According to surveys by analyst firm Info-Tech Research Group, cutting “discretionary spending” – including staff training programs – is one of the earlier, “almost reactionary steps” taken by many Canadian firms.
It represents one of the four main major cost-cutting areas for Info-Tech clients, said Robert Garmaise, vice-president of research and strategy at London, Ont.-based Info-Tech.
Others are staffing and salary changes, project portfolio management, and vendor and outsourcing management.
Garmaise was speaking on IT Cost Reduction in 2009 at IT360, a day-long conference and expo held in Toronto earlier this month.
He said businesses should be extremely wary about cutting or eliminating expenditure on staff training, conferences, team-building and such activities.
“Attempts to reduce these are fraught with risk” and represent a “low gain, high pain” approach. “They may save costs a little, but can have a big [negative] impact on the client organization.”
Read related article: Ten “low pain, high gain” ways Canadian firms can cut IT costs
It’s a view echoed by Cushing Anderson, program vice-president for project-based services research at analyst firm IDC in Framingham, Mass.
IDC’s Corporate Learning Outlook for 2009, he said, shows that cash-strapped businesses are likely to implement cuts in staff training programs.
“Budgets are being scrutinized, held flat, or sometimes slashed,” said Anderson in a keynote Web cast titled “Maximizing the value of your training through flexible delivery.” The keynote was part of the Virtual Education Learning Symposium 2009 hosted by SAP AG last week.
But if the general tendency these days is to reduce or eliminate staff training, at least a few Canadian firms are bucking the trend.
One of them is Harry Rosen, the well known chain of men’s fashion stores.
“Today, when the situation is difficult I’m going to intensify training for the staff,” said executive chairman Harry Rosen, during a recent Microsoft Canada-organized SMB roundtable.
In many stores, said Rosen, employees are distanced from buying decisions, not really understanding the product.
By contrast, exceptional customer knowledge and service distinguished his store from the very beginning, he said.
“I kept records of everything customers purchased, everything I knew about them. Customers understood I really knew about them and came back to shop with us frequently.”
As business grew, Rosen worked with his staff to fine-tune this process of capturing customer information. “The focus was on relationship building.”
And ongoing staff training helped maintain and intensify this focus.
For this reason, even during the tough 1980s recession, Rosen recalls, his firm didn’t skimp on training – and he attributes a big part of its success in those difficult times to that.
Today, confronted with another market downturn, Rosen is once more reviewing what the most appropriate strategy should be for his menswear store chain.
“It doesn’t appeal to us to introduce a lower-priced product,” he said. “We’re probably going to sharpen the selection at certain price points, but aren’t going to trade down.”
Instead in order to deepen the customer focus at his stores staff training will be intensified.
“I believe in spending money sending staff to trade shows, visiting vendors, talking to them. It’s very expensive, but makes career people out of the sales persons, makes them fully informed about their customers.”
Recent research indicates such an approach can pay off … big time.
IDC’s Anderson says the analyst firm’s researchers have uncovered compelling examples of how trained employee teams have improved performance.
Teams that met most or all of their objectives were found to have had “twice the amount of training” than those that met with little success, he said.
One IDC study found well-trained IT teams were at least 10 per cent more productive than average ones. “In a specific case, it resulted in more than $70,000 improvements in productivity every year — the equivalent of one full-time team member in a 10-person IT support team.”
On the flip side, Anderson suggested that cutting down on necessary training for IT staff could be very risky.
A new tech rollout is usually a complex and longwinded affair, he noted, with testing and implementation taking weeks, if not months.
After all that effort, he said, trying to manage or even use a technology or product without adequate skills sharply reduces the benefits it could offer.
That’s why IT managers polled by IDC believe their team’s skill “is the most important factor in the success of critical IT functions.”
And this skill is acquired and honed through effective training offered through the right channels.
The good news, Anderson said, is training delivery options have also increased, extending beyond classroom training vs. e-learning, to encompass blended techniques and technologies.
Leading business software vendors are responding to this growing clamour for “blended training” options.
By June 25, SAP North America will be offering 25 per cent of scheduled training on its enterprise apps in virtual format.
And the firm also has virtual training options for the SMB market.
SAP offers its partners e-learning on Business One software, said Richard Campitelli, senior vice-president, SAP Education, SAP America, in an e-mail to ITBusiness.ca.
SAP Business One is designed specifically for SMBs, helping them manage business functions across sales, distribution, and financials, in a single integrated system.
With SAP Business All-in-One — targeted at the mid-sized market — SAP adopts “a blended approach, using e-learning and instructor-led classroom and virtual learning formats,” Campitelli said.
Such a blended approach goes to the very heart of SAP Value University launched on January 20, 2009.
In the days after its launch, SAP hosted around 300 live virtual education sessions for its own sales teams around the world, with 9,000 staff being trained – and thousands of assessments completed worldwide.
“This assessment determined the participant’s level of understanding of the course content,” said April Young, Dean, SAP Value University.
“Comments were similar,” she said. “People liked the ease of use. They liked the content provided as it was spot on and relevant, and the format of the training was structured and simple to understand.”
Many drivers, multiple methods
Cost alone shouldn’t determine choice of a training method, according to IDC’s Anderson. Other criteria are convenience, mobility, engagement – and even corporate culture or generational issues.
Some of these factors influenced chip manufacturer Intel Corp.’s choice of training technologies for its own staff.
For instance, with expansion of its operations to far flung parts of the world, the need for training was felt in smaller emerging nations, noted Brian Launer, employee training manager at Santa Clara, Calif.-based Intel.
Over the past three years, he said, Intel has been rolling out a major SAP project. “We were putting all kinds of SAP systems in place.”
While employees globally need to be trained on these systems, he noted that traditional classroom coaching may not be the best strategy – and in some cases, not an option at all.
“How do you educate those one or two folk sitting in places such as Vietnam, where it’s not typical to have an SAP office — or even an Intel facility – and send them to train,?”
This definitely drives you to alternative solutions such as virtual training, the Intel exec said.
The other big driver, he said, is the shift in who is being trained, especially with the three-year “SAP transformation” project at Intel nearing its close.
“This doesn’t mean we stop training, but that we switch its focus from our implementation staff to our service and maintenance staff.”
And that switch also requires a change in training modalities.
For instance, with implementation staff, Launer said, longer stretches of in-class training are possible. “I can shove them into a classroom for a week or a month prior to a project or a project roadmap.
By contrast, this isn’t a practical option for the service technicians, who can’t be pulled away from their jobs for an extended time period.
“I don’t have enough backup staff to have my regular support staff sit in training for so long.”
So to sustain productivity, he said, service employees are offered “just in time training, and just the amount they need.”
Intel’s “virtual training” up to the start of 2009 was very limited, Launer noted, probably down in the 5 per cent range.
“We not sure 100 per cent virtual is the best,” he said, even in today’s dire economic climate.
Right now, the company favours a blended approach, he said. It involves “using an SAP instructor in a classroom, where our critical mass is, and having our students from other locations dial in to those sessions.”
Intel is still evolving the technology to support this method, in which a section of the students are virtually trained. Launer said when scheduling training sessions, he puts around 30 per cent virtual seats in each classroom.
In future, he will be looking at doing multiple classrooms brought together via technology, but with the instructor in only one of the classrooms.
“That’s possibly going to take us close to a 75 per cent model.”