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Editor's Note: The United States Distance Learning Association's National Policy Forum, April 16^th and 17^th, 2001, Washington, D.C. brought together leading educators from academia and industry to focus on serious issues within the new technology based education venues. The entire proceedings are currently being edited by Dr. Michael Simonson, Nova Southeastern University, Florida and will be published by USDLA in the coming year. We have selected and edited the interesting and provocative keynote delivered by Dennis F. Bonilla, then Vice-President, Oracle University, Americas Division.

United States Distance Learning Association

National Policy Forum - Keynote

April 16 - 17, 2001

TRANSFORMATION OF ORACLE UNIVERSITY

Dennis F. Bonilla

I thought I would give some background on Oracle's transformation to an e-learning business in the two years I have been here. When I came to Oracle, it was purely a brick-and-mortar business, a very large brick-and-mortar business, and we've been undergoing transformation for the last two years. We're not there yet; in fact, quite a long way from there. I want to share with you some the changes we've made, what has caused the transformation, what's still left to do. Then I will talk a little about some things we're doing in the non-corporate world.

I know Oracle may or may not be a household name to some of you. It's not Microsoft, but it is the second largest software company in the world. In addition, we have a very strong philanthropic arm to Oracle, and I will talk a little bit about what we're doing in high schools and universities and grade schools to try to accelerate the use of technology and education via that technology.

The Internet changes everything. I think most of us who have had some money in the stock market on Internet companies probably say, "Well, it changed my stock portfolio and my 401(k) plan more than it changed anything else in my life, especially over the last year." Five years ago, Larry Ellison, our Chief Executive, made a bold statement in a conference in Paris and has been following it up. I think what really happened to us over the last couple of years is a reflection of some of that technology as it has been enabled through the Internet.

But what we've found is, regardless of the technology and regardless of the age, is really an issue around people. The biggest resistance to change was around the people factor, even within our own company. And this is a company that implements technology all over the world for many global customers. Internally, we have found a lot of resistance to changes we've tried to implement over the last two years.

These questions before the panel concern all of us: Are the nonprofit universities selling out? Will big business eventually dominate the education sector? Can the old school mentality adapt to online degree granting? That's a big issue with many people in this room. Is the paper worth the paper or is it not worth the paper? Is the Internet the proverbial golden goose? Who owns intellectual property copyright? And the big issue is - are students better off in the end?

Some quick facts on Oracle. It's an information management company. We sell technology around databases and technology around applications. Pure and simple, we have an e-business infrastructure technology that we sell and we have an application layer that sits on top of that.

Our main competitors in the application space are PeopleSoft and SAP. Some people would say Microsoft, but we really don't view Microsoft as a challenger in the space that we play in. On the database side, certainly IBM and Microsoft own a part of that market. We are certainly the largest database company in the world, with about 45 percent of the market share around database.

About 1.4 million developers are on the Oracle Developers Network developing software applications around our technology. Millions of users, probably a majority of the world's Fortune 500 companies, operate some sort of Oracle in their corporation, either on the database side or on the application side.

When I first came to Oracle, Larry Ellison gave out the edict to the press, "We're going to save a billion dollars." Everybody thought he was crazy, including me, because I didn't really know where we were going to get a billion-dollar savings. He was very outspoken about that and said "We're going do it," but basically never told us or told the press at that particular point how were we going to do it. I would like to talk to you a little bit about how that transformation was accomplished. We saved those billion dollars. He said we would do it in two years. We did it in 18 months. We're on our way to saving the second billion. I think the second billion will be a lot tougher than the first billion, especially given the current economic climate and the drop in sales and revenue around technology in general. A lot of the first billion dollar savings had to do with how we integrated and used our own software. It also had to do with how we started transforming the education business from a brick-and-mortar delivery mode to what I call a very blended mix model of online and off-line delivery.

The reason I bring up our billion dollar saving is not as a commercial for Oracle; basically that was the mandate that was given to us from Larry. We had 90 subsidiaries around the world. We had 90 e-mail servers. We had probably 45 financial systems. At any given point in time, Larry could never tell you how many people actually worked at Oracle. This was from a company that specialized in database information and it drove him nuts. One of the things that we decided we had to do in order to be a global company was to simplify a very complex business. How do you go from 90 e-mail servers down to two? How do you go from 45 financial applications around the world to one? This does not come without a lot of pain and suffering from the 89 other countries that said, "I don't want to be the one to compromise. I don't want to be the one to simplify. I think I have the best practice. I think our content is better than AMEA. Well, I think Asia Pac has the better contact." How do you do that? How do you get 45,000 employees, 90 countries, to all accept a single, uncomplex business? It was not a very easy thing to do.

