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Thursday, June 24, 2010

Customer-Focused E-Learning: The Industry

Customer-Focused E-Learning: The Industry.

Everybody's doing it.

The culinary magazine Cook's Illustrated has it. So does the consumer
software site Barnes & Noble announced that it
will add it to its B& subsidiary later this year. And
numerous other Web retailers are adding it to their Websites.

It is e-learning with a new purpose: to educate customers and keep
them coming back. With the Internet's readymade distribution platform,
sophisticated implementation software, and growing libraries of
content, companies from a variety of sectors are targeting not only
their own employees but also their customers with e-learning
offerings. Large IT vendors have pioneered approaches to
customer-focused e-learning and have the revenue streams to prove it.
Now other industries are in the hunt to turn e-learning into a
marketing tool and revenue producer.

Companies are turning to customer-focused e-learning for a variety of
reasons: to fill a needed support role, to provide a service that
competitors don't have, to "incentivize" potential customers, to add a
new revenue stream. In every case, the business model behind such
customer-focused e-learning positions training as a value-added
service rather than an HR cost center.

Web retailers--e-tailers--are the newest and most visible
practitioners of this customer-focused e-learning approach, but it's
also being applied with equal vigor in the business-to-business
market. Whatever their market, the companies that are pursuing the new
model are cutting-edge practitioners of e- business.

"We're at a point where we can almost say--and I emphasize
'almost'--that e-business requires e-learning," says Clark Aldrich, an
e-learning industry trendspotter and senior market analyst with
GartnerGroup, Stamford, Connecticut. "Where e-business is today,
e-learning will surely follow."

Aldrich has been tracking the groundswell towards CFEL and the forces
driving organizations to pursue it (see "Customer-Focused E-Learning:
The Drivers" by Clark Aldrich in this issue). Information technology
companies started the trend--they were all but forced to move into
customer training to help customers use their products--and Aldrich
sees numerous parallels to the IT industry's bellwether embrace of
e-learning in the mid 1990s.

"We're following the same path [toward CFEL] that we saw in adoption
of e-learning in general," says Aldrich. IT companies (both hardware
and software) have been first to develop CFEL models, and other
industries with complex offerings, such as pharmaceutical companies
and financial services firms, are hot on their heels.

A key difference this time around, according to Aldrich, is the
emergence of e-learning that targets consumers and free e-learning
offerings, both made possible by the low recurring costs once an
infrastructure and content are in place. There's no telling how such
offerings will reshape the way e-learning is conceived and implemented
by organizations, Aldrich says, but it bolsters the now-famous line
uttered by Cisco CEO John Chambers that e-learning will grow so large
as to make email use "look like a rounding error."

Lessons from IT

IT giant Sun Microsystems probably didn't expect that training
customers would become a core component of its business or a
double-digit addition to its revenues. But the company, ranked among
the top 10 IT training providers in a recent IDC study, has learned
that training end-users and third-party integrators on the use of its
programming languages and back-office applications is vital to making
its products sell.

"It's both a strategic and profit-loss component of our business,"
says Mark Schietinger, manager of Sun's year-old Web Learning Center.
"The more people trained on Sun technology, the more successful we'll
be in the marketplace."

Sun is in the midst of augmenting its customer training operation with
e-learning, and the Web Learning Center is the core of that effort. In
June, the company began rolling out e-learning courses to 17
countries, where business customers can tap into Web-based training
content covering Sun's various programming platforms.

Sun isn't about to throw out a 200-facility bricks-and-mortar training
infrastructure in the rush to embrace e-learning, cautions
Schietinger. But like other companies, Sun is feeling pressure from
customers for the fast-delivered, low-cost value proposition that
e-learning can offer.

"The one major driver is speeding time to results," says Schietinger
of the new offering. "Five years ago, a business didn't have to
measure employee competencies based on Internet time."

Sun, Microsoft, Cisco, and other IT powerhouses have all built
elaborate CFEL programs that offer a combination of instructor-led
training, e-learning, and certification programs to business customers
and free agent learners. Though they started with their business
customers, who remain the core audience, many companies have begun
wooing individual consumers with e-learning options and e - commerce
-enabled Websites. Sun has been bullet-proofing the
business-to-consumer capabilities of its Learning Center, which lets
anyone in the United States with a credit card sign up for an
assortment of asynchronous Web-based courses. It will soon roll out
B2C capabilities in Canada and the United Kingdom.

