TRAINING EXPENDITURES INDUSTRY REPORT TRAINING INDUSTRY REPORT TRAINING EXPENDITURES TRAINING BUDGETS 0 5 10 15 20 17.5 from last year, when 32 percent said 15.2 18.6 0 10 20 30 40

TRA IN ING EXPEND ITURES

ABOUT TH IS STUDY

20 | NOVEMBER/DECEMBER 2012 training training NOVEMBER/DECEMBER 2012 | 21

REPORTINDUSTRY2O12 TRAINING

10. Who controls traditional training purchasesNow in its 31st year, The Industry Report is recognized as the training industry’s most trusted source of data on budgets, staffing, and programs. This year, the study was conducted by an outside research firm in May/June 2012, when members from the Training magazine database were e-mailed an invitation to participate in an online survey. Only U.S.-based corporations and educational institutions with 100 or more employees were included in the analysis. Agencies of the state, local, and federal government were not included in the analysis.

The data represents a cross-section of industries and company sizes.

SURVEY RESPONDENTS

Small companies 32% (100-999 employees)

Midsize 39% (1,000-9,999 employees)

Large 29% (10,000 or more employees)

Total respondents 913

Note that the figures in this report are weighted by company size and industry according to a Dun & Bradstreet database available through Hoovers of U.S. companies. Since small companies dominate the U.S. market, in terms of sheer numbers, these organizations receive a heavier weighting, so that the data accurately reflects the U.S. market.

After rebounding last year, the training industry hit a bump in the road in 2012 as it followed the downward economic trend that dogged the U.S.: Total 2012 U.S. training expenditures—including payroll and spending on external products and services—fell 6.5 percent to $55.8 billion. Some 65 percent of organizations either saw their training budget remain the same or decrease in 2012. Training payroll increased substantially, from $31.3 billion to $36.4 billion, but spending on outside products and services decreased $1.7 billion to $7.4 billion.

The training budget figure was calculated by projecting the average training budget to a weighted universe of companies, using a Dun & Bradstreet database available through Hoovers of U.S. organizations with more than 100 employees. It is interesting to note that although small companies have the smallest annual budgets, there are so many of them that they account for 62 percent of the total budget for training expenditures.

Total training spending: All training-related expenditures for the year, including training budgets, technology spending, and staff salaries.

Training staff payroll: The annual payroll for all staff personnel assigned to the training function.

Outside products and services: Annual spending on external vendors and consultants, including all products, services, technologies, off-the-shelf and custom content, and consulting services.

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About Survey Respondents:• 47% are managers or above in the organization • 26% are developers or instructional designers • 23% are mid- to low-level (based on title selection) associates • 47% determine the need for purchasing products and services• 17% set the budget• 19% manage request for proposals/bids• 60% recommend the purchase• 15% have the final purchase decision

Industrial ClassificationsRespondent profile by industry (weighted per Dun & Bradstreet).

02. training budget breakdowns

51.1 55.8 58.5 56.2 52.2 52.2 37.5 36.3 37.5 33.7 32.9 32.8 13.5 15.8 16.3 15.4 7.0 7.0

0

10

20

30

40

50

60

Training Expenditures 2007-2012In $ Billions

DEFINITIONS

Average of Total Annual BudgetOrganization Type Large Midsize Small Grand Total

Association N/A N/A $310,000 $310,00Education $1,214,286 $360,534 $180,000 $504,359Government/Military $8,410,000 $1,477,961 $488,824 $2,595,090Manufacturer/Distributor $7,191,235 $2,095,411 $364,586 $2,655,951Nonprofit $8,850,000 $5,029,692 $170,765 $3,049,676Retail/Wholesale $21,643,629 $1,262,000 $139,417 $6,785,673Services $15,590,480 $1,908,745 $280,947 $3,625,323Avg. Across Sizes $11,307,406 $1,990,918 $294,532 $3,190,202

