Decide how many people will actually attend training. You can put the total number of employees in your proposal to management but never use that number to get quotes from vendors. The quotes will be way too high and it will end up making your ROI look very poor at the end of the year. Small ROI means no money for training next year. As an example, if you tell a vendor that you want to train 10,000 employees, then the cost to you is the same if 10,000 employees show up or if only 500 attend class. Training quotes aren’t like catering contracts, you don’t pay per head; you pay by the class. So, if you’re delivering enough classes to train 10,000 people, then you are offering (and paying for) way too many classes. On top of that, attendance looks low when your manager looks at the class rosters and now it looks like no one is coming to the training you’re providing. Do you see how this happened? How we all got to a place where training is no longer in the budget? Start this exercise by admitting that there is no way that all 10,000 employees will attend training even if you make it required.
When budgeting, the trick is to figure out how many people you would have to train to reach the number of employees who actually use the product for critical business functions. That’s a mouthful. What I’m saying is that chances are that 10,000 employees don’t rely on Windows to make better business decisions. It’s great that it does so much cool stuff, but let’s face it, the Start button is in the same place. Unless you are customizing widgets, most of the benefit of Vista or Windows 7 is behind the scenes in your IT Department. So, training on a new operating system in a managed PC environment is really only affecting the people who can log in as administrators of PC’s. That’s nowhere near 10,000 folks.
And not everyone who is affected is going to attend training either, so the number gets even lower. You are going to reach more people than will ever attend a class. Reach is when someone comes back after attending a class and tells someone that the class was good or shares the tip sheet with a co-worker or shows their boss how to do something that makes them more productive. Reach is the service desk sending people out to watch the video long after the vendor has left the building. Ask your Six Sigma expert how many people one trained person can reach in an organization. It’s not as many as a dissatisfied customer, but for the purposes of this exercise, I suggest targeting an audience of 30% of the total number of employees who will use the new tool as a critical path in their business process. So, if it’s Office, then you only count people who spend their day in front of a PC and then take 30% of that number to come up with your audience. Big companies turn into small business real quick. Now...
Pick a price per head that you’re willing to pay. This isn’t as easy as it sounds. Sure, we’d all like to train everyone for $2/head, but coffee and sodas and cookies and doughnuts in the back of the room will cost you more than that (and if you weren’t planning to include refreshments – big mistake – food is a big draw to convince someone who’s on the fence to attend a training class). Instead, think about this number in terms of an hourly wage. How many hours of company time (lost productivity) are you willing to pay for one employee to get trained on the new toolset? How much is it REALLY going to cost the company to train everyone? This is a much bigger number than that quote you just got. Employees are the number one cost to companies. The longer you keep them away from their desks, the less likely their boss will be to allow them to attend a class.
Human Resources can probably provide you with an average cost per hour of how much employees cost the company, but if you’re just looking for an estimate, then $37/hour is the weighted average that Siemens Communication used in a 2007 study on how much money companies lose due to fragmented communications amongst team members (interesting read). So, for the purposes of our estimate, tack another $5/head onto that figure for catering and you’ve got a pretty good starting point for how much your company might be willing to spend on training next year. Keep in mind that this is not suggesting that training courses are only an hour long, just that an hour is about all the company is probably willing to pay for. That means that you will have to figure out how to make the productivity gains justify each additional hour spent in class. Design your curriculum with this in mind. If you can’t save them 15 mins/ week for the first month after they attend class, then you’ve just burned one more hour of the company’s time to the tune of $37 an hour.
So here’s what we’ve got so far:
($37 + catering cost/head) x .3(total # of employees affected) = min training budget for one tool
Decide how many tools you need to train on. Don’t panic. Office 2007 is one tool even though it’s multiple applications. The idea behind this exercise is to ensure that your training plan is in line with your technology roadmap. If you are deploying a new operating system at the same time as you are deploying a new version of Office, then that counts as two tools and you need 90 minutes (content builds on itself) to train them. But if you are deploying one tool at a time, then you have to teach two classes and the same content will take two hours (time for the intro and a review of what they might have missed if they didn't attend the first class).
IT implementation plans rarely consider that it will cost the company much less to pay for training development and delivery of all the tools that are integrated with one another at one time than it will be to repeat the process for each tool at different times of the year. Giving users training just in time, as the product is deployed to their machine, is the key to user adoption. While it makes sense to teach them everything at once and it is cheaper that way, you have to balance that with the fact that it’s a waste of time to teach something that they aren’t going to be able to use for six more months. But that doesn’t mean that you can’t pay to have the content developed and then just have someone in house deliver it later. Better yet, if you roll out the operating system first and people can get through their day with the new tool, then wait to teach them those couple of things you want them to know until you are going to train them on something else like Office.
The first step is only budgeting for the people who will come to training and the next step is making the content relevant enough for people to come to class. Get them through their first day, their first status report, and their first major deliverable using the new tool. They’re already going to be frustrated enough that they have to change that much; don’t get greedy. Business travelers need to know how to connect to a wireless network and manage their battery life. End users need to know that they can no longer use USB drives to share files and you need to teach them how you’d like them to do that in the future now that you’ve taken that option away.
