CIO

Enterprise Value Awards - Dow Chemical

Dow's Web-based training system serves a cast of thousands.

As Dow Chemical executives restructured their company around business processes rather than locale, Dow developed an intranet-based HR system to serve the needs of its globally scattered employees. Within this intranet it launched Learn@dow.now, a $1.3 million e-learning system that delivers standardised online training around the world. In its first full year of operation, the site delivered an estimated total cost benefit of $30 million, including savings on training delivery costs, class materials and salaries (Web-based training requires 40 percent to 60 percent less of an employee's time than its classroom equivalent). The company helped ensure a successful launch by holding traditional classroom training on how to use the online system and requiring all employees to sign up for its first courses.

THE WINNING SYSTEM

Cost: US$1.3 million in initial costs; $600,000 in maintenance costs (licensing and operation).

Hardware:Three servers - each a Compaq ProLiant Pentium III Xeon 700MHz/2M Rack Model (512MB) with four processors - connected by a common 100 megabit switch. The first server contains the TopClass application, the second is used as media storage, and the third server is used for the Oracle database.

Software:WBT Systems TopClass Suite 4.2.4 Web-based training management system; Oracle 8.06, Internet Explorer 5.00.2, Network TCP/IP, Infrastructure NT-5 with IIS-5.0 and Front Page Extension, linked to PeopleSoft 7 HRMS.

Network:Global WANs supporting voice, video and audio with a Remote Access Service that allows user to dial in to the Dow intranet.

VALUE STRATEGY

David E. Kepler, CIO and corporate vice president of e-business at Dow Chemical, has employed value-based management since 1995. He and his IT team move a project forward in phases, document its cost and value, provide a three-year investment plan, and track it at a portfolio level. Value management helped Kepler scope the Learn@dow.now project. "We started with the business result that we wanted to achieve and then built the system necessary to achieve those results, so we did it in the most affordable way," Kepler says.

In 2000, Dow Chemical fired 61 employees and took lesser disciplinary measures against another 540 for sending offensive e-mail over company servers. Not convinced that simply monitoring future employee e-mail was an appropriate response to the situation, then CEO Bill Stavropoulos (now chairman) mandated that all 40,000 Dow employees across 70 countries receive six hours of training on workplace respect and responsibility. This comprehensive response to a pervasive workplace problem would be prohibitively expensive for most global organisations. But Dow was able to do it by delivering the training through a Web-based training system, Learn@dow.now, launched a year prior.

Between October 2000 and February 2001, more than 40,000 employees took and passed the course - a two-hour overview and a four-hour class in their native language - and Dow saved nearly $2.7 million in the process. It saved $162,000 on manual record-keeping of class completions, $300,000 on classroom facilities and trainers, $1 million on course handouts and $1.2 million in salary savings, thanks to shorter training time. "What we've found is that it's more effective and cheaper in many cases to deliver this kind of learning online," says Larry Washington, corporate vice president of environment, health and safety, human resources and public affairs and a 32-year veteran of Dow.

The system also delivers a tremendous payback in mergers and acquisitions, because rapid assimilation of new employees is key to unlocking the value in acquisitions. Manufacturing-site employees joining Dow must complete a three-part operations discipline course. By taking the training online, 11,000 employees so far have completed their course work in 30 percent of the time normally required in traditional classroom settings, and Dow has saved $2 million in training costs. Learn@dow.now has also been the platform for 27,000 employees completing the company's environmental health and safety work processes courses, saving $6 million. Safety incidents have declined as a result, even as the number of Dow employees has grown 25 percent.

Dow spent $1.3 million on the e-learning system. In the first full year of operation, the company estimates the total cost benefits of Learn@dow.now at $30 million - $844,279 saved on manual record-keeping, $3.1 million on training delivery costs, $5.2 million in reduced class materials and $20.8 million on salaries (with Web-based training requiring 40 percent to 60 percent less time than its classroom equivalent).