One of the things that helped is that Larry decided that the only way we could succeed was to simplify the business on common software. He threw out all applications and all software that was not plain vanilla Oracle software. Those of you who are in the education business, which hopefully most of you are, know that a lot of this has to do with proprietary software. You have your own application, the way you run business, and the way you want things done. Now, all of a sudden, you have to throw all that away and compromise on common processes around the world and common business practices that may or may not be supportive of the way you ran business before. It is a very, very painful process. The ultimate goal, if we were really going to become an e-business, would be to show a common face to the customer. That included all of our sales channel, our Web store, and our customer service.

We had 90 different ways of looking at the customer and 90 different ways that people could come in and buy services and products on the Web. On the other side, we had to extend that out to our supply chain. We had suppliers and partners that had to interface with our customers. How do we do that? How will we be able to do that seamlessly? Then additionally, internally, one of the biggest things is we had to drive things to sell service. We couldn't have complex systems that required a tremendous amount of training and education just to get people to do the common practices. So there were four things:

1. we went from thinking local to global,
2. we went from an internal focus to customers and supplies,
3. we changed from an administrative task to self-service, and
4. we moved from just counting the number of transactions that were occurring in the business to understanding what the business was really doing.

We're still in that process. We started the implementation in the U.S. about eight months ago. It was very painful in the U.S., being the largest contributor to the company. The U.S. is about 50 percent of Oracle's revenue. And if that part of the business was going to fall off the tracks, then certainly the rest of the world was going to go through a lot of pain.

Some facts around the e-education market: the Higher Ed market represents about $225 billion a year. 1.1 billion of that is online; 7 billion is expected to be online by the year 2003. It's a big market. That's why there are 90 different Learning Management System (LMS) vendors and probably 200 different e-learning service providers. If you look at the Expo outside, there are probably several hundred people who are going to be exhibiting, and claiming they're the leader, they're the best, they're the largest, and they've got the best solution. In reality, it's a highly fragmented market and does not have any leadership. Everybody is just jockeying for position at this point.

There are 4,000 public and private institutions in this market and 14.5 million students, of which 1.4 million enroll for online courses. So approximately 10 percent of the student population is currently using some sort of online courseware. The largest nonprofit institution has 49,000 online students. Anybody guess which institution that is? University of Phoenix. 49,000 students. The largest for-profit has 90,000 students. Over 3,000 academic education institutions offer Web-based classes. That's 75 percent.

The big media companies are moving in. There are 1,800 corporate universities. When we started the transformation from Oracle Education to Oracle University; there was a big discussion as to what we were going to call this new entity. There were a lot of objections, including many from people on my staff who felt that the term "University" was very inappropriate for what we were trying to accomplish. Oracle is not a degree-granting institution. It really implies many different legal things outside of the U.S. If you go down to South America, the term "university" is a very explicit legal entity. But here we were trying to be a global business, driving the name, and really it came down to one thing: That's the name Larry wanted. That's the name that Oracle University became. After months of discussion, the decision was made.

E-learning in the corporate market represents about $11.4 billion of a $503 billion pie. Standards have finally been endorsed. Venture capital funding, which last year was quite abundant, was about $3 billion and dropping quickly.

It is very, very difficult to get venture capital funding. And what we're seeing right now is something that was predictable and we see it all the time. In the '70s, there were probably 25 major application software vendors in the United States, obviously led by IBM. That dropped down to about three or four in the '80s. In the '80s, there were several dozen application vendors in the client server area. That's down now to about five. As the technology changes and the era changes, there are very few vendors who survive the transformation from one era to the other. It's just very difficult to do.

What we're seeing now, especially in the e-learning space, is accelerating and consolidation. There's a lot more rationalization going on. Every week there is some announcement of some company partnering or buying another particular arm for e-learning or e-education space. If you don't have an LMS, you want a partner or buy somebody who has an LMS. If you're a service provider, you want to partner with somebody who has content. If you're a content provider, you want to have somebody who has services. What companies are really looking at is how to provide a simple solution to the client base because the clients really have to trust a brand. Clients are not really going to trust anybody. They need to trust a known brand, so they'll go and migrate in flocks to those companies/vendors they feel comfortable with from a brand name perspective. I think from the 90 LMS vendors that are out there today in the e-education space, in six to eight months there may be four or five at the most. There is just no way 90 vendors in the LMS space will be able to survive. It just can't happen.

It probably sent shivers down your back as it did mine when MIT announced it has a ten-year plan to put all its online courseware for free on the Internet. Later, when we talk around the issue of intellectual property and content, there will be more universities putting courseware online for free. So those content vendors who are trying to position themselves as content providers wonder how they will compete with an MIT that is willing to give you all content free.

