The IT skills shortage has been caused only partly by proliferating demand for staff in key sectors. The reluctance of companies, particularly smaller ones, to train people - rather than recruiting - has also contributed to the lack of skills. But now there are signs of a trend towards more home-growing of skills rather than relying on the permanent recruitment and contract markets to get the right people.
This change of attitude by some organisations is not so much motivated by any desire to contribute to the common good by increasing the overall pool of skills, but because it is now possible to justify the cost of training. It can be justified not only because of the high cost of relying on contractors for scarce skills, but also by improved morale, staff retention and productivity.
Avoiding the high cost of contracting motivated First Tele-com, an emerging telecoms provider, to start training its own staff in Microsoft and related skills, with courses provided by Peregrine. "We were buying in contract staff to provide short-term fixes for the lack of skills on-site in Microsoft, SQL, Visual FoxPro and also in the Unix side," says First Telecom's group IT director Neminder Matharu.
"Costs were high and it leaves you exposed in the long term." Matharu reckons that staff costs have been cut by a third in the areas where training is given.
There is fast growing interest in tools and methodologies that attempt to measure the return on investment (ROI) from training, both through direct staff savings and indirect business benefits. Although these may be crude and inaccurate, they do at least provide a tool for justifying the cost of training, and for tailoring courses to the needs of staff. This is giving a boost to training and increasing its profile at board level. Historically, training, alongside advertising, has been first in line for a budget cut during lean times.
The other factor contributing to a growth in in-house training is the rapid development of Web-based courses under the banner of e-learning, which can cut costs and also bring a number of advantages over the traditional classroom-based approach. But e-learning should not be regarded as a panacea, as Hewlett Packard's European general manager for education, Phil Lawman, points out.
"Too many companies are driving learning programmes by cost rather than ROI," says Lawman. "Our point is that if you want to save money, go online, but you will not necessarily get the best ROI". One danger of online training is it can be too passive and without sufficient interaction, meaning that staff fail to concentrate as well as in a classroom.
Xerox has made a major switch to online training and has already derived significant benefits, even though the classroom approach is still preferred for some technical and managerial training involving interaction or role playing.
Online training scores in several ways. Classroom-based training brings a high ongoing cost, whether a company maintains an in-house facility or uses external courses. This can be reduced substantially by a switch to e-learning. Money is also saved by avoiding giving staff time off to travel to courses and give up several days at a time that would otherwise be spent on productive tasks. E-learning is also more flexible, allowing people to take courses at their own convenience. Training can administered as a drip-feed on demand, almost like an extension to online help. With skills needing to be updated at a frenetic pace, it is easier to provide new mini courses online as and when required rather than continually dragging staff into a classroom.
E-learning also makes it easier for a large organisation to make its courses consistent and avoid contradictory messages being given. An online course can equally well be disseminated to 10,000 people as to a classroom group. Furthermore, by virtue of being online, the progress of people taking a course can be assessed more readily, helping to measure the value of training.
"Being online, you can provide software to record who's using our courses, how long they're spending in them, who's completing the course versus who's dropping out, and what kind of test results they're getting afterwards," says Paul Henry, international vice president at SmartForce, a provider of Web-based training packages.
Web-based training, though, has downsides, not least of which is that many of the packages are not much good, and while some purport to emulate the "real world" through virtual reality, the simulations are often poor. Some make no attempt even to simulate the real world, according to Paul Butler, managing director of IT training company KnowledgePool. "There are lots of start-ups who say they're in the e-learning business, but all they provide is an HTML-based book reading service," says Butler scathingly.
On the other hand, the best e-learning services are getting to grips with the more fundamental weakness of online-based training, which is the lack of interaction of students with each other and with their tutor.
The concept of the virtual classroom has been coined to describe Web-based systems that allow online interaction with tutors, either live, or via e-mail communication with some delay. There is also the possibility of combining the Web with interactive TV, but this is too expensive an option for many enterprises, although it has been adopted by Xerox.
It is also possible to incorporate some of the advantages of TV in Web-based packages, which some suppliers are beginning to do. "I think the Internet provides a better more cost effective way of offering the benefits of video-based training," says Steve Deneen, managing partner of the consultancy and training company Fuel. "Companies like us are taking video-based training and converting it into Web-based training with animation and streaming audio," says Deneen.