Total Training Expenditures

Training Staff Payroll

Spending on Outside Products & Services

Educational Services/ Academic Institution 7%

Public Administration 2%

58.5 59.7

56.2 55.8 52.2

37.5

16.3

32.9

7.0

31.3

9.1

52.8

33.7

15.4

25.7

6.9

36.4

7.4

Manufacturing 8% Wholesale/ Distribution 1%

Communications 3% Business Services 6%

Government/ Military 8%

Consulting 2%

Safety/ Security 1%

Real Estate/ Insurance 9%

Retail 4%Technology/ Software 7%

Transportation/Utilities 7%

Finance/ Banking 12%

Health/Medical Services 19%

Hospitality 3%

Construction 1%

n 2007n 2008n 2009n 2010n 2011n 2012

2012 TRAINING INDUSTRY REPORT

TRAIN ING EXPEND ITURES

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0 200 400 600 800 1000 1200

$1,041$749

$1,059

$1,076

$1,115$922

$1,104

$702$761

$864

$671$375

0 10 20 30 40 50

3941

3745

3735

4943

Average training expenditures for large companies decreased from $12.7 million in 2011 to $11.3 million in 2012, but midsize and small companies saw slight increases (from $1.8 million to $2 million for midsize organizations and from $256,082 to $294,532 for small companies).

Some 29 percent of organizations said they increased staff from the year before (the same as in 2011), while 51 percent said the level remained the same (down from 55 percent in 2011). Some 20 percent said it was lower, vs. 16 percent in 2011. Retailers/wholesalers have the largest personnel costs at an average of $1.8 million. Across all organization types, larger companies spend roughly six times as much as midsize ones, and midsize companies spend approximately four times as much as small ones. The average payroll figure for large companies was $4.7 million; for midsize organizations, it

was $763,549; for small companies, it was $187,354. The overall average for all companies was $1.2 million.

For those who reported an increase in their training staff, the average increase was eight people, two more than in 2011. For those who reported a decrease in their staff, the average decrease was 18 people—doubling the figure from last year.

Other training expenditures plunged to $12 billion from $19.3 billion in 2011. Such expenditures can include travel, training facilities, and equipment. On average, organizations spent 18 percent of their budget or $556,719 on learning tools and technologies. Large and small education organizations spent the highest portion of their budgets on tools and technology (34 to 35 percent). Large nonprofits and midsize retail/wholesale organizations spent the smallest percentage of their training budget on tools and technology

(7 and 11 percent, respectively). Looking ahead, 38 percent of organizations plan to purchase online learning tools and systems in the coming year, while 35 percent said they will buy authoring tools/systems, followed by learning management systems (29 percent) and classroom tools and systems (28 percent). These numbers are virtually the same as last year. Intent to purchase assessment and analysis testing decreased from 23 percent in 2011 to 16 percent in 2012.

Overall, on average, companies spent $1,059 per learner this year compared with $749 per learner in 2011. With the exception of midsize service organizations, manufacturers/distributors across all sizes spend more per learner than other organizations. Economy of scale is evident as larger organizations tend to spend less per learner than midsize or

small companies.On average, employees receive 41 hours of training per year,

two hours more than last year. Small education organizations have the largest average number of hours at 100, followed by large manufacturers/distributors at 72 hours.

Companies continue to devote the bulk of their training expenditures toward training non-exempt employees (44 percent, up from 41 percent in 2011). Training for exempt non-managers inched up a bit from 25 percent to 27 percent in 2012.

0 5 10 15 20 25 30 35 40

16% 8%

24%35%

18%25%

28%19%

25%22%

8%7%

20%14%

29%20%

38%9%

25%16%

11%8%

4%

Assessment & Analysis TestingAudience Response Systems

Audio and Web Conferencing Products & SystemsAuthoring Tools/Systems

Business SkillsCertification

Classroom Tools & SystemsConsulting

Content DevelopmentCourseware Design

Customer Relationship ManagementEnterprise Learning Systems

Games & SimulationsKnowledge Management Tools/Systems

Learning Management SystemsMobile Learning

Online Learning Tools & SystemsSupport/On-Demand Learning Tools & Systems

Presentation Software & ToolsTalent Management Tools & SystemsTraining Management Administration

Translation & LocalizationWeb 2.0

All Companies

Small (100 to 999 employees)

Midsize (1,000 to9,999 employees)

Large (10,000 ormore employees)

All Companies


Midsize (1,000 to9,999 employees)

Large (10,000 or more employees)