These are the really big challenges that are going to be coming up in the next couple of years. I believe that there are going to be, just like in every other transformation, two or three major vendors and players who will emerge stronger because of market conditions, who will consolidate, who will get a position of strength and who will become leaders in that space until the next wave hits. What that next wave is, I can't predict at this point. I'm not sure what's there after the Internet and e-education. I'm sure somebody will come up with some fancy term. I, personally, am disappointed that we add "e" to everything. I'm guilty of that myself, but I believe in learning and education, and the "e" is just a trendy buzzword that, hopefully, will pass away. Learning is learning, and the technology or the driver should be transparent in the learning process.

Why is e-learning so important for us at Oracle? Well, for us, it's a natural extension of our whole e-business transformation. We believe that you can't become an e-business unless there is an e-learning component to that transformation. We believe that you can't claim to be an e-learning organization unless you have e-business infrastructure and practices to support that. You can't have one without the other. We're trying to dominate from an e-business perspective. E-learning is a logical extension of that particular strategy. We believe that e-learning is really the key in terms of maintaining that competitive advantage.

There are four things that I looked at when we started this transformation. I have a thousand wonderful, talented instructors in my organization, a thousand. But these thousand instructors are only able to touch 24 students per week in each of the classrooms that we had. My challenge was to get those thousand talented people to touch, not 24 people, but a thousand people a week, maybe even 2,000 people a week without having to hire ten times the number of instructors, without having to build ten times the number of facilities. We weren't really interested in becoming a larger real estate vendor. We weren't interested in building more classrooms, more real estate space, but we were interested in having those instructors and their knowledge touch more and more people who are implementing the Oracle technology.

One of the things that's important for us is we don't teach anything at Oracle other than Oracle technology. We are not in the business of teaching project management, like IBM is. We're not in the business of teaching the Cisco systems or Novell systems or Microsoft desktop systems. We strictly teach and implement the adoption of Oracle technology. At Oracle University, our main mission is to accelerate that adoption throughout the business world. The only way we can do that is to touch more and more people and to get more people knowledgeable on that particular technology in the quickest, most efficient manner possible. This should be done exclusively in classrooms with face-to-face instructors, although what I still consider the best instruction possible was not going to scale for us. We looked at the Internet in terms of availability, being able to provide that best instruction and content 24 by 7. We looked at it in terms of scalability; how do I get that one instructor to touch 250 students instead of 24? We looked at it in terms of personalization. Everybody has that buzzword going around, "How do I make it my learning? I don't want to go to class and be exposed to 40 hours of content when I really only need 10 or 20 hours that are really applicable to me. How do I personalize that, and how is that adapted to my learning style in the best way that I can bring that experience to my job?"

Finally, we had to incorporate because we felt very strongly about this issue of collaboration. We observed, time and time again in our classrooms, the type of interaction among the people in the classroom, how they learn from each other as much as they learn from the instructor or facilitator in the classroom. How were we going to be able to leverage that through the Internet using that particular technology? Availability, scalability, making it personal and maintaining collaboration were key drivers for us in how we designed our model.

What's our vision? We're working toward delivering the right content to the right person at the right time in the right context on the right device in the right way. That's a pretty hefty challenge. I think we're a long way from getting there, but we're working toward that. How many of you saw the movie, The Matrix? Does everybody remember that part when Trinity has to fly the helicopter? Does she have to go to an online course to do that? No, she just sat in the chair. They downloaded the software. It was implanted in her brain. She had the knowledge, skills and abilities to fly that helicopter. I don't think we'll see that in my lifetime, maybe not in your lifetime, but I certainly believe there was a lot of personalization and instant access to a lot of knowledge in order for her to be able to fly that quickly. We may not get there in my lifetime, but I really believe that a lot of that has to do with how you select and drive individualized learning and personalization at the right time in the right place without having to do a lot that isn't needed for that particular person outside of that job environment.

Our university is a pretty big business. For the for-profit side, we do $600 million a year around the world with a staff of about 1,800 instructors or 1,200 instructor-led course titles. During the transformation, when we looked at our course listing, we found that we had probably about 1,200 to 1,500 courses that were taught around the world, but most of the money was made from the top 20 courses. The rest of the courses were being delivered because the particular product manager, the particular line manager, the particular product specialist felt that his/her particular product was going to be the next big thing and the manager needed to have courseware available in order for the adoption of that particular technology.

We develop about 200 different products a year at Oracle, and maybe one becomes a hit and the other 199 go away. But every one of those product managers feels that the only reason the manager's product will or will not become a hit is if there is education content available for people who want to become aware and actually implement that particular courseware. We've taken that down from 1,500 to 2,000 courses to about 500. We're continually paring down that particular content and curriculum. The big difference is that in the past everything was designed for instructor-led training first. We switched that around and we design everything for the Web first. Depending upon demand, we will invest additional dollars for instructor-led training.