But it wasn't simply cost savings or convenience that wowed CIO's Enterprise Value Awards judges enough to unanimously declare Learn@dow.now a winner. It was the strength of Dow's commitment to its e-learning venture. When it was launched, Learn@dow.now offered 15 course titles. By the end of its first year, the company was delivering 98 course titles and had recorded 24,492 course completions. In 2000, the system was offering 426 course options and boasted 208,464 completions. "What won them the award was the scale of the system," explains judge John Glaser, vice president and CIO of Partners HealthCare System in Boston. "The sheer number of classes that they've offered and the number of people that have been trained are remarkable. This award reflected a significant focus and organisational commitment on the part of Dow to move this out to a very diverse and global workforce."

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The impetus for this online learning system was a cultural change at Dow. In 1995, executives wanted the now 104-year-old chemical company to begin to act more like the global company it had become. The company was organised around locations - what happened at the company's Cairo, Egypt, location was entirely separate from what occurred at its Horgen, Switzerland, offices, which had nothing much to do with the Midland, Mich., headquarters, even though similar business processes were taking place at all three. That fractured management approach affected training. A technician in Greenburg, La., and her counterpart in Joliet, Ill., might have had to complete the same compliance training, but nothing was done to standardise its content or delivery.

As Dow Chemical executives decided to restructure around business processes rather than locale, HR processes like training had to be changed. It was a huge organisational change for the company, and technology was a major enabler of the transformation. David E. Kepler, CIO and corporate vice president of e-business, took the first step to support the new global entity by installing the PeopleSoft 7 Human Resources Management System (HRMS) in 1996. The following year, Kepler's team joined with human resources to create an intranet-based HR system called the People Success Finder, which offered employees access to career information, training resources, compensation figures and job opportunities. Within the People Success Finder, the company launched Learn@ dow.now in January 1999 to deliver standardised, online training.

Learn@dow.now didn't succeed immediately, however. When the global learning team launched it, employees were instructed to take a course via the online learning system to learn how to use the online learning system. "We made a mistake in thinking the system was easy to use," explains Lyn Hamilton, a Dalton, Ga.-based global learning leader for Dow Chemical, who worked on the project. So Dow initiated live Learn@dow.now classroom demonstrations and published a quick reference guide for employees to keep by their computer.

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Learn@dow.now has grown quickly and is now one of the most comprehensive Web-based learning tools around. Current courses range from cost accounting and business ethics to chemistry and hazardous materials handling - each one offered in Dutch, English, French, German, Italian, Portuguese and Spanish (with some available in Chinese, Indonesian, Japanese and Thai). Most classes require a post-test to determine if the employee has mastered the subject matter for certification. When an employee finishes a class, a record of completion is automatically transferred to her permanent training file in PeopleSoft 7 HRMS. "It's important to look at how e-learning fits in with a company's global mission," explains Katherine Jones, managing director of enterprise business applications in the Palo Alto, Calif., office of the Aberdeen Group. "Anytime you have that many employees all over the world it's difficult to ensure the quality of education. They've definitely succeeded at that."

Employees appreciate the flexibility, control and convenience Learn@dow.now affords them. "You could move at your own pace," says two-year Dow employee Kellie Rogge, who works in business communications within Dow's Epoxy Products and Intermediates business unit and has taken several required courses and signed up for the popular Six Sigma training class. "And I don't have to spend an entire afternoon in a classroom."

Among the only complaints: Concentration can be tough in the typical work environment. "Sometimes it's hard when you're sitting in a cubicle and there's all this activity around you, but it's pretty user-friendly," says Heather Dudley, who joined Dow as an office professional in the Global Purchasing Marine unit in March 2001 and has taken several optional software courses such as Microsoft Excel and PowerPoint.

For that reason and others, Dow leaders say some classes may never hit the intranet. Course originators conduct an assessment before bringing a class online to determine if Web-based training will be effective. Many classes, such as software training courses, are tailor-made for Internet delivery. Others, such as those on leadership, benefit from the classroom experience. But Dow does offer online pre- and post-assessment testing via Learn@ dow.now for some in-person classes like safe driving, new employee orientation, purchasing and behaviour-based performance. Extra prep or review time provided online helps instructors minimise the amount of time employees spend away from work.

As for the online respect and responsibility class, the value has gone beyond the several million dollars saved by delivering the information through Learn@dow.now. "We demonstrated commitment from the senior leadership to protect our values of respect for people and to take swift and decisive action where those values are compromised," says David Wilkins, Dow's director of global diversity. "And we used the best available technology to design and deliver this important information to our global population."