As another example, if you are deploying SAP in the same year as you are replacing hardware with a new operating system and a new version of Office, then you would probably use two training vendors, right? But if you are integrating SAP into Excel, Access, and SharePoint, then why not have a class for your SAP users and teach them the new features of Excel while they’re in there? Teaching two separate training classes isn’t helping them put together why you did both implementations this year. Whenever possible, group applications together on the same quote. Seek out a vendor that can do both SAP and Office training together.
And if you’re deploying six new tools in the same year and everyone is affected and none of the software applications are related, then you might want to reconsider. You might not, but realize that it’s going to cost you more than the company is willing to pay in the way of corporate profit and loss and now you’re stuck with no training budget because you came in too high and demanded too much of the company’s time to do it all. At the very least, this exercise allows you to line item each training program. If one gets slashed, you still have enough money to deploy training on other applications. I know it’s hard enough to get approval in an Enterprise to deploy new software that your business desperately needs. That’s why you need to make training count. The free classes that the software vendors offer are great but they are not going to be customized to your complex business scenarios and unique needs. And it only gets worse.
Figure out how many critical business processes are going to change. Whether they are improved or not, teaching users how to do a new process using a new tool is much more complex than teaching them how to do things the same way they’ve always done them using a new tool. And this is where most companies opt out of training. They figure that there isn’t much change between two versions of the same software, so users will pretty much figure it out on their own. The number one reason that I’ve found why companies opted out of Office 2007 was because they felt it was going to cost too much to train users on the new user interface – The Ribbon. Pshh. There’s a 15-minute video out there on Microsoft.com that can do it for free, but whatever. Unfortunately, training vendors really played this up in the hopes of making a bunch of money and it turned into quite a backlash for the entire industry. Companies panicked and didn’t deploy Office 2007 at all. The real losers were the users who missed out for the past three years on some amazing new features designed to help them get their work done faster and with less frustration. The ribbon should have been the least of your worries.
If you are using SharePoint 2007 and Office 2003 – SHAME ON YOU! You robbed your company of the integration between SharePoint and Office 2007 and made it that much harder for your users to adopt the new technology that you did deploy. For the sake of our formula, not rolling out to Office 2007 with SharePoint 2007 will cost you more in the way of complexity. It will take longer to teach users how to work around the lack of integration then it would have been to show them how to use the Ribbon.
This is why some companies opt to bring someone in to do analysis prior to training development. Bring a vendor in to just identify pain points and run skills assessment. This information can then be delivered to all future vendors and will save you from paying everyone you hire to do the same analysis. Make sure that they figure out what it’s going to take to align both the IT vision and the corporate objectives with end user efficiency. They’ll deliver a gap analysis that tells you where your users are based on where you want them to be and they will publish recommendations as to what the company needs to do to get everyone to a baseline of competency.
So, where did we end up?
$42 x .3(employees) x (1 +.3(# of additional tools)) + analysis = training budget for the year
Example: In a company with 10,000 user affected by the introduction of SharePoint and Office 2007 with no other rollouts planned.
[($42 x 3,000) x (1 +.3(2))] + 20% = $196,560
On a proposal, that comes out to about $20/head to train 10,000 employees. So, if you want to skip all of this and you need a number for the scenario above right now. Then, use that one. Just multiply your total number of employees times $20 and be done with it. The good news is that no one ever believes a number that low, so they’ll usually throw in a little extra. Which is good news because…
We did not factor in multiple locations into this equation. Typically, travel is another line item in the budget, and we all know that travel expenses can kill you. For the vendors part, just make sure you get an all-inclusive rate (seriously, who wants to deal with expense reports and receipts from these guys?) and write into the contract that you are not paying for the time it takes the presenter to travel to and from the event. You give them your budget and then agree with them on what they can deliver for that price keeping in mind that the more locations you add, the more likely you will have to go with a larger firm that has local offices. Now, for that price, you’re stuck with canned content (not customized to your business needs), fewer participants because these classes run all day and may even be delivered off-site, as well an inconsistent user experience based on the as fact that you have multiple presenters.
On the other hand, if you go for a highly customized training program, then you need to factor in another $2500 per week for each week that you or someone like you is going to have to spend out on the road. A successful training program means that you don’t send the vendor in to do your dirty work for you. They are just the talent, but you are the one who needs to answer the tough questions from the users and hear firsthand their frustrations and celebrations. I typically suggest delivering the content twice for each off-site facility with 300 or more affected users. You can minimize expense by traveling to multiple cities in one week, so if you have two locations you want to travel to, then estimate two weeks of travel or an additional $5,000. It seems trivial but by the end of the year, most people realize that they didn’t budget enough on this line item.
We also didn't factor in technical training. The only formula I have for this is that you're going to spend as much to train your IT department and support staff on the tools as you spent on your end users. That might sound like an exageration, but you know that I'm right. Any experienced project manager knows to pad whatever number you come up with, so this is as good of an excuse as any to take the results of my formula and double it. See for yourself, I bet this still came in lower than everyone expected.
So, how much is training going to cost this year?
[($37 + catering cost/head) x .3(total # of employees affected) x (1 +.3(# of additional tools)) + analysis + travel] x 2 = training budget for the year
In summary, don't expect to spend less than $20/employee for non-technical level training, and no less than $400/head for your support staff. In this example of 10,000 employees, I've assumed an IT staff of 500 people. Return to the top to go back through the scenario - how many will actually attend, number of tools, and level of complexity plus travel costs... or you can just take my word for it.