Last year we trained 600,000 students through our classrooms. I think that's quite an impressive number. I didn't realize how big it was until we actually started counting up the statistics from around the world. Those students typically spend, on an average, 10 days per year in our classroom. It takes about two years of calendar time to get certified on a lot of the Oracle technology. If students go to two classes a year, it takes about two years to go through all four or five courses. 600,000 people went through those classrooms last year trying to get through the certification process.

Our transformation can be divided up into four key areas. It's probably the only area you will ever see at Oracle headed in the down direction that's acceptable on a slide. It has to do with decreasing the time to market or decreasing the time to competency on Oracle skills. Our whole objective was to shorten the amount of time that it took for somebody to become competent on the new technology.

A new software release comes out about every six months. A major release comes out about every year. If you look at the amount of work and effort that goes into the major releases, it is not just a minor upgrade, in terms of an interface change, it is a fundamental change in the coding that goes behind the software. It's very difficult to do a real-time launch of the content in education that goes along with that software if you don't change the business processes on how you do that.

One of the first things we did around Internet content was to have the curriculum development team sit in Oracle University. If you were going to write content for new products, those people would actually, physically report into my organization. The product development people would write the code, then we would send the team of our people over to figure out what it is that they wrote, rewrite that into some form of educational, instructionally valid English, translate it into 14 different languages, edit it and pretty it up and put all the bows, ties and ribbons on it and get it to word processing and desktop publishing. By the time the content was ready and the product rolled out, it was six or nine months later. It looked very pretty. It was very nice. But we were now on to the next version of the software. We were constantly out of synch around product-release cycle and content. We made a bold decision. It is very difficult when you've had a process that works, not from a calendar perspective, but in terms of quality and time, to take that group of people and say, "We're going to put you over on the product development side and now you get to sit with the product people and create curriculum concurrently."

Did it work? In some cases, it did. In many cases, it failed. It failed not because the team failed but because the product development folks had different priorities. Their priority is to write code. The priority of the content development people is to write curriculum. In many cases, the code comes first and then the curriculum. In those cases where the priorities were set and were balanced, the content would come out in a timely fashion. In those cases where they were running behind on the software, well, guess what? The content also was going to lag.

It is the model that we've decided on. We're going to give it a couple more years to try to get it perfected. We've improved drastically from the first year of trying this out, as people learned the new business process and the new responsibilities and accountability. But it was not an easy decision to do that and it didn't work out well in the beginning. We're now seeing much better results. I mentioned earlier that we design for the Web first. And when I say design for the Web first, it's really what I consider disposable curriculum. That may or may not be a term that everybody would agree would be the appropriate words to use. But in many cases, we're willing to design content and curriculum that may only have a shelf life of two or three months and then it's going to go away. The shelf life may be only six months, and then it's going to go away because it will be supplemented with something new.

There was a fairly strong decision on our part to sort of swap that because everybody was in the mind-set that you always had to design for instructor-led training, and the stuff for the Web will come later. We really have to protect our core business around the instructor-led training and not Web development. What we found during that transition is that there is a happy medium between designing for the classroom and designing for the Web. How do you mix and match those up since it's not always going to be Web first? There are some things we know are going to be making their way into the instructor-led arena. How do we do that in a timely fashion? Components for customized learning are reusable content objects. How many are familiar with that term? The term means trying to get economies to scale.

In the past, every line of business at Oracle, including Oracle University, would develop content. We would find that the sales group had its own content; the support group had its own content; the alliances group had its own content. All of the content was either out of synch or out of date because nobody was leveraging the use of the single source.

When we moved the content development back to the product group, one of the other leverage points that we were able to get out was that we would have one single source of content, and that content would be developed in a way that could be reused over multiple media. If it were going to be delivered over video or delivered with instruction books or delivered in the classroom or delivered on the Internet, there would be one single repository for that content. We would chunk the content down into what we call reusable content objects. Then we would assemble and distribute that courseware as best we could from a personalized perspective for what was needed by the student. This was an experiment that was going very well, but not without its hazards around standards and compatibility. How do you actually implement that in a way that really makes sense and drive it all through an e-business solution?

The other area was around Internet sales. What we wanted to do was to try to integrate the Web as much we could with our telesales. We have two educational call centers in the United States. The employees answer the phone, taking registration information for courses. We try to get people to self-register on the Web, but it takes awhile for them to really understand how to move through all the intricacies of the Web site. So, we implemented collaborative software in the telesales centers so that, as people were navigating through the Web, if they ran into a problem similar to what you would find on Lands' End or some of the other retail sites, there is a little sort of a lifesaver help button that you can hit. That help button then rings into a call center, the call center then will have a representative call you up, take control of your browser, and take you through the Web page, with the whole intent being that the next time the student is trying to register for class, he or she will have gone through the experience of navigating through the Web site and won't have a need for a telesales person's help.