Types of Training Products and ServicesIntended to Purchase Next Year

Training Expenditures per Learner 2010-2012

Hours of Training per Employee 2011-2012

n 2010n 2011n 2012

n 2011n 2012


TRAIN ING BUDGETSTRA IN ING EXPEND ITURES

0

5

10

15

20 17.5 15.2

18.6

0

10

20

30

40

50

26.321.7

40.6

23.4

0

10

20

30

40

50

10%

24% 27%

44%

0

3

6

9

12

1512.3

10.312.5

14.7

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0 20 40 60 80 100

20%46%

34%

16% 36%

48%

24%49%

27%

42%11%

47%

26%26%

29%0%0%

22%

100%

39%39%

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The majority of companies—43 percent—said their training budget remained the same, while 35 percent said it went up and 22 percent said it decreased. This is not much different from last year, when 32 percent said their budget went up and 25 percent said it went down. Government/military organizations showed the greatest tendency for training budget cuts, while retailers/wholesalers and manufacturers/distributors showed the largest gains. In the small organizations, almost three times as many showed an increase than showed a decrease. Most companies with a budget increase also increased the number of learners served.

Some 38 percent of organizations reported increases in the 1 to 5 percent range, while 36.4 percent saw increases in the 6 to 15 percent range. Most respondents who reported an increase in their training budgets attributed it to the following reasons:

• Increase in the scope of their training programs (56 percent; down from 77 percent in 2011)

• More learners served (52 percent; down from 62 percent last year)

• Added training staff (49 percent; down from 52 percent)

Like last year, the majority (31 percent) of respondents reported budget decreases between 6 and 15 percent. Some 53 percent chose “other” as the reason for the decrease, citing “overall budget cuts,” “reduced income,” and “cost containment,” among others. This was followed by:

Staff per 1,000 LearnersLarge Companies

Staff per 1,000 LearnersSmall Companies

Staff per 1,000 LearnersMidsize Companies

Training Expenditure Allocations—Who Gets Trained?

Is the Number of Training-Related Staff Higher

or Lower Than Last Year?

Manufacturer/Distributor

Services

Retail/Wholesale

Government/Military

Education

Association

Nonprofit

Budget Change by Industry

What Happened to YourTraining Budget This Year?

Increased35%

Higher29%

Remained the same

43%

Same51%

Decreased22%

Lower20%

n Decreasen Increasen Same

Executives Managers,Exempt

Non-Managers,

Exempt

Non-Exempt

Employees

Overallfor Large

Companies

10,000 to24,999

25,000 to49,999

50,000 ormore

Overall for Small

Companies

100 to249

250 to499

500 to999

Overallfor MidsizeCompanies

1,000 to4,999

5,000 to9,999

The average training budget for large companies was $11.3 million, while midsize companies allocated an average of $2 million, and small companies dedicated an average of $294,532.

training NOVEMBER/DECEMBER 2012 | 25


TRA IN ING BUDGETS

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0 5 10 15 20 25 30 35

0 5 10 15 20 25 30

0 5 10 15 20 25 30 35

0 10 20 30 40 50 60

0 10 20 30 40 50

24%21%

31%24%

32%11%

46%11%

26%18%

28%28%

17%32%

24%27%

45%31%

25%40%

29%46%

53%

0 5 10 15 20 25 30 35 40

0 5 10 15 20 25 30 35 40

0 5 10 15 20 25 30 35 40

0 10 20 30 40 50

0 10 20 30 40 50 60

• Budget adjustments to reflect lower costs (46 percent; down from 50 percent last year)

• Staff reductions (45 percent; down from 48 percent)

• Attended fewer outside learning events (40 percent; down from 42 percent)

Like last year, the highest percentage of organizations (28 percent) said management/supervisory training will receive more funding than the year before. On average, organizations plan to allocate the most funding to professional/industry-specific training ($1.8 million), followed by management/supervisory training at $635,535 and mandatory/compliance training ($505,038).

The most important priorities for training in terms of allocating resources in 2012 are: increasing the effectiveness of training programs and reducing costs/improving efficiency (both at 26 percent; the former was at 28 percent last year and the latter at 23 percent), followed by increasing learner usage of training programs (at 15 percent). Like last year, learning infrastructure/technology initiatives and obtaining revenue through external training remain the lowest priorities.

