Five years ago, Henry Stewart, unconventional managing director of 30-strong IT training firm Happy Computers, didn't have to worry about his competition. "Frankly, much of it was a bit naff, but that has changed," he says. "It really focuses you when a rival rings all your clients to offer them free training."
Competition from large, established US training companies such as ARIS and New Horizons is changing the carefree, small business world of IT training for good. Happy Computers - where hierarchies are banned, job titles discouraged and Jaffa cakes are free - could once afford to focus on the hiring of the bouncy castle for its annual staff meeting. Now it has to look at fresh ways to deliver its service - Stewart wants computer-based training (CBT) to be half of his business in five years - and whether it can continue to survive on a word of mouth business strategy. "Competition has suddenly become more intense," he admits.
Yet there is still a market for small training companies such as Happy Computers, which has an annual turnover of more than £1m. Its client list includes high profile names such as the global human rights group Amnesty International and the Cabinet Office.
Among the training community, the popular consensus is that while the past 18 months have seen many small training companies bought out or fold, the demand in the market means there is room for everyone, for now at least. Research company IDC, for example, predicts that the European training market will grow by 10 per cent each year, and by 2002, will be worth £5.2bn. That equates to a lot of Happy Computers, and even quite a few New Horizons.
Although the market is changing, the same cannot be said for the strategies that many of the smaller training companies use, according to Philippa Maher, training director at reseller First Stop. "Our firm wins much of its business through day-to-day account management. Many of the accounts come from the bigger companies. It's hard, but it's what the company does - nothing else but to provide training. And if an account is lost through carelessness, it becomes much harder to get another one to replace it."
First Stop's big accounts include Chanel, Direct Line and Vodafone - each one a large company that might be expected to look for an approach more in tune with the 21st century - such as CBT, for example. Not so, says Maher.
"I hear about clients that want to introduce CBT, and I think, Oh no, it's never as successful as instructor-led training. We always go back to the old-fashioned methods. First Stop deals with some big companies, but some don't even have email yet," she complains.
Julie Hunter, training and vendor manager at Ilion Faculty, says the training company is similarly sticking to its well-tested approach. "Ilion has a loyal band of customers that rely on us. I was talking to one of my trainees last week and I asked him why he was coming back on one of the courses. He said it was because I was talking to him, and that I knew his name."
Ilion is committed to innovation, but Hunter isn't predicting a revolution.
She says: "I would like £5 for every time I have been told that instructor-led training will disappear. I have heard it several times before, but there will always be a requirement for that kind of approach - although Ilion will have other elements."
The company aims to focus on its core business, which is skills training for professionals. Rather than change the way it delivers training, Ilion's priority is to be able to justify the money organisations spend on training.
"Companies are looking to see what is their ROI from training. Previously, they would not look at it in that way, so we are asked to provide training and they want a decrease in downtime of 20 per cent as a result. It's not just a case of running the course in the right location," Hunter adds.
Ian Stone, commercial manager at training company SHX, is also focusing on niche sectors. He aims to provide Microsoft skills with a real-world slant. "The focus with our instructor-led training is on war stories. Our consultants aren't just good trainers, they're out there working on real projects."
This has led to some very intensive courses, such as Accelerated Exchange 5.5. "Nobody turns up late, and nobody leaves early from the 5.5 course," says Stone.
However, he has yet to feel the impact of competition from rival multinational training organisations, despite running courses in Europe as well as the UK. "A small company can often respond better than a big one because many companies have various departments and many different skillsets within each unit. But no one asks about issues such as centralised billing for training," he adds.
Not everyone is as confident that the status quo will last. Janice Brown, managing director of 50-strong Trainers Ltd, which has been providing both technical and user training since 1984, believes the answer is to merge. Six months ago, she saw that her best chance of success was as part of a large firm. Trainers Ltd is now a subsidiary of Highams Systems Services Group.
"It became so competitive that Trainers couldn't increase its portfolio and retain margin. Now we feel more comfortable as part of a large group as we have the support for large projects," she explains.
According to Brown, the allure of small training companies for large customers will quickly fade. She is certain that being part of Highams helps Trainers to retain its accounts with IBM, Motorola and Cap Gemini among others. "These are household names, but what is Trainers? To put it frankly, the company wouldn't have been able to play ball with the big boys."