We always try to leverage our Internet sales and support division. I used to have my own IT staff in all my classrooms. Oracle has an IT group. I have my own IT groups, and each of our classrooms had a fairly complex infrastructure set up. We had a whole team dedicated just to keeping the classroom technology and hardware up. As part of the consolidation of these 90 e-mail servers, there was also a consolidation of all the classroom services. All of the servers and content hardware that was deployed around the world and all the people that supported that were transferred over to this global IT group. Imagine the shudders going through my mind when, on a Monday morning, the instructor shows up and that classroom is not set up to start training immediately. You've got to call the help desk and IT support to get that classroom up and running very quickly. When that group moved over to the global IT group, we were not only at the mercy of not just having our own force, but now we were also at the mercy of all of Oracle's needs that had to be filtered through the global IT help desk.

Education may or may not be a priority for a lot of the people on the global help desk. Every time the Web site was down, it cost us about four months of traction getting people to use the Web. If people go to the Web and they can't use it, they abandon it and say, "I'm not going to come back," You have to get them to come back. It takes a long time for people to trust the availability of the Web site. What we found, as we dedicated more and more resources on the global IT site to Web site availability, was our Web registrations have been constantly increasing from the point where we used to only have 5 percent of our registrations being taken through the Web. This year, we will probably have 35 percent of our registrations through the Web and our target next year will be 80 percent of registrations being self-serviced through the Web.

The registrations are very dependent on Web site availability and reliability around that Web site, so when people go to the site, it actually works and it works the way they want it. They can actually get input. They can actually register for a class and get a confirmation letter, via e-mail. If I were to try to find out what class is going on in Toronto, Canada, and I'm in Detroit, before this year, I had no idea if I was registered without going to a separate system. I didn't have one consolidated view, because every country ran it's own registration system. This year we're consolidating those 40 registration systems into one global system. I can get a whole global view of what's going on with my instructors and my classrooms in every country around the world. If somebody wants to register for a class in Toronto that's also being offered in Detroit, and the class in Toronto is canceled, that person may be able get into Detroit or may be able get into Ottawa at the same time and get one global view, as opposed to trying to then log into a different country's Web site to figure out when is that class being offered. Not an easy task when we go back though this issue around global processes and simplification.

Canada was very happy with its Web site and registration system. It was totally different from the system we're asking Canada to implement today. But it's really the only way you can get a global view and the global leverage around that and drive Web registration and confirmation, implement everything on standard Oracle applications with no customization. Last year, it didn't make sense to a lot of people when I initially threw this idea out, but I had a company come in who had done a hold yield management strategy for Delta Airlines. I said, "You know, what we're really running here, from a classroom perspective, is an airline management system for filling seats and deciding where we're going to offer those flights and how often we're going to offer those flights and to/from what cities will we offer those flights." So I brought in a company from Atlanta that specializes in maximizing the revenue for Delta Airlines to provide an in-depth analysis of our classroom operations and give us answers to: What are the best practices? What are the things that we are doing wrong from a fixed-cost, fixed-capacity perspective? How do we maximize the utilization of those seats at what price, at what opportunity, in what direction? How do we do discounting? What do you do on a Friday when the class is sort of half empty? Do you offer a special discount? Do you insert in top-level customers to come in, in the next week, to fill up those seats?

What we found, interestingly enough, was that every quarter we would schedule about 30,000 events around the world, and we would cancel one-third of them; still put on 30,000 events, but one-third of them were totally different than what we thought we were going to run at the beginning of the scheduling period. So we were actually very inefficient in our hold scheduling, in our hold demand aggregation model until we were able to figure out how you aggregate demand and how you start doing a prognosis on what people's behavior for coming to classes is. Then you actually set the schedule associated with that particular behavior pattern. That's how you offer which courses in what cities and then at what price. We found that this particular efficiency has really yielded a lot of results for us this year. Again, not without pain, because, you know, some cities were shut down. Some cities were added, some classrooms were closed down, and some other cities' classrooms were expanded.

And then, on the Internet delivery, two years ago, we had no net classes. By net classes, I mean a typical one- or two-hour or four-hour session that's either asynchronous or synchronous on the Web, either with a live instructor or as a demand pull-down; we had had none, zero. So we instituted net classes. We started a subscription service, The Oracle Learning Network, and we launched an Internet television station called The E-business Network to drive more education and awareness through the online component. We also instituted what we called the thin client classroom. It was very difficult in our classrooms to implement our software because of the amount of download and client side software that was needed. We're changing all that so that there's no download required. All you need is a browser to take our classes.

