The warehouse manager looked at the bid proposal and saw that the hardware and software for an inventory tracking system would cost $3,000. The price seemed reasonable. However, he questioned the additional $800 dollars that was being charged to train his employees on the new system. After all, the training cost was more than 25% of the cost of the system. "I would have to be out of my mind to pay that much for training on a $3,000 system," the manager thought to himself.
"Companies tend to look at the cost of training separately from the rest of the package, but there are really two costs associated with training. The first is the cost of having training and the second is the cost of not having training. Usually the cost of having training is a bargain compared to the cost of what occurs without training," states Steve Terry, vice president of systems at Austin, TX-based Data Recognition. The automatic identification and data collection VAR reported gross revenues of $14 million in 1997.
Look For Training Costs In The Proposal
If you are receiving training on a new system installation, you can be assured the cost of training is built into the original proposal. Training will either be listed as a separate line item in the proposal or included as part of the overall cost of the system.
Lynne Leahy of Leahy Associates recommends training be listed as a specific line item. Her consulting firm, located in San Carlos, CA, specializes in document and image management (through the use of a scanner, converting paper documents to electronic pictures that can be stored and accessed on a network) training for companies that have installed a new system. "The line item should include the cost of the training and a detailed plan should be appended as to how the contracted company will train the employees. Training should be treated as one part of the entire project plan," states Leahy.
If a price for training is not listed in the proposal, that does not mean the integrator is not charging for it. Some end users believe that if training is not listed in the proposal, then it must be free. This is not the case according to Barry Duppstadt, vice president of marketing at Progressive Software, Inc., located in Charlotte, NC. His company recorded $25 million in revenues in 1997 installing POS (point of sale) systems (combining cash registers, optical scanners for reading bar codes, and magnetic stripe readers for credit cards to capture data at the place of sale) for restaurants. Duppstadt warns his customers to be leery of "free training." "When end users tell me that one of my competitors is not charging for training, I tell them that it will surely be built into the cost of the hardware and software," states Duppstadt.
Training The Trainers
One of the most effective training methods is to have the contracted company which installed the system meet with several members of a business' IT (information technology) staff. The integrator can train the IT staff on the new system and then the IT personnel can train other employees at the company. This method of "training the trainers" works especially well in large installations.
This proved to be the case when a large pharmaceutical company installed a new document and image management system. The company had previously stored all of its documents in file cabinets, but under the new system documents were scanned and stored on CDs. Employees could now retrieve electronic versions of files from the PC at their desktop. "This was an enormous change for the employees and the training would have to be effective for the new system to work," states Lynne Leahy of Leahy Associates, whose firm did the training for the pharmaceutical company. She asked the company to select 20 members of the IT staff to receive intensive training on the new system. These 20 employees then acted as the trainers for the rest of the company employees. For example, several members of the IT staff met with customer service representatives to show them how to access information using the new system.
Who Should Train?
When companies choose this method, it is important to select employees who can adequately carry out their training responsibility. Members of the IT staff are usually preferable to nontechnical employees, according to Barry Duppstadt of Progressive Software, Inc. His company has had some unsuccessful experiences with training non-technical personnel.
A large restaurant chain contacted Duppstadt to install 100 POS systems in a four-week period. Because the chain did not have enough IT personnel to train at every location, Progressive Software was asked to train the restaurant chain's 17 district managers instead. Each of these managers was in charge of about five restaurants in a particular territory. The managers were flown to the software company's headquarters in Charlotte, NC, where 17 individual systems were set up for training. All of the district managers went through a three-day training course. At the end of the course, the district managers returned to their territories and waited for the installations to take place. Over the next four weeks, new systems were installed at each of the restaurants in the chain. "By the time the district managers had to train the employees, the managers had forgotten a lot of what we taught them. They had returned to their day-to-day responsibilities of running the restaurants. Clearly, they had forgotten much of their training," states Duppstadt. As each new system was installed, the district managers contacted Progressive Software to answer their questions. "Our help desk was swamped with phone calls from the district managers for about a two-month period," states Duppstadt.
Opt For On-Site Training
The most effective training is done on-site, according to Steve Terry of Data Recognition. On-site training with a new system ensures that the instruction will be customized to meet the needs of the employees. For example, there may be a feature of a software program that does not apply to the company which had the program installed. In that case, the integrator would not spend a lot of time discussing that feature. "In the case of training classes that are held off-site, the instruction will not be one-on-one. Most of the time, much of the instruction is not directly related to what your company is trying to do."
Progressive Software also prefers to train on-site. In a recent installation for a chain of restaurants in Texas, the company dedicated five days to training. The integrator met with IT personnel, restaurant managers, and servers for three days. "We required that the IT personnel be present for all three days of training. The managers had to come for two days and every server had to attend one full day of training," states Duppstadt. After three days of training, the system was used for the first time. The integrator oversaw the first two days of operation at the restaurant to make sure the employees were using the system correctly. "In the POS industry, any integrator worth his salt will be on-site for at least two days once the system is in use. Remaining on-site insures the system is running properly and reduces calls to our help desk," states Duppstadt.
Giving Employees What They Need
Before training employees, a company must decide how much an employee needs to know about a new system. A typical POS restaurant installation involves two parts. The first is a POS station where servers can record a sale. The second is a back-office application where a manager can monitor inventory, personnel, and sales. In this case, a restaurant manager would have to know both parts of the system, while the servers would only need to know how to use the POS station.
In the case of a new document and image management system, Leahy believes that a broader approach is required. Replacing traditional paper document filing methods with a document and image management system is an example of what she calls a "culturally changing event." In this case, employees would be responsible for scanning paper documents and storing the images electronically. Leahy believes employees need training which addresses more than how to operate the scanner. "Employees need to have an understanding of the whole system and why their job is important. People scanning papers should know that these documents will be accessed when important decisions are made. Employees then realize their jobs are important and they are an asset to the company," states Leahy. She claims that training employees as team members will increase morale and lead to better productivity.
Receiving Return On Investment
A company will
receive little if any return on investment (ROI) for training, per se. The big return for investing in training comes from having a new system that is implemented successfully. The ROI that is quoted for a new system usually assumes a successful training program following the installation.
A company which spends $250,000 on a new document and image management system may have to spend an additional $50,000 on employee training, according to Leahy. She says the company should think of the total investment in the system as $300,000. A company should base its ROI on that $300,000 figure. "Not investing in training is short-sighted," states Leahy. "By trying to save money in training costs, the company will probably not realize the ROI it expected from the system."