Apart from the role of e-learning, the other big issue is how to measure ROI and justify the cost of training. Some, such as Microsoft's UK education manager Clare Curtis, still believe the need for IT training is self evident in many cases, such as when implementing a new project. "I would say training for every IT project should be mandatory and you shouldn't have to justify it," says Curtis.
But as at Xerox, for example, training managers are now having to justify their budgets. Indeed Microsoft itself has published the results of research it conducted with IDC into the benefits of training.
"We were looking at the difference between individuals who were certified in Microsoft qualifications (such as MCSE) and those who weren't," said Curtis. "The research did show some significant savings in computer failure, which was cut by more than 50% when someone who was qualified was in charge."
Such research results should be treated with caution, as other factors could have contributed to the reduced failure rate, such as the fact that qualified staff have more experience. This may be more significant than that they happen to have taken the Microsoft courses.
There are, however, serious attempts being made to assess whether training has a direct business payback. The Kirkpatrick model, used by both Xerox and Stream, has evolved as a standard way of obtaining feedback about the business value of training.
This model is divided into four components, firstly to assess how candidates got on with the course, secondly to test the knowledge gained, thirdly to determine how the courses altered staff behaviour within their job roles, and fourthly to establish some measure of whether they are doing their job better. Each successive level is harder than the last to assess. As already noted, e-learning can help with the first two, but the hard nut to crack is the last one of real business benefit. That is where the focus in training research now lies.
Case study: Xerox
Xerox is making a big shift to e-learning and virtual classroom-based courses for all its in-house training including IT, although the company's director of education and learning for Europe, Graeme Cree, admits this is has proving to be a culture shock for some people. "The response by staff varies both by age and what area of the company they work in," says Cree. Conventional classroom-based training is being retained for courses involving role playing or significant amounts of hands-on with expensive equipment, although often allied with Web-based content. "We aim to have a 50/50 split between classroom-based training and e-learning by next year," says Cree.
Xerox is also using interactive TV, sometimes backed up by the Internet, to deliver courses across multiple sites, avoiding the need for staff to travel. "This allows us to get at a large audience with a very consistent set of messages and no variation in deployment in a short space of time," says Cree. This is quicker than traditional classroom-based training where instructors can only teach a small number of people at a time. "Instead of taking six weeks to train people on a new product, we can do it in six days and get five weeks more productivity," says Cree.
Xerox uses the Kirkpatrick model (see main article) in an attempt to measure the benefit of training, which is essential given the ongoing battle with other departments for budgets. The tough one to measure, as Cree admits, is business benefit, measured in terms of factors such as increased productivity, and reduced turnover of staff leading to lower recruitment costs.
Stream International is a global provider of high end technical support, working for a number of major suppliers of PCs and small business systems on an outsourcing basis.
Its 7,000 staff have to cover a broad spread of skills, given the wide range of PC kit such as scanners, digital cameras and so on that might be included in a given installation, as well as software.
The company embarked on a drastic move to improve its level of service and at the same time reduce staff turnover by setting up its own internal training centre called Stream University. The company's training manager Paul Duddy says this has already scored a direct hit for the business by helping to retain existing clients and gain new ones.
The Kirkpatrick model has been used to assess the benefits, and attrition rates of staff fell in the first year, from 37% in 1998 to 28.5% in 1999. The ultimate goal is to retain staff for an average of three years, which is good by the standards of IT technical support and field service.
The company is less enthusiastic than some about e-learning, with Duddy concerned that staff treat it casually and fail to acquire skills as quickly that way. "You're competing for someone's leisure time, and that's a difficult challenge when doing computer-based training," says Duddy.
The nature of the training may have something to do with the lack of enthusiasm for e-learning, given the need to train engineers rigorously and quickly to provide support for new pieces of kit or software.
How much do companies spend on IT training?
The answer to this question is that nobody knows, and there are, in any case, huge variations both between industry sectors and individual enterprises.
There are signs of an increase in IT training budgets as it becomes harder and more expensive to recruit people with the required skills or obtain them on the contract market. It generally costs between £20,000 to £30,000 to recruit a relatively junior member of IT staff, and companies are realising they can buy a lot of training for that, assuming the staff are of sufficient calibre. Indeed by training in-house, it becomes possible to re-focus the recruitment effort on hiring people with potential, rather than just those with the skills needed at that time.