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What you don't know can hurt you. More specifically, what your employees don't know can cripple sales, alienate customers, and keep your company three steps behind the competition. But for large and growing companies, getting the entire crew together for a day or two of intensive classroom education can cost millions of dollars. And depending on the department, instructor-led courses may not be the smartest use of your money—or your employees' time.

Two years ago, classroom training accounted for 77 percent of the business skills education market. By 2004, corporate America will school its employees the old-fashioned way only 35 percent of the time, according to IDC. Businesses will earmark $11.4 billion in 2003 to train their workforce via the Internet. But despite the large amount of projected spending, the fact is that e-learning is cheaper than many traditional methods. A lot cheaper. It helped IBM carve $100 million out of its training budget. Salomon Smith Barney saves $245,000 in travel costs and $480,000 in opportunity costs—the expense of taking executives away from customers—on every product training event. And Rockwell Collins is poised to slash its employee education expense by one third.

E-learning providers now deliver more than just canned courses in a Web browser. The challenge for businesses is to choose training that accounts for the varied learning styles and job descriptions of employees from all departments. Salespeople do best when they're entertained—and when they can talk back to presenters. Analytical engineers and technology staff? They want to get their hands dirty. And managers? Teach them to collaborate, before they become dictators. Here's how to solve your most pressing business problems.

Problem: Your sales force dots the country—or the globe. But getting everyone together in the same place for strategy sessions isn’t in the budget.
Solution: Virtual launch events cut costs and keep everyone on the same page.

In 1995, IBM started developing its e-business product and services line. By 1998, it was ready to send its sales team out to deliver the hard sell. Except for one thing. There's a big difference between knowing how an e-commerce server works and knowing why a business needs it. The company had to make sure its global sales army was equipped to tout the products in terms CEOs could understand—profit and loss and competitive advantage.

The clock was ticking. All 43,000 members of Big Blue's sales force had to be trained in just a few months. Face-to-face training would require flying groups to hotels in Asia, Europe, and the Americas, and booking them rooms for a week, says Ralph Senst, vice president of e-business training for IBM Global Services. Then Senst did the math. At $4,000 per person, it would have cost $172 million.

The expense was out of the question. So IBM turned to the Internet, which seemed the only way to train so many employees in so little time. But the company didn't think a ready-made e-learning package could handle the job. However, IBM's software division had already developed Web lectures, which blend PowerPoint slide presentations and voice-overs. At first, Senst wasn't sure using the Net to train salespeople would work. "Traditional salespeople are a different breed," he says. "It's hard to hold their attention in an e-learning environment." He didn't trust them to learn without prodding from managers.

Then Senst discovered that he could incorporate testing and tracking functions into the Web-based system. That way he could identify which employees were taking the tests, how well they were doing, and which managers were actively encouraging their staff to take the online courses. Three months after introducing Web lectures to the sales force, all 43,000 employees knew the drill. The old way "would have taken us three times as long and cost us 20 times as much," Senst says. Plus, IBM's e-learning solution is padding its bottom line: Web lectures are now another product in IBM's e-business line. For $200 per student, you can create a one-hour Web lecture that will train as many as 1,000 people in three days.

Caliber Learning Network takes a similar approach, but it also adds video. At a recent launch event the e-learning developer staged for 3Com, pie charts flashed across a screen, guys in white button-downs and ties explained product specs onstage, and group leaders threw out hypothetical customer questions. The cutups were there too, hamming it up in the back row, waving their hands to get the sales director's attention.

Sure, just your average launch event. Except that 3Com's sales force wasn't packed into the same auditorium. The presenters were in Baltimore. The audience sat watching on big-screen TVs in Salt Lake City, Washington, D.C., and Raleigh, North Carolina. Those who didn't have a Caliber studio located nearby caught the presentation on the Internet.

Caliber helps companies like 3Com, Salomon Smith Barney, and Bristol-Myers Squibb save time and cut down on the expense of flying everyone to the same meeting place. Salomon Smith Barney, for example, saves almost three-quarters of a million dollars every time it stages a Caliber training event rather than flying empoyees to a central location. And SPSS, a software developer, shaved the amount it spends training its staff by $1,580 per person. At $99 a pop, Caliber's solution nets SPSS a 94 percent savings.

Caliber has more than 52 learning centers in 46 North American cities equipped with videoconferencing gear and PCs. Microphones in the classrooms give participants a chance to talk back—and with video cameras you might catch someone snoozing in San Francisco. After every presentation is over, Caliber archives the session online. If employees miss the live meeting, they can always review it later.

