The 2016 Industry Training Report was released at the end of 2016. Published for over 35 years, the Report is recognized as a trusted source of data on the training industry. In this article, I will discuss the highlights of the Report that are specific to the eLearning industry and share some thoughts on what those points mean to eLearning developers.
2016 Industry Training Report – Implications for the eLearning Industry
The 2016 Training Report
The Industry Training Report is based on a study that was conducted in the U.S. The study represents a cross section of small, medium and large organizations over a broad range of businesses and services.
For eLearning developers, the highlights of this report are the data concerning:
- Training expenditures
- Training expenditures 2011 to 2016
- Intended training products and services purchases for 2017
- Training budgets
- Budget changes by industry
- Budget increases and decreases and reasons for those changes
- Projected 2017 funding for training (by learning area)
- Training delivery
- Preferred methods of training (by company size)
- Online methods used by types of training
- Learning technologies currently in use
- Training outsourcing
- Current extent of outsourcing
- Projected extent of outsourcing for 2017
1. Training Expenditures
1. Total 2016 Training Expenditures
It seems to be a rule that training expenditures follow the economy. When the economy is booming, there’s lots of money for training. When the economy slumps, training expenditures are among the first cuts that business make.
Across all of the types of organizations represented in the Report, training expenditures were pretty much unchanged in 2016 compared to the previous year with an average increase of only .05%.
- Of the large organizations (10,000 or more employees) the manufacturing and distributing sector, the US government / military, and the services sector spent the most on training. The average expenditure for large companies is US$14,282,589.
- Mid-sized organizations (1,000 to 9,999 employees) spent an average of US$1,368,788.00 with the biggest spenders being organizations in the manufacturing and distributing, service sectors, and associations.
- Of the small organizations (100 to 999 employees) surveyed, non-profit organizations, educational services and associations spent the most on training in 2016. Small companies have the smallest annual budget, with US$376,251.
What this means to eLearning developers is that they can expect 2017 to be a year of modest increase in new business as there is not much new money up for grabs. So, continue to hunt for new business, but keep your current clients happy!
Page 3 of the Industry Training Report provides a more detailed breakdown of 2016 training expenditures by organization type and size.
2. Intended Training Products and Services Purchases For 2017
For those of us in the eLearning development and delivery business, this is where the Report starts to get interesting. What are clients looking for? What do they want to buy?
The chart on page 4 of the Report has some interesting implications for the eLearning industry. The top 5 training products and services intended to be purchased are respectively:
- Learning management systems (LMS) represent 40% of the training products that some organizations will purchase. These systems can be simple in operation but limited in functionality or they can be very robust and offer a complex suite of functions designed to create a “virtual college”.
- Online learning tools and systems
- Web 2.0
- Authoring tools/Systems
- Content development
Other anticipated purchases of interest to eLearning developers include certification, classroom tools and mobile learning.
2. Training Budget
The training budget is where a learning developer’s bread and butter comes from. Next to the question, “What does the client want to buy?” is the question, “How much have they got to spend?”. Let’s have a look.
1. Training Budget Increases and Decreases and Reasons for Those Changes
Training budget increases were attributed to:
- Increased training program scope (including increasing the number of trainers),
- Increased learner numbers, and
- New technology and / or equipment purchases
It is interesting to note that small organizations showed fewer training budget decreases than mid-size and large organizations (8% as opposed to 16% and 18% respectively) and more increases than large organizations (38% versus 23%). Most budget increases were less than 16% over 2015 budgets.
On the negative side, 33% of US Government / Military organizations and 13% of manufacturing and distribution organizations reported a decrease in training budgets, representing a significant loss in potential revenue for eLearning developers.
The main reason cited for budget decrease was that budget was adjusted to reflect lower costs. The other reasons were:
- Reduced training staff (21% vs. 31% last year)
- Other (37% vs. 30% last year) including acquisition costs, legislative cuts, new director does not see the importance.
- Attended fewer outside learning events (23% vs. 13% last year)
- Decreased scope of training (20% vs. 19% last year)
2. Projected 2017 Funding for Training (By Learning Area)
The Report’s Budget section also includes a section on projected funding for learning areas for 2017 (see page 10 of the Report). While all areas listed have potential for eLearning development, it is the “onboarding” category that may be most encouraging as it points to a continued demand for eLearning.
Page 11 of the report indicates that 66% of onboarding-style training was delivered using a few, some online or mostly online delivery methods. Only 4% of this type of training was delivered entirely online.
Overall budget projections for onboarding were that 24% of respondents anticipate an increase in budget while 64% will maintain their budgets at 2016 levels.