All the servers are being removed from classrooms and consolidated to central servers in San Francisco. This may not be the smartest decision based on fault tolerance, but that's where our primary data center is. We do have our own substation, so we're not worried about rolling blackouts. We built our own substation about five years ago. But really, the whole intent was to be able to host all the classrooms, coordinate all the classrooms, and administer all the classrooms remotely from the data center. All the instructor needs is to show up on that Monday. All lesson content has been loaded in remotely, and all the student needs is a browser to access the courseware.

We implemented what we called the E-Learning Fast Tracks, and this is the blended model we've implemented at Oracle, Basically, we took what was formerly 25 days of classroom instruction over two years down to 12 weeks. The students spend five days at the beginning of the fast track in a classroom environment with two instructors who will be their mentors throughout the 12-week period. Then the students go away for 10 weeks and do everything else online with facilitator discussions, office hours, online chat, online mentoring, online discussion forums, Web-based delivered courseware; syllabus online; discipline, homework assignments. Everything is monitored. Then the students come back at the end of the ten weeks for one more week of five days in the classroom, and then they're done. What took students normally two years to do in the past, they can finish now in 12 weeks and become Oracle-certified professionals at a lot less cost; less registration cost, a lot less cost in time away from work and, also, less cost in calendar time. We found, obviously, many people are taking advantage of this, not only for the time savings, but also for the marketable skills that they'll be able to gain in a shorter period of time. A lot of people are able to leverage that into either a promotion at their current job or marketability outside of their current employment.

And then the last thing we were missing was a Learning Management System (LMS). We said, "Well, if we're going to become an e-business and we're going become an e-learning organization, we've got the content. We're very rich, obviously, on the Oracle content. We have the service organization that can implement the technology, but we don't have a learning management system." And quite honestly, there are many good learning management systems out there that we could have implemented. But in true Oracle fashion, with the dictation being that we would only run our own software, we developed and designed our own learning management system; it's called Oracle I-Learning. And basically, it's the delivery platform upon which all learning is delivered at Oracle, either to our customers or to our employees or to our partners. Basically, it's a learning content management system that rides on the Oracle database and has a middle layer of Oracle applications. Except, and this is something I'll talk about a little while, it is a little different from the way we implement the learning management system in a purely hosted model. Oracle, for many years, for its application, would ship out a CD; you get the CD at your corporate site and bring in a bunch of project team people. Everybody works on installing the software. You would spend a couple months customizing it, and then six months later, Oracle would send out another CD, the corporate site project team people do an upgrade, on and on and on and on.

There's a fundamental shift at Oracle, that we will no longer ship CDs. Our vision is, in two to three years, there will be no more CDs shipped. Everything will be a hosted application and people will utilize the software the same way we utilized that light switch when you came into the room. Basically, you came in; you turned on the light switch. You expected the lights to come on. Our philosophy is, in ten years, people will come into their office; they'll expect the software to be installed, up and running like a utility. You won't even be thinking about: How was it installed? How was it upgraded? For example, how many people know how many changes to the Amazon software were done last year? 58! Amazon went through 58 software changes last year. Did anybody feel that pain? Did you get 58 CDs in the mail to upgrade to the next version? No. Seamless, right? It's a hosted application. Basically, you have a browser. You don't download anything. It's not like AOL, where you have to sort of download the AOL client to your computer. It's basically seamless. You get a better customer experience. You expect the experience to be great and you expect more features. This is the same model that will be implemented at Oracle over the next couple of years. We've already started with our sales and our support systems. Our sales and support applications are hosted fully online, and now, our learning is in fully hosted model. There is no software to ship.

People who utilize Oracle I-Learning are online with our learning management system. We do two releases a year, major releases, that are seamless to you in the background. And, continuously, every week, we are upgrading the features and functions of that particular software. It's quite a fundamental shift in thinking. Larry has decided that this is the way we're going to go. And, you know, five, six years ago; he decided we were only going to do Web-based software. We were not going to do client server anymore, and everybody thought he was crazy, including the president of the company, now no longer with us. But while he was with us, he basically said, "Well, why don't we hedge our bets? Why don't we continue to do the client server software and we'll develop the Web-based software in parallel and everybody will be happy?" Larry said, "No. We're going to do Web-based software, only, and we abandon all client server software." And it turns out Larry's bet and vision were accurate. And there was no risk of destroying the company if the decision were wrong.

