Business Intelligence

Published November 2009

Economic Impact on Training Investments

Cushing Anderson

Overall, investments in learning technologies and services have declined predictably in 2009 compared with 2008 budgets, though a large percentage of firms did not change their spending much between those two years. And while investments in learning technologies continue to be a priority compared with most other spending alternatives, design and development of in-house training and leadership and executive development appear to be the areas expecting the most growth in the next 12 to 24 months. Enterprises expect to continue their investment in collaborative software and performance management capabilities, and custom content development will be the most important service CLOs will invest in during the next budget cycle.

Every other month, IDC surveys Chief Learning Officer magazine’s Business Intelligence Board (BIB) on a variety of topics to gauge the issues, opportunities and attitudes that are important to senior training executives. For the past several years, members of the BIB have been asked to provide annual insight into their investment choices. This month we look at how companies are investing their training dollars, in what learning technology and learning services areas, and whether spending on training will increase or decrease from 2009 to 2010.

2009 Training Budgets Declined as Expected
On average, training budgets declined as a result of the global economic crisis. For the first time since the Chief Learning Officer BIB has been reporting its budget intentions, a plurality of firms saw a decline in budgets, with almost 45 percent of CLOs experiencing a decline in budget and only 23 percent seeing an increase.

The average impact on budgets was a decline of about 14 percent, with firms that saw a decline reporting one of about 20 percent and firms that had larger budgets only growing about 10 percent.

The trend for changes in training budgets looks somewhat better for 2010, although a large percentage of companies are unsure of the direction of training budgets next year. About 20 percent of enterprises expect a decline in budget for 2010, which is also about the average reported decline between 2005 and 2008. Overall, we project that budgets for 2010 will grow slightly — about 4 percent on average, with about 40 percent of firms seeing no change from their 2009 budget.

Key Investment Areas
CLOs continue to use their training dollars efficiently, spending most on important areas that offer fast and visible results. The clear first choice is developing in-house training options. This reflects a cost-savings attitude and recognition that relevance of instruction is critical to its value.

Enterprises are also continuing to invest in e-learning –— again, reflecting pressures to deliver more training content to the widest possible audience. Informal learning and leadership and executive development are also investment priorities. Compared with the priorities from previous years, performance management has fallen in importance to the middle of the list of options. This may suggest that the other options represent a shorter, more visible return on investment, though the long-term value for performance management remains high.

One-quarter of companies expect to decrease investment in training facilities and equipment and in tuition paid out to colleges and universities. With community college and advanced degree program enrollment up, it is likely this reflects a reduction in employee benefits as opposed to an indication of a decrease in the perceived value of advanced degrees. Two other areas of investment decreases are expected to be in training and development personnel and payments to external learning services suppliers. Both of these priorities reflect the ongoing scrutiny of budgets and spending throughout the organization.

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