Smaller software developers have seen the success of their larger
brethren and are following suit with e-learning offerings that target
the end users of their technology. Clarify e-Business Applications, a
subsidiary of Nortel Networks, exemplifies the trend. In May, the
Wayland, Massachusetts-based company announced that it will create
end-user e-learning on its customer relationship management
applications, with the help of e-learning developer Knowledge Impact.
Carol Shaffer, Clarify's worldwide director of learning, says the
decision to create the offering was driven by strategic concerns.

"It's a differentiator that sets us apart from competitors, and it
adds significant value to our product suite," says Shaffer. "We're
also answering a significant need for this kind of end-user support."
Previously, Shaffer's staff would train its customers' system
administrators on using the CRM tools, but customers were on their own
as far as training rank-and-file employees. "It represented another
hurdle for them," she says.

The new end-user e-learning, which will be included as part of the
package sold to Clarify's customers, includes task-based support,
simulation-based training, and an info-web of resources. The
e-learning will be updated with each upgrade to Clarify's CRM
applications, thanks to a tight relationship with Knowledge Impact
that includes "an almost continuous presence" of KI staff in-house at
Clarify, says Shaffer. The e-learning is developed in tandem with
Clarify's software applications to eliminate any lag time in its
release. The e-learning can also be customized by KI to match the
customer's application and business processes.

IT service providers are also rolling out CFEL offerings. EMC, a
fast-growing provider of information storage services, has a
well-developed classroom training operation for customers on managing
data. In May, it announced a new initiative that includes development
of e-learning courses made available to employees and customers
worldwide. EMC will deploy its e-learning in 37 countries using a
delivery platform and services from e-learning provider Saba.

Enterprise application developers such as SAP, PeopleSoft, and Baan
have also built sophisticated training operations to help customers
use their products. SAP has moved into e-learning with and a
recent investment stake in synchronous e-learning platform developer
InterWise, which is offering synchronous e-learning classes on the use
of SAP (see the June installment of Newsbytes at for the full story).

These software-related CFEL offerings will become mandatory as
business customers come to expect e-learning when they buy IT products
and services, analysts predict. The same dynamic is behind the growth
of CFEL in areas outside of IT, in which product sophistication begs
for training to help customers and to entice prospects. One example is
financial services, in which brokerages vie for business from brokers,
other financial professionals, and individual investors. Charles
Schwab & Company was first to capitalize on the need for investor
education by providing e-learning services to customers. Now, Fidelity
Investments and others are also developing customer e-learning
offerings. Recently, Fidelity announced a contract with Eloquent, a
provider of streaming mediabased communications tools, to give product
information and e-learning to its network of brokers. Fidelity
spokesperson Peter Lynch (who wrote the classic Beating the Street) is
seen talking up the company's distance learning on TV commercials, ill
ustrating how e-learning is being leveraged as a marketing tool.

Pure providers

Financial services is among several areas outside of IT to target
individual consumers. As consumers shop for products and services over
the Web, they will become the next major target of e-learning
offerings by retailers and service providers looking to distinguish
themselves, say market researchers. A handful of providers that
specialize in creating bolt-on CFEL capabilities for Web retailers is
betting that the trend is nigh. isn't a training provider in the traditional sense.
Its core philosophy is "brands should teach," and employee training
isn't part of its stump pitch. The Boston-based company says that it
functions as an invisible partner in allowing e-tailers to augment
their Websites with e-learning.

"If you don't teach your customers, your competitors will," the
company's Website warns. Launched only last November, LearningBrands
secured $5.5 million in venture capital in May to pursue its vision.

"Companies haven't been able to do this before the advent of the Web,
but now there's a critical mass of people to make this work," says
Seppy Basili, executive vice president of content at LearningBrands.
Formerly a manager with testing services provider Kaplan and a
Newsweek editor, Basili now oversees a team of e-learning content
creators for clients that will promote their brands and knowledge
leadership over those of competitors.

"We strive to match a client's voice and tone," says Basili of the
CFEL services it has developed for computersoftware Website CNET and
other clients. "In some cases, we're adapting their existing content.
In others, we're creating it from scratch." The content, together with
various communications tools, resources, and functions such as Ask an
Expert, are tied together as part of the SmartPlatform that
LearningBrands customizes for each client.