Here is another fork in the road for us - timing. - Larry doesn't normally get the vision wrong. What he normally gets wrong is the timing. He says it's going to happen in five years, we're saying in ten years, maybe fifteen years for implementation. It is probably going to take ten or fifteen years! If he says it's going to happen in two, it's probably going to be five. But typically, we will get to that point in time where that vision of online software, as a utility, will be most of the applications around the world because it's too easy to do it that way. It's less complex and people don't want to spend time and money on complexity and installation. They want to spend time and money on business performance.

There are four investment level models:

1. our product release cycle for in-class, which is our instructor-led class;
2. our online model;
3. the more complex, blended model; and
4. a Web-based, technology-based training model.

We depend upon the demand and we will build content based on what we expect the demand to be. If we expect a very strong product and the demand is there, we'll go all the way up to including having a certification track for that particular software. If we feel the demand is not going to be there, we're not going to invest a lot of time. We're going to stay with investment models one and two, which have what I consider disposable curriculum, content that can be thrown away after 6 or 9 months. You haven't invested a lot to get it up online; you have haven't invested a lot in getting it delivered online, and you're willing to throw it away for new stuff. If it gets to number 3, it takes a lot more time and energy to keep that current. If it becomes the number 4 investment model, which is really more Web-based, technology-based training, it better have some long-term life cycle. And if we're going to have a number 5 investment model, invest dollars around certification, which includes maintaining certification exams, then it better be a long-term product that's going to stay around for a while. If not, we're just going to invest short-term money and short-term content, and it's going to be delivered online.

What this allows us to do, though, is to bundle stuff around. So if you consider what we call the E-Track, which is the integrated training method or the e-learning fast track, this really has all five components of the investment level model or content. So in the e-learning fast track, that 12-week certification track, there are components that have to do with e-class; there are components that have to do with instructor-led training; there are components that have to do with technology-based training, and there's a certification track at the end of that. If you consider your Oracle Learning Network Subscription, what we were able to do there is we said, "You know what? After these people become certified, how do they stay up on this content? Because our product release cycle is every six or nine months. We don't want them constantly having to pay to come back to class." So what we decided to do was set up an online subscription service for those people who wake up on Saturday mornings and put on an Oracle T-shirt. They're the fanatics who drink the Kool-Aid constantly, and there's a subscription model where they pay a flat fee and they get as much as they want to consume, as much as they want to eat, of fresh content for a year. And we add about 200 hours of this online content every month to the various tracks that are offered. And people can consume it as much as they want when they want. And if they are watching David Letterman at 1:30 in the morning, and they have an urge to go online and take the course, that courseware is available to them for continuous learning after they've gone through the certification path.

Well, you know, nothing talks like money, unfortunately, in the world of business, and they say money is the alphabet. I just want to share with you the financial results that we had the first quarter in the U.S. when we went to the blended e-learning model. And the reason I say only the financial results, because, right now, I really can't tell you the performance results because there's not really an accurate way that I can measure all the performance on the job from those components that strictly had to do with online learning. And quite honestly, I think the jury is still out on whether the effectiveness of online learning has reached the point where job performance can be categorically measured to have shown the same improvement, had they done the same thing in class.

However, if we look at the Q-1-to-Q-1 comparison for the first two years in the U.S. alone, we saved about $3.7 million, and this is internal training alone - almost $4 million. Our class enrollments were up for the Net; our total enrollments were up. People took fewer face-to-face classes, but they took a lot more of the online classes. People were willing to try it out. What we found is that some students, at first, were very hesitant to try this. We heard "I still want to go to class. This online stuff, I don't really think it's going to work. What am I going to do with it?" So this is what we decided to do this year -- pretty revolutionary for us -- we said, "You know what? If you're going to take internal training at Oracle, if you want to go to a classroom event, you pay a market price plus a discount. So if you want to go take an Oracle class and you're an Oracle employee, you can take that class, but you're going to pay about 65 percent of what the list price is.

If you want to take an online class, it's free for every employee and for all our partners. Everybody who is an employee and a partner gets a subscription, gets an account to the Oracle Learning Network. And for that account, they get free access to all the content that's on there. They get to use and consume as much as they want for free. And what this really eliminated was a lot of back-end transaction processing that was going on behind the scenes, in terms of, "Well, you know, I took one download, but I didn't finish it, so I had to take another download; but you want to charge me $25 for the first download. By the second download, I shouldn't really have been charged $25." We could have spent years just tracking the financial transactions that were going on between the lines of business, trying to find out what their training costs were. We said, "You know what? Forget it. It's not worth it. It's free. Go use it, consume it. Knock yourselves out. And if you want to go to class, that's great, too, but you're going to pay a certain price for that. And if you want to do the blended model, we'll give you a special price on the blended model."

We're really trying to push the online component. Let me review quickly.