Key to the success of this approach is the fact that participants can still interact with presenters. "The students see the instructor, the instructor sees the audience," says Monica Cojocneanu, channel marketing manager at 3Com. "The technology does not completely eliminate the human factor. This environment simulates instructor-led training more than any other form of e-learning."

Brett Wimmer, a San Diego-based channel account manager at 3Com, likes the Internet-based product rollouts better than the old way where "everybody's gone for how many days at a time, bringing everybody across the entire country." In fact, he'd like to reduce travel time even more—by not trekking to the nearest Caliber classroom. "I'd love to be able to do it on my desktop [and also] in a conference room, not just alone." That way, Wimmer says, "everybody's asking questions and learning."

Problem: Your call center fields queries on everything your company sells. Botched calls mean unhappy customers—and fewer sales.
Solution: Teach service reps people skills and school them on your product line with simulated customer calls.

Your service department is often your customers' first and only point of contact. All it takes is one encounter with a surly or uninformed agent to send a client packing. But call centers—which don't generally require staff to have lots of previous experience—are notorious for high turnover. In this department, training starts at square one.

Call center employees at First Union used to have it relatively easy. Before 1995 they could memorize everything they needed to know in training class. Back then, call volumes were lower, each call center had its own toll-free number and computer system, and customer service representatives dealt with only one product line. "They didn't have to know as much, and they didn't have to be all things to all people," says Ronald Garrow, senior vice president of the bank's consumer college within its First University training department.

Then First Union consolidated its 60-plus toll-free numbers into one main toll-free number, which resulted in five call centers. Suddenly, service representatives were taking calls about credit card accounts, IRAs, and loans. First, the bank overhauled its call center system so that reps had instant access to information about all of First Union's financial services. But all 6,000 service representatives still needed to know how to respond to the most common types of service calls.

Most customer service programs separate their new-hire curriculum into discrete modules such as product information, systems skills, and customer service skills. But teaching these things separately and then asking trainees to pull it all together on the job is a "nightmare," says Michael Korcuska, senior vice president of professional e-learning solutions at Cognitive Arts, an e-learning developer.

A better way? Web-based simulators that mimic customer calls. Cognitive Arts organized First Union's training program around the types of calls agents typically handle: providing basic account information and making credit limit adjustments, for example. Trainees answer calls—basically just recorded questions or problems—but they can't speak back to the caller. Instead, they "choose responses or compose responses so that we can hear what they're saying and give them coaching based on that," says Korcuska. With simulated practices, reps learn enough to start taking real calls during training too. "We start from the old apprenticeship model where you're doing something and an expert is looking over your shoulder and providing you with coaching and advice."

First Union spent about $350,000 to train half of its 6,000 agents. In the pilot test of the intranet-delivered program, training time dropped by 16 percent, from six weeks to five, and the new course graduates made 40 percent fewer errors than other new hires and 20 percent fewer errors than experienced employees. Add to that the potential for increased revenue: Web-trained agents transferred 20 percent more calls to the sales department.

Problem: Costly mistakes in product engineering and design are driving your company’s balance sheet perilously into the red zone.
Solution: Let your engineers get their hands dirty before flawed products make it to market.

Rockwell Collins used to throw money away. Its engineers wasted tens of millions of dollars designing flight-deck instruments that failed electromagnetic interference (EMI) tests. When the strong electronic emissions jammed airplanes' navigational equipment, the team had to scrap product designs and go back to the drawing board.

Rockwell engineers had to learn to catch EMI flaws before they got to the test stage, says Cliff Purington, manager of learning and development. But the company couldn't just send its engineers back to school. Nowadays, a radio frequency problem like EMI is something of an anachronism. Few universities offer courses in how to prevent it. To avert these failures, Rockwell would have to school the engineers itself.

But engineers are a tricky group to train, especially via the Net. The complex procedures they need to know demand hands-on demonstration. In the past Rockwell always trained its engineers in person. The company figured that it could train 180 people per year in EMI by flying them to the firm's headquarters in Cedar Rapids, Iowa, from outposts such as Portland, Dallas, and Melbourne, Florida. But at that rate, Purington says, it would have taken 14 years to reach all 2,500 of the engineers who needed the EMI training. Rockwell couldn't wait that long.