LearningBrands isn't alone as a pure CFEL provider. It has a
formidable competitor in the form of, which recently
agreed to provide e-learning to customers of Barnes & in
exchange for an equity stake. Fully $26 million was raised as part of's second round of venture funding. The company has
coined its own term-educommerce--to describe its offering and has
created CFEL component sites for the Websites of clients including
Motorola/Metrowerks (, Pervasive Software, and

"We consider distance learning as a natural extension of Barnes &'s core business," says vice chairman Steve Riggio, in
announcing the deal with notHarvard.

Basili stresses technical differences between the competing systems.
For instance, LearningBrands's platform features an adaptive learning
system that gauges a learner's skills and knowledge through a series
of introductory questions and tailors choices accordingly. The result
is more relevant learning and greater site stickiness, which enhance a
customer's allegiance to a company and its brands, says Basili.

"You can get away with a lot if you're training a captive audience of
employees and convenience and ease-of-use aren't as critical," he
says. "For consumers and a company's brand, it's critical."

The B2C niche that LearningBrands and notHarvard are exploiting
includes B2C learning portals such as Hungry Minds, MySmartForce, and
SmartPlanet that seek revenue from direct sales to consumers. But
those sites differ in that they offer generic content rather than
elearning content related to a company and its brand, Basili notes.

National retailers are also getting into the act. The Home Depot has
been steadily adding how-to tutorials to its Website, which serves as
its CFEL portal (the company doesn't sell directly to consumers over
the Web). Staples office supplies is said to be investigating options
for creating a CFEL offering.

Going outside the firewalls

Corporate-oriented e-learning providers are adapting quickly to the
new business model posed by CFEL. Saba was among the first to position
e-learning as a tool for the extended enterprise, and says that its
e-learning platform is designed to enable organizations to push
e-learning outside their firewalls.
"We're even more bullish on the trend than we were a few years ago,"
says David Martin, Saba's vice president of marketing . More than half
of Saba's customers are using its LMS platform to train customers or
partners outside of their firewalls. Martin points to a recent B2C
e-learning offering by, which runs on Saba's LMS
architecture, as an example of a client using Saba for B2C CFEL
initiatives. Anheuser-Busch and Ford are two Saba customers providing
e-learning to their distributors and dealers on the B2B side.

Trade associations--and their Web equivalents--are also seizing on
elearning as a powerful new member benefit. Some are going it alone,
while others are partnering with e-businesses. VerticalNet, creator of
almost 50 vertical industry portals often affiliated with relevant
industry associations, put its CFEL operation in high gear in April in
a partnership with learning portal developer
Using KnowledgePlanet's portal platform, VerticalNet is aiming to add
learning portals to each of its 55 Web communities by year-end to
provide customized learning opportunities for member companies.

Much of the learning available to members of VerticalNet sites, most
of which make up manufacturing industries, is still instructor-led
training on technical, industry-specific topics, says senior director
and general manager of business training services Walter Rogers.
Members have been clamoring for more sophisticated means of developing
and tracking skills, something that its partnership with will
allow, says Rogers.

"Our customers were telling us they wanted to benchmark skills against
industry standards. They wanted to be able to create profiles for
individual learners and track their development and learning options. provides us with the technology to do those things."

GartnerGroup's Clark Aldrich says that vertical communities, whether
they are trade associations or industry-specific portals, will have an
important role to play as e-learning middlemen that channel e-learning
to members. "It's the e - commerce version of guilds: Professionals
will have greater loyalty to these organizations as turnover increases
and work becomes more project based."

What advice can CFEL veterans like Sun give companies that are just
beginning to look beyond the fence line? In short, it's a whole new
challenge--one that gets exponentially harder when your customers are
all over the globe.

"If you want to be in this game, you have to pull yourself up by your
bootstraps," says Schietinger. "The faint of heart can't do it
overseas." Difficulties include the need to overcome geographical and
cultural barriers that can hinder efforts to reach customers in
foreign countries.

Sun built much of its system in-house, but content delivery platforms
are helping lower implementation barriers for others. Martin of Saba
says its platform is e - commerce ready and can handle Web-based
financial transactions that convert values for numerous currencies
automatically--a major challenge for e - commerce providers in
overseas markets.

Equally important is assessing the customer need for e-learning and
the marketing potential of offering free or low-priced e-learning to
potential customers. It's a function of the complexity of a product or
service, say analysts, as well as the degree of competition that a
company faces. CFEL can be a critical differentiator that gives a
company a leg up on competitors.

Carol Shaffer of Clarify typifies the enthusiasm with which companies
are moving into customer e-learning initiatives: "We want to apply it
anywhere we can."