3. Training Delivery
1. Training Delivery Methods
|Delivery Method||Reported % of hours delivered 2015||Reported % of hours delivered 2016||Difference +/- %|
|Instructor-lead classroom session||46%||41%||-5%|
|Online or computer-based learning||26.40%||30.40%||4%|
|Virtual classroom / webcast||16%||16.40%||0.40%|
As you can see, 41% of training hours are still classroom-based, down from the 46% reported last year. At the same time, online or computer-based delivery is gaining importance, with a 4% increase since 2015.
While small and mid-sized companies depended more on classroom instruction, it was the larger organizations that reported greater use of online learning. Blended learning percentages were relatively consistent across the range of reporting organizations, ranging from 24.4% for large companies to 32.1% for smaller firms.
2. Online Methods Used by Types of Training
The Industry Training Report looked at the frequency with which certain types of training were delivered online. For most of types of training, the highest percentages overall were in the “A few online programs” and “Some online programs” categories.
Mandatory or compliance training was more often delivered online with 81% of reporting organizations delivering some of it on line and 31% doing it entirely online. Online sales training delivery was reported at 80% in 2016 – an increase of 16% over the previous year. Increases were also seen in online delivery of desktop application training and IT / systems application training.
4. Learning Technologies Currently in Use
Learning technology use also showed an increase, most notably in LMS usage and virtual classroom/Webcasting/video broadcasting. The most used learning technologies are:
- Learning Management Systems (LMS) followed by virtual classroom/Webcasting/video broadcasting with respectively 74% and 73% of use.
- Rapid eLearning Tools (PowerPoint Conversion tool), especially for mid-sized and large organizations, but somewhat less popular among small companies.
- Application simulation tools
A breakdown of technology usage by company size is available on page 12 of the Report.
5. Training Outsourcing
Outsourcing of training declined slightly in 2016. 81% of the responding organizations said that they expect their levels of outsourcing for 2017 to remain the same as it was last year. The table below summarizes the use of outsourcing for 2017 and the projected use for 2017 by outsourced area.
|Area Outsourced||Reported Use of Outsourcing for 2016||Projected Use of Outsourcing for 2017|
|Instruction / Facilitation||44% of all respondents do not outsource. 52% outsource some of their instructional requirements while only 4% mostly or completely hire outside facilitation services.||35% of respondents reported that this function isnt or wont be outsourced. 48% said that the level of outsourcing would remain the same, while only 7% said that they would increase outsourcing of facilitation.|
|LMS Administration||83% of respondents do not outsource this function.||53% of respondents reported that this function is not or will not be outsourced. 40% projected outsourcing will remain the same or will decrease or in 2017. Only 7% projected an increase in outsourcing.|
|LMS Operations and Hosting||53% of reporting organizations do not outsource this function. For 28% of respondents, LMS operations and hosting is mostly or completely outsourced.||49% of respondents projected that their outsourcing of LMS operations and hosting would remain the same. 34% said that they do not or will not outsource this function. Only 11% projected an increase in outsourcing.|
|Learner Support||80% of the companies surveyed do not outsource this function.||47% of respondents projected that this function would not be outsourced in 2017. 39% said that outsourcing levels would remain the same while 11% said that they would reduce the level of outsourcing.|
|Custom Content Development||60% of all respondents develop their own content.||35% of respondents reported that outsourcing levels would remain the same, while only 15% said that they would increase outsourcing.|
What does this mean for eLearning developers? For blended learning, I suspect that very little will change regarding instruction and facilitation provided by outside companies.
On the other hand, eLearning developers who administer learning management systems may see a lean year in 2017 with more administrative functions being done in-house and only a projected increase of 7%. Projections for learner support services also point to much of it being done by the companies and less being done by outside providers.
LMS operations and hosting will be a bit better for those vendors as 49% of the companies surveyed say their outsourcing levels will remain the same and 11% say their outsourcing requirements will increase.
The custom content development side shows an even split between those companies who say that they will maintain or increase their current levels of outsourcing (35% and 15% respectively) and those who say that they will reduce outsourcing or develop their own content (11% and 39% respectively). For eLearning developers, this means that there will not be much change in demand for content development in 2017.
The Industry Training Report tells those of us in the eLearning development business that the lean times we’ve seen are slowly improving. But, don’t set off the fireworks yet. It will take the economy a while longer to recover and the same can be said for the training industry.
The world of work will always need training and training specialists to develop, deliver and administer it. Training needs and delivery methods will continue to evolve which means that eLearning developers must do their best to keep in step with what’s new. In other words, there’s not a lot that’s changed.
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