Training is a major revenue-generating service for many dealers.
Its big margins make it highly lucrative, and it is often the first service which is unbundled as a dealer moves from being a basic volume reseller to a Var.
But training can be a complex and expensive service to provide, especially if it is to be of real value to the customer. One alternative is to outsource training services to a third party. Your margins may be reduced but overall you will be far better off.
You will save all the costs associated with setting up and running the training facilities, which are not inconsiderable. Then there are the staff recruitment costs, which, if you are going to get the specialists you need, is expensive and means having highly paid people only being properly used some of the time.
There are also organisational headaches associated with running a training arm. All these can be eliminated at a stroke by using another company's training services and charging a percentage of their fees.
There are several options. First there are the specialist training third parties that do nothing else and will either work direct with a client or anonymously, so the client thinks they are part of your business. Second, there are distributors that want to add value and are keen to provide training facilities for the reseller community. Third, there are the vendors which, like the distributors, are feeling the product-margin pinch and recognise that training offers good returns if the facilities are kept busy.
The main reason it makes little sense for most resellers to set up their own training resources is that although training can be extremely lucrative, a facility needs to be used regularly if it is to deliver best returns.
Few resellers are able to keep their training facilities busy 100 per cent of the time, which is why many resellers that have gone to the time and trouble of setting up expensive training facilities quickly turn to making them available to other resellers as well as their own customers.
In fact, many specialist training companies started out as dealers, but end up specialising in training because of the need to find more business to keep trainers occupied and training stations busy.
Origin is a training provider which offers a broad range of added-value services, including systems management, integration and all the other Var services to its user customer base. Training manager Rob Thorley says Origin's other consultancy activities provide its resolution to the problem of having highly skilled staff which are not used all the time for training.
'Our specialist training staff are consultants most of the time and are only expected to train occasionally,' he says.
Thorley says Origin has a core of training experts that give regular sessions in PC use and Lotus Notes, but the company uses highly skilled consultants for Sap or BAAN training. 'There is not enough demand to keep those specialists busy, so they mainly work as integration and consultancy specialists.'
Another benefit of using consultancy staff for training is that their real cost is far below the market rate for specialist trainers, says Thorley.
Resellers wanting to provide their own training would be advised to follow the Origin model of keeping a core staff that understands the software most in demand and then pulling in experts for highly specialised training.
Origin benefits because it has the experts on its payroll all the time and does not have to pay top rate fees by the day. Thorley says: 'Many of our customers are global companies wanting specific training at specific locations, so we need a high level of flexibility. Few resellers would be geared up to deliver training like that, which is why many outsource their training to us and we represent them to the client.'
He says Origin will either quote a rate to the client and reseller, and offer a discount to the reseller, or quote a price for the trainer and then allow the reseller to put in as many delegates as it wants. 'Quite a few do that,' he says, 'but all the resellers make a lot of money out of using our services. And of course they don't have any of the costs or problems that are usually associated with providing training services.'
Peter Gee, business development manager of Bytech, says, somewhat predictably, that a distributor is the best source of outsourced training, despite the fact most distributors are rooted at one location and their customers may be scattered across the country. The main reason for their suitability is that they understand the requirements of the channel and are geared up to working with resellers and Vars.
'We currently only have one location at Bracknell, but we are looking at expanding. We may use another alternative like using other training establishments,' he says. It is not unrealistic to imagine a network of subcontractors right across the country, each filling each others' seats with local clients.
Using third parties to satisfy training requirements is a practical solution to the problem of having facilities which are convenient for every customer.
Another way is to provide training at the client's facilities. Many resellers take this route as it removes the need for premises.
'It can be very difficult to get some customers into classrooms at all, even though the most effective training is often that which is carried out well away from the distractions of the ordinary working day. Most managers, especially senior ones, want to be trained in their own offices and it can be very hard to get them to stop taking calls or dealing with routine demands,' says Thorley.
Many managers also expect their training to be highly tailored, he says.
'While there is a need for a basic set of scheduled training courses on basic programs or techniques, most of the training and the more lucrative, highly specialised training is done on an ad hoc bespoke basis. It would be unrealistic for most resellers to be expected to be able to provide that kind of training, so it makes sense to use training specialists like Origin.'
According to David Smith, channel sales and marketing manager at Microsoft, users are tending to want a single point of supply for all their IT requirements, including training. 'A couple of years ago we were seeing more user companies and IT managers wanting to make their own training arrangements, but now they want it as part of the package.' He says this makes it even more crucial for every reseller to have the right network of third parties so it can provide top-level training.
Microsoft does not provide any training itself, but Smith says the company sees the crucial importance of training services to the channel and to users. 'The most important thing is that Microsoft recognises that almost every environment is mixed and trainers need to have a knowledge of more than one product, not just MS products.'
He says the firm is aware of the criticism that it takes a blinkered approach and wants the whole world to have a Microsoft view, but he says multi-product and multi-environment expertise is crucial. 'It is crucial that a reseller offering training is able to provide a very broad range of skills and and can draw on a huge pool of expertise.
'That is why is makes more sense for a reseller to draw on other specialist third parties rather than try to deliver all the training itself from its own resources.
'Microsoft has encouraged dealers to unbundle training for a long time,' he says. 'It is something that the mid-systems channel has been doing all along, but for some reason at the PC end the resellers feel more obliged to include training as part of the bundle.'
Microsoft regards training as extremely high value, and has invested in channel training programmes. 'We pass on leads for training from our customers to the channel, so we have to be sure that there is a sufficient number of resellers with a high level of skills,' says Smith.
To make sure the channel has the skills users want, the firm has recently launched Net Results, a channel training programme that offers online, computer-based weekend training. 'The opportunity to go on weekend training courses appeals to resellers,' says Smith.
MS has a network of high-level training centres throughout the country, which smaller dealers can send their customers to and charge a margin on the cost. 'We also offer individual accreditation to individual reseller employees so that a smaller reseller can at least have some formalised skills in-house. Then they need only call on specialist expertise on an ad hoc basis,' Smith says.
The perception that training is a useful revenue earner on top of a product sale diminishes the importance of training and the amount of specialisation it demands. It is an attitude Robin Adda, MD of Barefoot Training, is quick to dismiss. 'Those that think selling training is like selling products are underestimating it.
'There are many resellers I know that are missing a big opportunity to earn revenue from training either because they don't bother to offer any training, or try to deliver it themselves. There is nothing worse than a reseller that tries and fails. It lets them down and it lets the customer down,' he says.
According to Adda, it takes different skills and an alternative approach to sell training properly. 'Those resellers that try to move sales consultants into doing a bit of training when necessary are not doing their staff or their customers any favours. The only way resellers should be delivering training is through specialist third parties that have the right expertise and facilities.'
He says resellers can pick up healthy revenue simply by passing on business to training specialists, without the headache of setting up themselves.
'It costs a fortune to start up from scratch. Any reseller that tries to make their facilities double up with other departments will end up with trouble.' The cost of keeping the trainers up to date can, in itself, be prohibitive for a small or medium-sized reseller, says Adda. 'You can't use a demo room for training or a technical consultant as a trainer.
The culture gap is too big. It just doesn't work.'
Companies like Barefoot will help a reseller sell its training courses, so everyone benefits. 'Resellers that have realised training is not a simple sell are earning more from training services than those that are still turning customers away because they haven't got the facilities or contacts. They should wise up and make the right partnerships now.'
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