So with the help of e-learning developer Mentergy, the company created a computer-based course to walk its engineers through the process of preventing EMI in their designs. Because the courses required audio, video, and graphics to do the job, it made the most sense to create them on CD-ROM. And engineers had to be able to take the course wherever they were—in the office, at home, or on the road—and to pass it around to colleagues.

Application engineer John Gilbertson says he likes the way the electronic EMI course let him learn at his own pace. "I could sit down when my time permitted and go through the sections that I wanted to and skip other sections," he says. Afterward, Gilbertson applied what he learned by customizing the computer-aided design tool that Rockwell's circuit-board engineers use. Now they "don't have to remember everything about every little signal on a board," he says.

Since the EMI program was created last April, about 500 engineers have completed the course. As a result, Purington says, the company catches EMI design flaws before products go to the testing stage. Now he plans to put the course on the company's intranet, which will let him track which employees take it and how they do. It also makes the course more widely available among Rockwell engineers.

Rockwell spent $250,000 to develop the EMI course, but not all e-learning solutions require huge cash outlays. In 2000, Purington slashed his department's multimillion-dollar budget by 34 percent. Even with less money, Purington delivers 40 percent more courses than before—more than 350 to date. Rockwell also uses course-design software from Centra, which combines slide presentations and audio. During live classes, employees can raise a virtual hand with a mouse click, and ask and answer questions with live audio or instant messages.

Engineers—which total 40 percent of Rockwell's workforce—look for learning opportunities "just to maintain their proficiencies and their own personal competitive position," Purington says. And Rockwell doesn't want them looking outside the company. If they quit, "it costs one-and-a-half times what you're currently paying an engineer to get a new one," says Purington.

Problem: Managers like to manage. But rolling up their sleeves to collaborate isn’t always their strong suit.
Solution: A group project—where managers work from far-flung offices and hold meetings on the Net—forces them to work together.

When Ford Motor Company wanted to groom 47 junior managers from its offices around the world to become tech-savvy executives for the new economy, it chose eRoom Technology's virtual workspace to bring the group together. The leaders-in-training convened last summer for a six-month pilot test inside an eRoom, where time-zone differences pose fewer barriers to collaboration, says director of management systems Bipin Patel. Trainees can post documents and share files, then discuss them via instant messaging, chat rooms, and discussion boards.

An eRoom "is like one of those old-fashioned war rooms where they all look at the same information on the wall," says Patel. Divided into smaller teams, the group is assigned actual management projects. Senior executives in the company sponsor the projects, which are intended to solve real problems—such as increasing customer satisfaction—within divisions of the company. "They develop it, they work together, they bring together external people to help them grow that part of it, and then look toward implementing it," says Patel.

You can set up an eRoom in about half an hour. eRoom Technology supplies the server for $9,995; each eRoom member costs an additional $199. You pay another 17 percent of the total bill for maintenance, support, and upgrades. Or you can opt for an eRoom without the hassle of hosting it yourself: Through eRoom.net, up to 10 employees can join a room for $249 a month. With either setup, your company information can stay within the eRoom or, if a project ends for example, you can transfer it to your own knowledge management system.

The Ford group will meet in person twice during the six-month period at company headquarters in Dearborn, Michigan. "You'll always need face-to-face learning," says Patel. But he credits eRoom with making the group's first weeklong, in-person training session more productive. Before a collaboration platform like eRoom, "you came to a class and you learned something and maybe you applied it," says Patel. "But now, you come to that class having worked together, and you're a lot more focused on achieving something."

Problem:Your technology staff learns best by doing. But letting them tinker with your company’s network could bring down the whole show.
Solution: Give them a practice area that's like the real thing in all respects but one: You don't run your business on it.

Sometimes simulations just don't cut it. Rick Lemon, director of technology and instruction at the Boston University Corporate Education Center, knew this was the case for his Web design and development classes. So he gave them the real thing. Almost. Lemon devised his own e-learning tool, a live Web-hosting environment, called a sandbox.

With the sandbox, the center's students—many of whom are professionals from corporations—can build Web pages, script server applets, and design databases. If the sandbox goes down, Lemon sees it as a good thing, another way to learn. Unlike simulators, which force students to get the right answers, live servers do exactly what they'd do outside the learning environment when you type the wrong command: They choke. This way, Lemon says, students learn how to troubleshoot.

