GO
Loading...

Online courses trim billions in personnel training

Massive online open courses (MOOCs) are supposed to change the face of higher education. Early success, though, has been easier to find among corporations.

A University of Pennsylvania survey released late last year found that few students made it past the first online lecture. That's been a constant criticism of MOOCs from educators: There's a lack of proof that they work as well as traditional classroom methods. San Jose State University suspended a program it had initiated with MOOC provider Udacity after poor early results.

These stumbles in the education sector haven't stopped corporations from finding a compelling reason to embrace MOOCs: Online courses trim a bill that runs to $130 billion annually for job training and certification, according to a report by Bersin, a unit of Deloitte Consulting.

Steffen Leiprecht | Stock4b | Getty Images

Bank of America, AT&T, Intuit, Qualcomm and Yahoo! are among the companies adopting online courses as an effective and inexpensive way to train their workforce. And MOOC providers, including Coursera and Udacity, are introducing new programs tailored for a business audience.

"There's a lot of potential for how MOOCs can be used for corporate training and development," said Julia Stiglitz, head of business development and strategic partnerships for Coursera, which also partners with universities such as Stanford and UC Berkeley to offer online college courses. "The companies are looking for new ways to train their employees and get them up to speed on skills that may not have been relevant five years ago."

(Read more: The most hated teachers in America)

Yahoo! employees can take any classes from Coursera's "Signature Track"—not even limited only to specific job function edification—from macroeconomic principles to genetics and evolution. Yahoo! employees can be reimbursed for the cost, around $30 to $100 per course.

Udacity launched its "Open Education Alliance" last fall, partnering with businesses such as Google and AT&T to develop skills-based classes.

Another Silicon Valley start-up, Udemy, has designed a course catalog focused on professionals and career-oriented classes, such as Facebook marketing or leadership and management training, taught by former GE CEO Jack Welch.

Last year Udemy began piloting a service for businesses to create their own "university in a box," a dedicated online place where businesses can offer proprietary online classes for their staff. According to Udemy, about 2,000 businesses are currently testing it.

(Read more: Google's future in the Ivy League)

Inexpensive training isn't the only lure. Brightpearl, an online business software management developer, started to use Udemy last fall to help train a new team of salespeople. It found that the new team produced 32 percent more in revenue compared with a previous group of new hires, who had been taught in a traditional instructor-led class.

"It's easy to go back to the application and review and improve your skills," said Carter Perez, senior vice president of sales at Brightpearl. "I think that's led them to be able to get out of the gate faster."

Online courses are not necessarily cheap to produce. Perez declined to disclose how much Brightpearl spent to launch its online university but said that the company invested about 500 hours to produce the online video tutorials, which it is also using to offer certification for its business partners. The MOOC nonprofit founded by Harvard University and MIT has said it can cost hundreds of thousands of dollars to develop one university course online.

Businesses spend $1,195 on average per employee for training each year, according to a report by the American Society for Training & Development. The ambition of the online educators is to prove to businesses that they can save hundreds, if not thousands of dollars, in productivity, as well as the cost of hiring an instructor, sending employees to a conference or beefing up their IT desk to manage, say, an operating system migration for the entire company.

(Read more: Can wearable tech boost productivity?)

1-800-Flowers has partnered with Udemy to create a Web version of its BloomNet Floriology Institute, where members of its retail florist network can take classes on the latest trends in floral design. Now its florists don't necessarily have to travel to its headquarters in Jacksonville, Fla., or to a regional seminar for training.

"They're a little bit of everything in their store, so they need a system that is flexible so they can take it when they can take it," said Lisa Carmichael, vice president of marketing and new business development for BloomNet, a subsidiary of 1-800-Flowers.

The benefits of learning hands-on with an instructor can't be erased: On average, just 4 percent of students managed to finish an online class, according to the University of Pennsylvania study. But for businesses, online learning is not so much about sitting through an entire lecture and earning an A, but being able to take new information and apply it to jobs immediately.

"We believe that if you know it, it doesn't matter if you sit through it," said Dennis Yang, Udemy's president and chief operating officer.

Compared with an in-person class or seminar, online courses also offer much more flexibility for employees, who have varying levels of skill and need varying amounts of coaching. "Not everyone needs the same instruction," said Lynda Weinman, co-founder of Lynda.com, another California-based online learning company.

Lynda.com's business began well before the MOOC revolution: The site started 18 years ago with a library of online video tutorials mainly focused on photography, graphics and design. Since then, it has expanded to more than 15,000 hours of curriculum, including 450 business-related courses, and corporate customers have become the fastest-growing segment of Lynda.com's revenues, Weinman said. Bank of America, Disney and Apple are among the companies that pay a fee to give their employees unlimited access to the site.

"It is a new era of abundant learning, where there are so many avenues for people to increase their skills," Weinman said. "It's giving people a lot of options." Their employers, too.

By Ellen Lee, Special to CNBC.com

Latest Special Reports

  • Inside the market's biggest sectors with a look at the trends, companies and trades netting profits for investors.

  • Profiles of philanthropists and entrepreneurs who are addressing huge global challenges—from climate change to hunger.

  • From family-run companies to public companies with family ownership, we tackle challenges and rewards facing family businesses.

Business