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Digital Transformation in the Midsize Enterprise
Terry Orletsky, VP of IT, The Ken Blanchard Companies
At our core, Blanchard is a training company. Two thirds of our business is providing Leadership Training to the Global 2000 around the world, and we are good at it. When we select an item from a dropdown list that is supposed to describe what our company does, we invariably choose “Professional Services”. Actually, we are both a Professional Services organization and a manufacturing company. Fully two thirds of our income is derived from the sale of manufactured learning materials that support our training. Our accounting system is a full-fledged ERP.
Ten years ago, our workbooks were incredibly complicated by design. We used Cerlox binding and plastic inserts and card stock tabs. We did everything we could to discourage taking our workbook apart and copying it. The books were relatively expensive; we ran a print shop on our campus pretty much 24x7 that churned out millions of pages per year and constructed the “copy proof” books. You can imagine the logistics and costs of shipping tons of paper to our clients. Most of our training was held in the classroom with a trainer presiding. Our project managers had to ensure the delivery of the workbooks and other manufactured materials. They also had to get the right trainer to the right place at the right time.
About ten years ago, our company decided that the strategy for growth was in the global marketplace. Many of our clients already had a global footprint and they were expecting us to provide training to their employees in far off lands. We were shipping palette-loads of materials all over the world; this quickly became a logistical nightmare. Shipments were held up in customs awaiting payment of “tariffs”. Shipments were damaged in transit. Some slow boats were slower than other slow boats and the materials didn’t arrive in time.
Fulfillment success hinged on getting those materials to the client locations. We looked at somehow getting the materials to the clients as PDF documents. FTP technology was the rage. We considered placing the workbooks on a secure FTP site and having the client download one copy of the file and print it out. But we quickly realized that if clients could copy the one file at will, then our copyright could easily be violated.
We tried using Digital Rights Management (DRM) technology. This meant an encrypted file that needed a key at the client end and an Internet connection that transmitted the decryption of one workbook and reduced the number available to the client. Ten years ago, most classrooms were not equipped with an Internet connection. Wireless was not everywhere. It also made it that much harder for our clients to do business with us. DRM was rejected. This project however did lead us to simplifying our books. We were able to use “perfect binding” and substantially reduce the weight and size of the shipments. Manufacturing costs went down. Print shop hours were reduced.
Digital transformation enables a company to move into the global marketplace and create delivery efficiencies using the ubiquitous cloud that would not otherwise be possible
We weren’t done yet of course. We were in the habit of developing training courses around almost every book that Ken Blanchard wrote. We reduced the number of programs we teach to nine core and nine supporting from about 50. Simplify, simplify.
Our virtual training business blossomed. We still used live instructors for most sessions with physical materials delivered to the learners. It was obvious that digital delivery would lead to more efficiencies and reduce costs even more as that part of our business grew. We built a materials delivery and curriculum management system and housed it at Amazon Web Services in Dublin, Ireland. That way we keep personally identifiable participant information on that side of the Atlantic and make it easier to comply with European data privacy laws.
Today, we have over 500,000 participants housed on that platform. The learners receive a much richer learner experience. The platform ushers them through the content before, during, and after the engagement and they get slick, full color printed materials and interactive job aids during this transformation as well. Almost every client receives their materials through the platform. We have successfully transitioned from a face-to-face training model to a blended face-to-face/virtual/e-learning model. We have even integrated the platform with client Learning Management Systems. Imagine the cost savings we have realized by not having to manufacture 500,000 workbooks and ship them someplace.
Our gross margins are the highest they have ever been. Our manufacturing costs are the lowest they have ever been. Coincidence?