Simon Maskrey, education services sales and marketing manager at Sun Microsystems, also sees a host of fresh challenges for training companies that smaller rivals will struggle to meet. "Delivery has changed dramatically.
The lion's share is still instructor-led. But if people only provide instructor-led training, they are only addressing part of the demand in the market.
"People with an established set of skills do not want chunks of skills training to be thrown at them - they want short modules and the chance to learn out of hours, at their desk or at home. They want to be self sufficient," he says.
Maskrey believes that if large organisations begin to treat training as a strategic part of the business rather than an afterthought, they will become more demanding of the manner in which that training is provided.
"The days when it was possible to have an off-the-shelf training scheme are long gone. You have to mix various ways of training, and the content of the course. That's very different from how it was 10 years ago," he says.
Two services for which Maskrey highlights a strong demand are mentoring - where a trainer will oversee the trainee in a live project situation - and floorwalking, where the trainer is constantly available at work.
But, as might be expected of someone whose job is to deliver Java training to thousands, he believes the biggest impact will come from custom-built CBT packages.
He says: "Java technology opens up areas of innovation. It has provided for us the tools that we need to deliver training." The training package includes CD-Rom and intranet courses.
Paul Trendall, marketing director of US multi-site trainer ARIS, goes even further. He refers to training in the future as being a holistic education service, but he is not referring to the type of therapies familiar to Happy Computers. Instead, ARIS sells training as part of an all-round performance improvement service.
"It highlights the need for a change of focus from learning as output, to performance improvement as output - recognising the need to achieve business objectives rather than learning for the sake of learning. It is a process, rather than a sequence of events," he explains.
Instead of asking for what packages a company wants to train its employees, ARIS listens to what it is trying to accomplish, and then monitors where those skills are lacking, using its own web-based tool. Trendall claims: "A gap analysis allows IT training to be targeted with pinpoint accuracy and cost-effectively. It's highly targeted, so this is where money can be saved."
Training can then take place in whatever way suits the needs - whether it is online, in a classroom, one-to-one or mixed. What matters is reaching a pre-determined goal in business efficiency - not simply the number of people who have passed on a course.
An alternative exists, says Trendall. "There is still a good living to be made from scheduled, public training as long as the revenue is spread over a lean cost base. That favours the single-minded."
Survival for small IT training companies may be through enthusiastic account management. It may come from targeting niche skills, or it may even come from attaching a company to a much bigger vendor. But in the present climate, it will not come from selling the same courses at the low prices the entrants to the UK market are charging.
"Every training company has losses, but have too many and they will lose themselves," says Brown.
If there is any good news for the training firms, it is that those companies that have made it through the past 12 months must be doing something right.
As Hunter puts it: "In the UK, there has been a vast consolidation in the past year. The bottom line is that we now have fewer competitors."
INNOVATION TURNS THE FORM BOOK UPSIDE DOWN
The idea that a small training company can survive without changing the way it offers its services, horrifies Linda Craney, director of Prometheus.
"Heavens. A company doesn't want to change? That just spells extinction to me," she says.
Craney describes Prometheus as the KD Lang of computer training. Hard to categorise, not quite country, not quite rock and roll. "We specialise in non-classroom training for people who won't go to a class." Prometheus' customers - including the BBC, financial giant Dresdner Kleinwort Benson and American Express, receive one-to-one training over the internet, which allows the trainer to train at exactly the right level of sophistication, but without either party having to travel. "The key is innovation. People can work hard, or they can work smart. Individual tuition is an ancient idea. What's special is the way we use the internet to deliver it. We find people and discover they don't know how to access a menu or highlight text," says Craney.
Because the training is individual, it can also be focused on specific needs. For example, Prometheus helps BBC employees publish their documents internally - and the training goes well beyond basic Frontpage skills.
Craney explains: "We are covering questions such as, 'What do you have to say that interests other people?' All sorts of dull subjects become very interesting."
One certainty is that Prometheus won't be building a classroom in the future. Craney is staking her company's future on the assumption that instructor-led classes will eventually become a historical curiosity.
"I certainly hope so, as does my bank manager," she says.
"But I really believe that change in inevitable. It really makes me laugh when I see all those adverts that urge people to look at gleaming training centres. When was the last time you learned anything in a classroom environment? And when would you want to do that again?"
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