Tom Barron is consulting editor for Learning Circuits and Training
& Development;

Teaching e-commerce by shopping only online

AB Issues discussed concern a professor of marketing who shops only online to teach students the best ways to run an Internet-based business. Topics addressed include buying and selling on the Internet, consumer choice online, and efficient home delivery of goods purchased over the Web.

   BRUCE D. WEINBERG has set foot in a store only once in the past six
   months, but his shopping diary is required reading for his M.B.A.
   students at Boston University.
   Mr. Weinberg, an assistant professor of marketing who has vowed to
   shop only over the Internet, is apologetic about his slip-up. It
   happened in late September, when one of his bike tires blew out and
   there was no computer in sight.
   Other than that, he's kept a strict vow of cyber-purity since
   September, shopping over the Internet for everything from a $5 bottle
   of Mylanta stomach medicine to a vintage Rolls-Royce.
   His goal? To give his electronic-commerce students an inside glimpse
   at what works, and what bombs, when selling in cyberspace.
   Mr. Weinberg keeps a detailed diary of his shopping experiences on a
   World Wide Web site that awards "Brucies" to companies that go out of
   their way to please him and "Noosies" to those that tick him off
   ( Mr. Weinberg has also created a second
   Web site that seeks to educate consumers and businesses about
   electronic commerce  
   He originally planned to end his e-commerce experiment January 1, but
   now that he's on a roll, he thinks he can hold out until September,
   one full year after he started.
   The diary is filled with chatty, often hilarious accounts of his
   purchases, which include dress shoes, ruby earrings for his wife,
   Batman action figures and memorabilia, tires for his car, Cajun hot
   sauce, and a water heater.
   "Hurricane Floyd is not going to interrupt this e-shopper," he wrote
   on September 16. "As long as electricity is humming through the veins
   of my PC, I can burn up the digital aisles of the world. I need to get
   a battery for my watch.... Tomorrow, I think I'll order some groceries
   as I am getting hungry, and then, after that, maybe I'll buy some
   retirement real estate."
   Mr. Weinberg hopes his experiences will make better Internet shoppers
   and consultants out of his students, many of whom will be helping
   companies plan Web sites after they graduate. They're tapping into an
   area with a staggering potential for growth, but a sobering number of
   failures. Businesses sold some $177-billion in goods and services to
   other businesses over the Internet last year--an amount that is
   expected to jump to $2.7-trillion by 2004, according to Forrester
   Research Inc., which analyzes the impact of changing technology on
   business. Meanwhile, businesses sold $20-billion in goods to consumers
   last year.
   Despite the boom in online sales, many companies are struggling to
   make a profit, and even those that succeed in attracting first-time
   buyers have trouble retaining them, Mr. Weinberg says.
   He hopes to help his students, and the business community, determine
   why so many e-commerce efforts falter.
   "I figured, companies aren't making enough money, and customers aren't
   happy," he says. "Why can't I dive in there and analyze why that is
   and pass it on to practitioners?"
   Students enrolled in his electronic-commerce course must complete a
   series of exercises that require them to become both buyers and
   Working in teams of two, the students create their own Web sites,
   which may make money but don't have to. For instance, one student
   created a Web site with everything a consumer might need to know about
   buying watches, while another set up an online travel agency.
   Students must buy something online and interact with a company's
   customer-service representatives. They must also return an item and
   buy and sell something in an online auction. For each exercise, they
   write a short paper on their experiences.
   A second-year M.B.A. student, Greg Crescenzi. says becoming a
   more-savvy online customer will help him next year, when he begins
   work at a consulting company in Cambridge, Mass., that handles
   business-to-business electronic commerce.
   "I'm finding that I take a much more critical look at Web sites," says
   Mr. Crescenzi. For instance, while renting a car for a vacation, he
   swore off one site that required him to go through many cumbersome
   steps before it gave him the information he needed.
   Customers who buy online are generally better informed and have more
   clout, Mr. Weinberg says.
   "You can reach C.E.O.'s. If you send them an e-mail, they'll often
   respond. Granted, I'm a professor and the company might have more
   reason to respond to me, but I still think it speaks to the impact
   consumers can have in this industry. They're definitely empowered," he
   "Seven years ago, when you bought a car, the dealer held all the
   cards. If he knocked $1,000 off the price, you thought you got a good
   deal. Now, as a customer, you know what he's paying and what is a fair