This professional subscription is 100 percent Web mediated; it's available globally. It's growing at the scale of 2,000 subscribers a week. Basically, 2,000 new users are being added to the system. The system runs off a single database around the world. One version of the database contains all this content for around the world. And it took about four months from concept to implementation. Pretty quick cycle. So last August, we said, "We really need an online delivery." In October, we launched it. We're targeting about 100,000 new learners by the end of this fiscal year, and again, it's growing by about 2,000 subscribers a day. Right now, there are about 50,000 users that hit that system concurrently.

I want to talk about Oracle's philanthropic arm.

Basically, the Oracle Academic Initiative is our philanthropic arm for high schools and universities. We have a commitment to work with the high schools and the universities to provide them with free software -- well, relatively free -- with instruction, with content, and with facilities to get people to utilize the Oracle technology in high schools and universities; obviously, with the intent that, when it comes time to work in the corporate world, you know, they're already familiar with the Oracle technology, and that would be something that they would then recommend in terms of purchase. It's a $30 million annual commitment and basically, that's based on $500 million list price, which we virtually give away to the colleges and universities. And what we're really trying to do is foster a pathway for these students from entry level all the way up to Ph.D.

About 1,200 institutions, globally, are on the Oracle Academic Initiative, and the program is growing daily. We provide the colleges and universities with recruitment support, certification exams. We provide them with the curriculum. We provide them with free education for their faculties. One of the things that we did last year is we brought in 50 teachers from around the United States, from the high schools, and got them actually certified on Oracle technology so that they could go back to their individual high schools and teach all the Oracle content. This year, we will be bringing in 300 teachers, primarily from disadvantaged communities that are trying to help the communities close that digital divide. We also provide them the software and the support.

Here are Oracle's future directions for the program. We are going to increase the offerings, not only from our technology stack, but also for applications. We're going to provide internships and scholarships to the students and the teachers. We're going to provide some additional programs with corporate partners to provide additional content to the schools, not just the Oracle content, and we're going to have integration with user group activities.

So, as final closing remarks, what do I think are some of the things that we should be able to be do from a distance learning and technology perspective? Obviously, I think we need to integrate the communication, information technologies and teacher preparation institutions. I don't think we do enough of that. We should encourage accreditation associations to recognize the appropriate use of distance learning. I think now with the NEA and the AFT endorsing online standards, we're going to see a lot more support of the online communities. We must ensure rapid deployment, effective use of the infrastructure, and ensure that high quality learning materials evolve and are maintained by continuous support program development, including distance learning options. And we must, obviously, maintain protections for copyright to accommodate digital technology. Copyright, I think, is one issue that will continuously appear to be controversial, who owns the material or technology; how do you protect it; how do you keep it sacred? How do you continue to relate the academic institution, the professor who creates and owns the intellectual content with Oracle as creator/owner of the learning objects?

We need to continue to have affordable infrastructure access. One of the things that was proposed four years ago at this forum was free Internet Service Providors (ISPs). I'm not sure where we are on that. The government in Columbia, South America. provides free e-mail service to all the students in the country and to the people. Everybody gets an e-mail address, everybody gets free ISP service and nobody gets denied access to the infrastructure. Now, what the Columbian government has to worry about, obviously, is getting the content appropriate for the population. But the government really feels that there are important needs to be met for the country to move forward: - the need to continue the development of low-cost Internet appliances and the need for these appliances to be portable from school to home to college.

Everywhere, these needs should be, I think, government funded, as part of the contribution the government should make to education. Government should provide free ISP for low-income neighborhoods and other non-school entities, and additional participation in online learning communities. There should be more interaction, collaboration, and software access. I think there's a lot of good collaboration and software access not available to the schools. These should be available in order to promote community involvement. And support services should continue to be digitized. We're seeing a lot of universities doing this and it should be continued.

I'll end by quoting the Web-based commission in December: "There's no going back. The traditional classroom has been transformed." I think it's the most exciting time since I have been in education. I've been in the education and learning field for 25 years, started off with the lesson plan hidden in the file folder that I didn't want to share with anybody. I think we'll see a big shakeout in the coming 16 to 18 months, and it's going to be an exciting time around learning. Hopefully, someday the "E" will drop out of e-learning.

I thank you very much for your time.

About the Author:

Dennis Bonilla is currently Chief Executive Officer of Madsyn, a leading company in multimedia solutions for the health-care industry. At the time of this keynote, he was Vice President, Education Division for the Americas, Oracle Corporation. Dennis is also a member of the Institute for Telecommunications OSU Advisory Board. Before Oracle, he was at General Physics Corporation serving as VP for Global Business Development. Dennis has an MBA, a Master's of Science, and a background in nuclear engineering.