Lemon's practice server—a Hewlett-Packard Kayak with 20GB of disk space and 512MB of RAM—is connected to a network with a T1 line. Students can access the sandbox from class or from home if they have a DSL or cable connection. On a typical day several hundred students are logged onto it—and students' sites crash many times a week. But that's how students learn that their code "sucks," says Lemon.

Lemon estimates that it costs $10,000 to buy the necessary hardware and software to build a sandbox. That doesn't count paying someone to maintain the server and add new users. Lemon automated that process by writing a Web-based application that extracts student information from the center's database to create new user accounts.

If you don't want to do any of it on your own, a hosting service provider can help—if it's willing to take on the additional risk of downtime on servers that house the learners' Web sites. And although it sounds obvious, Lemon advises, be sure your Web host can provide the applications your tech staff has to learn. "Don't let the purchasing department buy this on their own," Lemon warns.

BU doesn't develop all its e-learning solutions itself. Like most companies, it relies on several e-learning vendors to fill gaps in its courses and save money. Through Knowledge Net, BU has access to MentorLabs' online labs, which allow students to practice setting up routers in six of its Cisco certification programs. Live router labs cost about $350 per student. And the online mentors who answer students' questions 24 hours a day cost $195 per student for a six-week course. Those costs are on top of the $1,595 fee for a typical Knowledge Net live course.

Though it's affiliated with a major university, BU's Corporate Education Center is actually a business. In other words, if it wastes employees' time, it wastes its own money. About four years ago, the center began using e-learning to make better use of its instructors' time and experience, says Andy Kelley, the center's associate executive director. Students in its Computer Career Programs class—a course for people looking to enter the IT field—were coming in with varying degrees of computer experience. Each time, the center's highly paid instructors had to start from scratch, teaching everybody how to use a mouse in class.

With e-learning developer SyberWorks, BU created an Internet-based primer that tracks students' progress with pre- and post-lesson tests. Three to four weeks before an in-class course starts, students receive an e-mail message directing them to the online course. Text, graphics, and simulators introduce such basics as the parts of a CPU along with more complex topics like hexadecimal codes. By the time they enter the instructor-led classroom, most of the students are on the same page. But for those who are still struggling, the instructor has a snapshot of their performance and is prepared to give them extra help in person.

John Laycock, a systems administration student at the center, says that using the Net-based program before going to class gave him "better hands-on experience than the textbook." But, he says, the in-class experience is not to be missed.

What kind of resistance are you likely to encounter when you propose e-learning for your team or department? Forty-one percent of the companies surveyed by Forrester Research cited "cultural resistance" as an obstacle to putting online learning to work. To allay employees' fears, take these steps: Cite research. Studies show that technology-based training cuts learning time by an average of 50 percent, according to e-learning analyst Brandon Hall, author of Web-Based Training Cookbook (John Wiley & Sons, 1997). Because employees can get the training they need when they need it—not months or years before—retention rates go up as much as 60 percent.

Show them the money. Savings vary, but most companies count on reducing training costs by about 50 percent when they convert from classroom-based training to e-learning.

Find a problem and fix it. Link e-learning to a real business goal. This tactic worked for IBM, Ford Motor Company, and Rockwell Collins.

Give the boss a test drive. Many of today's seasoned executives didn't grow up with computers in classrooms. Don't expect your managers to give the go-ahead to Web-based learning unless they've tried it out themselves.

U.S. companies budgeted $54 billion for corporate training last year, according to Training magazine's Industry Report 2000. But not every company is willing or able to offer on-the-job development. Thanks to the Net, you can sharpen your skills on your own without enrolling in night school.

Back to School More than 150 universities and colleges offer online degree programs. The University of Dallas Graduate School of Management, for example, offers an Internet-based degree called an IMBA. The cost: $1,173 for each three-credit class.

Skills on Demand E-learning sites put courses in a range of topics at your fingertips. SkillSoft specializes in business training. A course in Decision Making Fundamentals, for example, runs from two to four hours and costs $99.95. AvidLearn hosts live seminars such as "Are You Hiring Rabbits to Swim and Fish to Run?" ($69.95, aimed at human resources professionals). Click2learn hosts corporate e-learning portals, but also offers one-off courses starting at $24.95.

Knowledge Sharing For something less formal—and free—hook up with an online learning community like WebCT. More than 1,500 universities use the site as a repository for materials, resource libraries, and discussion groups for online courses. But you don't have to enroll to get access to the information. Scan the site to find topics that apply to you.