   price. The information is all out there in the open."
   Wading through all of that information isn't everyone's idea of a good
   time. But for Mr. Weinberg, a computer-science major turned e-commerce
   guru, online shopping is addictive.
   "What I think is so incredible is that it's so darn much fun," he
   exclaims in typical exuberance. His diary entries reflect his
   "Big Big Big Brucie to and a Big Big Brucie to,"
   he wrote on December 16. "The Palm V [an electronic organizer] that I
   ordered from at 10:54 pm last evening, arrived today at
   11:30 am. Wow, I was blown away."
   But treat him wrong, and this Internet shopper tears into a rant.
   In his January 22 diary entry, he shared the e-mail he had sent to "Congratulations, you have earned a NOOSIE for poor
   service on shipping this order. I placed the order on January 19 with
   NEXT DAY delivery requested. You managed to take a couple of days to
   get the order out, and then managed to send it with GROUND service.
   Not the way to treat a customer, and particularly no way to treat a
   customer who earlier in the week gave you a Brucie."
   A customer-service representative responded 10 days later with an
   apology and a coupon for $10 off of future orders. Mr. Weinberg says
   he'll place another order, but if the service is poor, he'll award the
   company "a lifetime Noosie."
   The most expensive item he shopped for was a 1958 Rolls-Royce Silver
   Cloud. After months of searching the Internet and bidding on a few
   cars, he ended up inheriting a Rolls that had been in his family.
   Still, he did use an online transportation company to deliver the car
   from Kansas.
   In his November 5 entry, he casually mentioned that his new car had
   arrived, but reserved most of his enthusiasm for an impulse buy he had
   made the same day on the eBay auction site: the Batman's Villain
   Gallery and action figures.
   Mani Rafii, a second-year M.B.A. student, says Mr. Weinberg's passion
   for Internet buying makes for some entertaining classes.
   "He's like a small kid who's jumping around when he's gotten a big
   gift. He's especially excited if he's gotten something for free," says
   Mr. Rafii, who has accepted a job with a consulting firm in Boston
   that advises German companies that are selling online.
   "This is helping us understand both sides of the industry--what the
   consumer wants, like fast delivery and no minimum orders, and what
   problems businesses are likely to run into."
   Mr. Rafii conducted his own experiment during a recent class. The
   general manager of one of Mr. Weinberg's favorite Internet sites,, was visiting the class that day to talk about his service,
   which promises to deliver items like videos, CD's, and food within an
   hour in designated cities, for no delivery fee. Mr. Rafii decided to
   put the company to the test. He typed his order into his laptop
   computer at 6:05 p.m., just as the class was beginning. At 6:40, two
   delivery men knocked on the door and asked for Mr. Rafii. They handed
   him a box containing one bag of M&M candies, along with a bill for
   "Everyone was shocked. It was really quite funny," he recalls. His
   stunt turned into a lesson on marketing strategies.
   "I asked him how they can stay in business if people order M&M's
   10 times a day. He told me their model is trying to please a customer
   as fast as possible, and relying on word of mouth to get new
   business," Mr. Rafii says. Even if someone takes advantage of the
   system, most customers will be impressed with the prompt service, and
   will spread the word, he explains. officials would not release information about the company's
   financial performance, but Mr. Weinberg says it is not making a
   profit. "I have no doubt it's going to become a big-time player, and
   eventually be profitable," he adds.
   Even before the World Wide Web was invented, Mr. Weinberg was
   experimenting with a precursor of the electronic marketplace.
   While pursuing a Ph.D. in management at the Massachusetts Institute of
   Technology in the late 1980's, he developed a computer-based,
   multimedia shopping system for automobiles. "You could get inside the
   car and talk to the salesperson--it was very realistic," he says.
   Mr. Weinberg has focused recently on how cars are bought and sold over
   the Internet. His interest was piqued by a Web site,,
   that allows customers to buy cars online and have them delivered to
   their door. "Initially, I thought that this concept was crazy, because
   it excludes visiting a dealer for the time-honored traditions of
   tire-kicking and test-driving," he says. "Later, I realized that
   tire-kicking in this day and age is absurd; and a five-minute spin on
   a smooth-surfaced highway doesn't provide much value."
   That got him thinking about whether customers could buy just about
   anything over the Internet. Mr. Weinberg says he's in no hurry to go
   back into a "real" store, but might be forced to this summer.
   "Our third child is due in June, so it might get tricky," he says.
   When the diapers have run out, even a one-hour wait can seem like an

Wednesday, June 9, 2010

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