Channel Training and Outsourcing
By Mohana Radhakrishnan

Is your company missing out on big benefits?

Over the last five years, outsourcing has proven itself to be an integral part of most corporate training strategies. Recent research from Bersin & Associates finds that approximately 30 percent of all training expenditures go to outside suppliers or consultants. In some sectors, such as business services and government agencies, approximately 80 percent of budget dollars go to third parties.

Almost 60 percent of organizations now use outsourcing for some or all of their custom content development, according to the same research. Besides offering development expertise and resources that many companies just don’t have, outsourcers also offer clients very significant cost savings. Bersin & Associates research shows that the per-hour cost of custom content has dropped by 30 to 50 percent over the last several years.

Cost savings and efficiencies drive companies to outsource other functions, too. Instruction, learning management systems and other technologies, and learner support and help desks, and training administration are other frequently outsourced functions.

But interestingly, most companies have yet to discover the big benefits outsourcing can bring to channel training, which is a particularly challenging area of training for many organizations. Based on the results Expertus has seen with its clients, companies can definitely save money and reduce administrative overhead by outsourcing channel training.

But other benefits are even more important.

Consider that for most companies, channel training is directly tied to revenue, customer satisfaction, customer retention, and service costs. When partners are not trained, their sales fall short and they likely don’t provide the services needed. Business strategy also feels an impact because market penetration and adoption rates for new technologies and products can suffer.

By outsourcing channel training, Expertus clients have increased the training delivered to partners, improved the overall consistency of training, and have gained new insight into training programs.

Most channel training programs have characteristics that pose challenges to any training organization, no matter how it is structured, staffed, or budgeted. Below are just a few of the common problems. (Note: Expertus and TrainingOutsourcing.com conducted a survey on channel training in the fall of 2006. Readers can view detailed findings of this survey here.)

Many stakeholders. Channel programs usually involve multiple internal and external stakeholders. Sales and service organizations can have their own partner programs; programs in different geographic regions often are managed independently.

Budget inefficiencies. Budget constraints were cited as the biggest overall challenge to channel training in Expertus’s 2006 survey. Typically, budget issues are caused by budget inefficiencies, such as duplicate spending and decentralized vendor contract management. One expertus client discovered that it was wasting hundreds of thousands of dollars on partner employees who registered for training but didn’t actually attend.

Lack of control. In a survey conducted by Expertus in 2006, lack of control was cited as one of the biggest challenges to channel training. Companies have little or no control over the priorities and schedules of partners’ employees, which is the target audience of most channel training. Additionally, they often cannot—or do not—control the consistency and quality of training resources across the channel.

Distributed locations. Most channels encompass partner companies in many different geographies, which adds further complexity to the delivery and scheduling of training. Often, training has to be localized for different languages and business cultures— an expensive customization and one that requires specialized resources. Multiple geographies also adds significant time, cost, and resources to managing logistics related to training. Even sending out training materials on a timely basis can be challenging.

Technology. The Expertus survey showed that nearly 70 percent of respondents did not use an LMS for channel training. The survey also showed that for those companies that do use an LMS for channel training, almost half use a different LMS for internal employee training. Companies not using LMSs are likely to struggle with registration and scheduling, class follow up, assessments and evaluations, and even basic reporting. Inconsistently applied technology upgrades and updates, ad hoc customization work, lack of standards, and shortage of skilled resources can turn the technology support of channel training programs into a black hole.

Staffing inefficiencies. Obtaining adequate administrative resources is a constant headache for most responsible for channel training. Turnover and insufficient staff training can make the problem even more painful.

Reporting. Every company Expertus has worked with to date has struggled with reporting and measurements used for channel training. Even when LMSs are in place, most find it difficult or impossible to get the business-focused information needed. In fact, all of the challenges listed in this article play into the problem of reporting—and prevent most companies from obtaining true insight into channel training operations and results.

One Expertus client is a global technology company with thousands of partners—many of which are very small companies—in 13 countries throughout the AsiaPacific region. Adoption rates, sales revenues, and customer satisfaction of the company’s technology products are all linked to the representation of the products by partner employees. When partner employees aren’t well informed or skilled in servicing the products, revenue targets, customer satisfaction rates, and other significant business goals are impacted.

Like many, this company had a natural bias toward training its own sales representatives. Historically, partner training always came as something of an afterthought. It was never given the priority, budget, or attention that employee-focused training initiatives received.

This company experienced all of the challenges outlined earlier, plus several others. Partner employee turnover was fairly high. Some partners had difficulty affording training fees and other costs, most of which was conducted onsite. The productivity of the company’s own sales team was suffering because so much of its time was spent on activities that should have been handled by partners.

The company recognized that it had to make changes in its channel training approach. Its goals were not to cut training-enabled expenses, but rather to increase the efficiency and effectiveness of its partner training, to decrease the skills gaps of partner employees, to increase partner sales, and to raise the productivity of the company’s own salesforce by offloading more responsibility to partners. Additionally, the company wanted to gain better visibility into the partner training program by improving data accuracy, developing meaningful metrics, and streamlining reporting.

One of the first actions in revamping the program was to analyze all processes involved in partner training in order to identify critical paths, redundancies, and duplicate efforts. The process analysis covered:

• planning, scheduling, and conducting training
• supplier contracts and management, review and approval of purchase requests and purchase orders, and budget monitoring
• all logistics, including printing and shipping of materials, shipping of training equipment, remote lab setups, hotel reservations, and class registrations.
• marketing training
• follow-up activities, such as evaluations.

Once the processes had been analyzed, then decisions could be made about how processes needed to be changed and streamlined, what functions could be centralized, and what responsibilities could be outsourced.

Work on the development and implementation of critical metrics was a separate initiative that first involved collaborating with multiple stakeholders to determine the measurements that were most important. Among those identified were: training attendance statistics, utilization rates, incompletes and no shows, and evaluation results. All data needed to be reported by country and technology; comparisons by country and technology were also needed.

Training metrics have long been a pain point for many companies. In fact, a recent Bersin & Associates study pointed out that reporting is one of the biggest areas of dissatisfaction companies have with learning management systems. But, while LMSs have reporting limitations, there are other challenges involved. Data can be inaccurate because of inputting errors, lack of administrator training, or lack of time. Often, data resides in multiple sources, not all of which can be easily integrated with LMSs. Additionally, we often see a lack of consistency in the types of data that’s collected.

By focusing on metrics and resolving the barriers to meaningful reporting, the company gained significant insight into the partner training program that was never before available. For instance, the company discovered it was losing hundreds of thousands of dollars on no shows. By examining training attendance by technology and/or by country, managers could immediately see problem areas and take proactive action. Rather than guessing at scheduling, decisions could be made based on actual fact.

Bottom line

Companies make significant investments in channel training. The Expertus survey found that 25.8 percent of companies with more than 5,000 employees plan on spending more than $500,000 on channel training in the next 12 months, and 53.1 percent of these companies plan on spending more than $100,000 in the next year. Outsourcing can help maximize these investments by bringing an objective perspective, multi-cultural experience, and technology expertise to the challenges at hand.

But increasing the effectiveness and efficiency of channel training shouldn’t be a goal only for very large companies. In fact, the Expertus survey found that small to mid-sized companies actually place more importance on channel training than large companies—likely because they are more reliant on partners for sales and service.

Our advice is not to limit your thinking when it comes to outsourcing. Otherwise, you might be short-changing your company on an important aspect of its training.