Software Firms Making It Big in Employee Training Plans

Over the past decade, a new generation of software companies has emerged to help corporations reduce the increasing cost of employee training, which adds up to more than $40 billion a year nationwide.

One such company is Courseware/Andersen Consulting, a Scripps Ranch-based software company that assists corporate clients in developing and implementing self-administered, personal computer-based learning software. The training programs reduce the cost and time involved in employee training and make the programs demonstrably more effective, industry observers said.

International Business Machines, for example, has reduced by half the time it used to take to train its computer sales personnel, an improvement due in part to systems designed by Courseware/Andersen Consulting. The savings to IBM total in the hundreds of millions of dollars, Courseware/Andersen Consulting partner John Splavec asserted Monday.

Self-administered, PC-based software programs now represent 50% of a typical IBM corporate training curriculum, Splavec said, up from zero eight years ago. The rest of a trainee’s time is generally spent in a classroom setting or on the job, he said.

Known simply as Courseware before it was acquired for more than $5 million last July by Chicago-based Arthur Andersen & Co. accounting and consulting firm, Courseware/Andersen Consulting has been a leader in developing “interactive” systems that employ video disks to give training systems a personal touch.

Founded in 1972 and based in San Diego since 1977, the company got its start designing training systems for the Navy, including flight training programs for pilots and gunnery practice instruction for sailors.

The company was “discovered” by IBM in 1981, which then gave it a $10,000 contract to analyze the effectiveness of its marketing training. The relationship with IBM subsequently has grown to the point that IBM is Courseware/Andersen Consulting’s largest customer, accounting for more than $1 million per year, or 20% of the company’s expected $6 million in 1989 revenue, Splavec said Monday.

Other clients include NCR, Apple Computer, Fujitsu Systems of America and Leadership Studies of Escondido, a corporate leadership training firm that has taught more than 1 million corporate managers, Splavec said. The bulk of the Courseware/Andersen Consulting’s products are sold to computer and insurance companies.

Arthur Andersen & Co., one of the nation’s “Big Eight” accounting firms, came into the picture after Courseware sent out feelers to the industry that it was looking to forge a “strategic alliance” to pursue the booming systems integration market. The term is the catch-all phrase used to describe companies’ attempts to unify disparate elements of the electronic office into systems easily used by all employees.

The combination with Andersen is a “natural fit” because Andersen had a similar employee training practice within its Andersen Consulting subsidiary numbering 400 employees. Splavec said the worldwide network of Andersen offices will afford Courseware/Andersen Consulting “a tremendous opportunity to expand our services.”

The firm’s sales could reach $13 million by 1992, he said. The company and its 60 employees will remain based in San Diego, however.

Splavec, 48, himself a former IBM computer salesman, was one of a half dozen major shareholders who, combined, held a controlling interest in Courseware stock before the sale to Andersen. Other major shareholders are co-founders Gerald Faust, Jonah Hymes, C. J. Ross and Gene Regard. Only Regard is still a full-time employee.

Why are the PC-based training systems more efficient than classroom settings? Splavec said it has to do with the fact that most classroom curricula are geared to the “bottom 15% to 20%” of a class, meaning that a majority of students are held back by the minority.

Students on the PC-based programs can proceed at their own speed.

Also, the computer training programs are non-threatening, unlike the classroom environment in which many adult students are afraid to ask what they think are dumb questions, Splavec said. “You can ask the PC all the dumb questions you want and not be intimidated by it,” he said.

The need for employee training in the workplace is heightened by the presence of sophisticated equipment. But the need is also exacerbated because 25% to 33% of all high school graduates would flunk one adult literacy test or another and must be brought up to speed by their employers, Splavec said.

Another key is that systems such as those designed by Courseware/Andersen Consulting include built-in self-assessment functions that do not allow the student to go forward until he or she has mastered the material to be learned. The self-assessment function also allows the trainee to jump ahead to the appropriate place in the curriculum.

The self-assessment function also gives companies the means to measure the success of the training programs, a key element as the cost of employee training rises, said Jack Bowsher, the retired head of IBM’s employee education program who now lives in Westport, Conn. Bowsher is also the author of “Educating America, Lessons Learned in the Nation’s Corporations.”

“When companies are spending billions on these programs, it tells you that they are getting very serious about how to train and retrain employees,” Bowsher said. “What it amounts to is that companies are putting more measurement into the things. They want people to like (the material), learn it and apply it, and they want it to have a business result.”

“As companies become more professional about wanting a higher return on training, they turn to someone like Courseware who have instructional designers, media experts and professional educators who know how to build high quality courses that will ensure what we call ‘mastery of learning,’ or that all the students will learn.”

The integration of video technology displayed on a PC’s high-resolution monitor in particular has helped PCs augment classroom teaching as the means of transferring “corporate culture,” or history, tradition and beliefs, Bowsher said, a critical objective in most employee training programs.