If you were to ask Ray Kelly IV to characterize the learning function of most organizations, he might say it was analogous to coins underneath the cushions of a couch: You have to dig around to recover all that money.
That’s exactly what Kelly, the director of HR safety and technical training for DTE Energy, and his organization had to do back in 2006 to optimize the company’s learning process. But in implementing a comprehensive outsourced learning BPO solution from Raytheon beginning in 2007, the operator of Michigan’s largest utility captured more than just a few dollars. Not only did the five-year deal result in significant concrete savings, it is also raising the quality of training, improving process efficiency, and enabling the business to achieve its goals through more effective learning, Kelly said.
“We were going to focus on our strategic activities, making sure we were becoming partners with our business units, being at the table as they were working on designing or working on their organization versus doing the day-to-day tactical stuff. We wanted to change that relationship or that work so that we had someone else doing all the basic blocking and tackling,” said Kelly.
Trailblazing might not be a word most people associate with Detroit these days, but consider this: When Kelly first began looking at outsourced learning, there were nearly no predecessors in his vertical that had engaged in a comprehensive deal.
Even when it comes to outtasking—the outsourcing of narrowly defined learning functions—utilities were reluctant to turn over much of their training functions to outsiders, citing the unique skills required to run their business. That’s why when Kelly and his team first broached the idea, they were considered on the cutting edge of the practice. With little guidance from other utility practitioners, DTE Energy took a leap of faith by turning over a large swath of its learning services to Raytheon—a decision that Kelly said has proved successful two years into the deal.
As part of the contract, Raytheon delivers training administration; instructor-led training; course development; IT and call-center support; reporting; and additional back-office support similar to a project management office (PMO). Kelly said the outsourcing contract made vast improvements in DTE Energy’s existing learning processes as well as bolted onsignificant new capabilities through the establishment of a call center and the tracking of problematic issues. The company retains its leadership development curriculum, although there have been discussions about adding this work to the existing outsourcing contract. Furthermore, highly specialized training for utility repairs is also being handled internally because it would not have made economic sense to turn it over to Raytheon.
The energy giant was able to implement the comprehensive solution in a short period of time, requiring just three months to roll it out. Kelly said the company focused on having clear communications with all the stakeholders and ensured a smooth knowledge transfer process so no significant delivery or quality gaps occurred post implementation. “There’s never a good time to move from a fully internal service-provided activity to an external service-provided activity without a tremendous amount of energy spent on that transition activity, and we moved through that transition activity relatively quickly,” he said.
Typical training activities are in safety and compliance activities, including CPR, first aid, hazard communications, vehicle and mobile equipment training, electrical skills, welding, pipefitting, and others.
Even though DTE Energy is considered a learning outsourcing pioneer in the utilities industry, in many respects its journey is a typical learning BPO tale, one in which the buyer evolves from being a highly decentralized administrative organization to one that is more accountable, transparent, and efficient. And like many HR organizations that embrace outsourcing, cost was an important motivator for moving services to an external provider, but myriad other benefits also drew Kelly’s attention to outsourcing.
For instance, he said in a number of instances, his group provided services to various businesses of DTE Energy but did not have clear accountability for many of the issues around learning, training, and development. Furthermore, there was a significant disconnect among the learning professionals within the organization, leading to duplication of effort and a failure to share knowledge.
“Everybody was taking phone calls and fixing stuff in their own world and not sharing what they were fixing and how it might impact someone else. Even though we had 100 people in the [learning] organization, I don’t think we were connected very well,” said Kelly.
But for many organizations of DTE Energy’s size, such inefficiencies are not uncommon. It’s also why comprehensive learning outsourcing can have such a profound impact on cost savings and organizational throughput. As a diversified energy company, DTE Energy operates Detroit Edison, Michigan Consolidated Gas Co. (MichCon), and Citizens Gas Fuel. With these utilities serving more than 3.5 million accounts, they are DTE Energy’s largest businesses. Additionally, the company operates a number of other industry-related entities, including a coal transportation unit, a gas production business in Texas, private energy services catering to industrial manufacturers, an energy trading company, and a technology investment venture fund. In all, DTE Energy employs 11,000, most of whom are in Michigan.
As anyone familiar with learning services knows, it is one of the most difficult to transform among HR domains due to its decentralized nature, so when Kelly embarked on his vision, he understood the challenge and the rewards. After all, the learning function can be disparately practiced, territorial, and highly inefficient. But it can also produce a quick return on investment, especially as companies offload administrative burdens onto the service provider. But like any organization, DTE Energy’s first step in transforming its learning function was to identify the problems, which Kelly said were flagged through a formal evaluation the company undertook in 2005. These issues were later confirmed with the help of a local learning service provider. Through these assessments, the company discovered that the quality of learning delivery was inadequate, the processes didn’t function the way they were supposed to, and a “tremendous” amount of waste existed.
Identifying process gaps was just the first step in the outsourcing journey. Because DTE Energy sought to take on such a comprehensive solution, and because there were few predecessors to whom Kelly could turn to for advice, it needed outside subject matter expertise to help determine the right solution and the right provider. Third-party advisors have always played a critical role in helping buyers to connect with the appropriate providers, and in hiring EquaTerra, DTE Energy sought out the consulting firm’s deep-domain experience for guidance. As a result of the collaboration with the consultant, Kelly said his department became an internal resource that others could turn to for outsourcing expertise.
Once DTE Energy gained the domain expertise it needed to go to market with, the company moved ahead with the request for proposal (RFP) process, which in the summer of 2006 narrowed the list of appropriate vendors to four, Kelly said. It was at this stage, he added, the company learned an important lesson: Taking time to build a highly detailed document that specifies the statement of work is critical to building a strong foundation with the outsourced vendor. During the process, DTE Energy saw its original RFP document b