and update it from a support perspective.”

Ultimately, following the SaaS/best-of-breed route, Utica National has implemented a highly successful solution, Mullen says. GeoLearning provided each of the components and offered a single point of contact for service and support for the implementation, training and assistance in establishing Utica’s assessment, performance management, and training and development processes.

“It was the right thing at the right time,” Mullen says. “And it’s working the way we had planned. It’s so different from what we were doing before. It’s a major change.”

Speaking of change, Mullen adds that, in the process, Utica also had to change some processes, but that development actually created some new efficiencies for the company.

“It forced us to take a new look at what makes sense for us,” she says. “It’s working very well. Changing our performance-management approach will shift the way we look at ourselves as an organization, which includes striving to be a completely customer-focused organization.”

Cabela’s Hunt for Training

As noted, the team at Cabela’s had a much different need, but ended up taking the same road as Utica.

While Cabela’s business, founded in 1961, has been built on its direct-mail and Internet distribution channels, over the last two years, it has focused heavily on opening retail locations.

So Cabela’s main focus was on an integrated e-learning platform and retail training solution.

In that two-year time span, Cabela’s opened 18 new stores across the United States, and is opening nearly eight new stores annually. Each store has approximately 400 to 500 employees who must understand a wide variety of products. For example, the optics department alone (binoculars and other related products) has dozens of highly complex items.

In addition, Cabela’s offers certified degree-granting programs for all employees, so Sarah Kaiser, Cabela’s director of training, faced the responsibility for developing a training and certification solution to support this rapid growth. After looking at many systems, Kaiser says, Cabela’s realized it also needed an integrated solution provider that could offer a well-designed LMS and provide learning content-development. assistance, tools for internal content development and a platform enabling employees to enroll and participate in degree programs from Western Nebraska Community College. “We needed an LMS with custom content, including a way to develop and edit such content and a platform that would enable employees to enroll in and complete degree programs,” Kaiser says.

Cabela’s also needed a solution for measurement and reporting, so that each store could track employee training and certification among product categories. The company also chose to work with GeoLearning, which provided:
  • The GeoMaestro LMS platform,
  • Content-development assistance to help build the initial library,
  • An integrated Learning Content Management System and tools (a third-party product supported and integrated by GeoLearning),
  • An analytics system from KnowledgeAdvisors (a GeoLearning partner), and
  • A collaboration system to facilitate the completion of certificate degrees (from Q2 Learning also a GeoLearning partner).

“These are all important aspects to our total training solution, but were not available from any one vendor,” Kaiser says. “We saved valuable time by working with a best-of-breed solutions integrator, which took responsibility for the selection, implementation and support of each component of this solution.”

And that’s an especially good thing, Kaiser adds, because from the start, Cabela’s faced a very complex deployment, considering that the bulk of its employees work in call centers, in distribution centers or in retail stores—which means most do not have a computer sitting in front of them while at work.

“It’s a little different administering our training,” she says. “Our retail and distribution-center employees do not even have company e-mail addresses. We do have HR staff in every location, so they coordinate the training.

“The SaaS model has saved us time and money,” Kaiser adds. “But best of all, our employees like it for the self-development opportunities built into the system. Any employee can take courses in areas such as MS Office at any time.”

Josh Bersin says the ability to easily “connect” to third-party content is a strong differentiator of the SaaS delivery model.

“If you need a course on leadership or diversity, SaaS vendors can just ‘turn it on’ for you,” he says. “You don’t have to buy a license for it or install it.”

Bersin adds that most of the customers surveyed in his report are very happy about the fact that they have “one-stop” shopping flexibility.

“In that sense, the SaaS vendor takes on the role of a systems integrator, but without the hassles,” Bersin says.

Frank Russell, GeoLearning’s president and CEO, says perhaps the most compelling thing about the SaaS/best-of-breed strategy revolves around the idea of the “iceberg” effect, because it practically eliminates those hidden costs that were prevalent in the old on-premises LMS and other system implementations.

“With SaaS it’s easy to pinpoint the required investment and manage it. SaaS is gaining momentum because it is a straightforward business model without pricing surprises or additions at the end of the implementation,” Russell says.

Russell adds that GeoLearning has had new clients that had their previous on-premises LMS down for days or weeks at a time before moving to the SaaS “on-demand” model, and were powerless to do anything about it.

“When a company is concerned about keeping core financial systems up and running, learning and performance management systems will always take a backseat,” Russell says. “The SaaS model helps client organizations focus on what they do best, not on managing IT and software projects.”

Reprinted from GeoLearning