How Much Did Your Training Budget Increase?All Companies

How Much Did Your Training Budget Decrease?All Companies

Small Companies Small Companies

Midsize Companies Midsize Companies

Large Companies Large Companies

Added Training StaffIncreased Number of Learners Served

Increased Scope of TrainingAttended More Outside Learning Events (conferences/seminars)

Increased Outside Trainer/Consultant InvestmentPurchased New Technologies/EquipmentBudget Adjusted to Reflect Higher Costs

Other

Reduced Training StaffDecreased Number of Learners Served

Decreased Scope of TrainingAttended Fewer Outside Learning Events (conferences/seminars)

Decreased Outside Trainer/Consultant InvestmentBudget Adjusted to Reflect Lower Costs

Other

16% 10% 36% 38%

More Than 25%16% to 25%

6% to 15%1% to 5%


6% to 15%1% to 5%


6% to 15%1% to 5%


6% to 15%1% to 5%


6% to 15%1% to 5%


6% to 15%1% to 5%


6% to 15%1% to 5%


6% to 15%1% to 5%

17% 13% 37% 33%

15% 9% 39% 37%

15% 32% 31% 49%

49% 52% 56% 17% 11% 39% 16%5%

Why Did Your Budget Increase?Why Did Your Budget Decrease?

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TRAINING DELIVERYTRA IN ING BUDGETS

Technology usage for training delivery showed a slight uptick in 2012, although 45.2 percent of training hours are delivered by a stand-and-deliver instructor in a classroom setting. That figure is up a bit from the 41.6 percent reported last year.

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0 20 40 60 80 100

0 10 20 30 40 50 60 70 80

0 20 40 60 80 100

16% 51% 9% 24% 28% 54% 10% 8% 18% 60% 11% 11% 18% 57% 10% 15% 12% 61% 14% 13% 17% 57% 10% 16% 18% 39% 6% 37% 18% 70% 6% 6%10% 61% 7% 22%

Technology usage for training delivery showed a slight uptick in 2012, although 45.2 percent of training hours are delivered by a stand-and-deliver instructor in a classroom setting. That figure is up a bit from the 41.6 percent reported last year and nearly back to the 47 percent reported in 2009.

• 27 percent of hours are delivered with blended learning techniques, up a bit from 24 percent last year.

• 24.7 percent of hours are delivered via online or computer-based technologies, up slightly from 21.9 percent last year.

• 1.1 percent of training hours are delivered via mobile devices, just about the same as last year.

Small and midsize companies continue to rely on instructor-led delivery methods more so than large companies: 47 percent vs. 38 percent. Blended learning is fairly even across companies of all sizes, ranging between 25 and 29 percent. Large companies appear to be focusing on online or computer-based methods (28 percent vs. an average of 23 percent for small and midsize companies).

Mandatory or compliance training continues to be done mostly online, with 74 percent of organizations doing at

least some of it online and 23 percent entirely online (up from 18 percent last year). Online training also often is used for desktop application training (58 percent) and IT/systems application training (58 percent). Online training is least used for executive development (28 percent) and management/supervisory, interpersonal skills, and sales training (all at 42 percent).

Of the learning technologies presented, the most often used include:

• Learning Management System (LMS) (73 percent, up from 67 percent)

• Virtual classroom/Webcasting/video broadcasting (70 percent, down from 76 percent last year). Some

50 percent use it for 10 to 49 percent of their training programs.

• Rapid e-learning tool (56 percent vs. 50 percent last year). This replaced usage of an application simulation tool as the third most often used tool in 2012.

The delivery methods least often used for training remain the same as last year:

• Podcasting at 17 percent (vs. 21 percent last year)• Online Performance Support (EPSS) or knowledge

management system at 23 percent (same as last year)• Learning Content Management System (LCMS) at 22

percent (down from 26 percent last year)

Executive DevelopmentManagement/Supervisory Training

Interpersonal Skills (e.g., communication, teamwork)IT/Systems Training (e.g., enterprise software)

Desktop Application TrainingCustomer Service Training

Sales TrainingMandatory or Compliance Training

Profession/Industry-Specific (engineering, accounting, etc.)

Projected Funding for Learning Areas Next Year

n More Than Last Year n About the Same as Last Year n Less Than Last Year n N/A

n Blended Learning (a combination of methods listed below)n Instructor-Led Classroom Onlyn Virtual Classroom/Webcast Only (instructor from remote location)n Online or Computer-Based Methods Only (no instructor)n Mobile Only (cell phones, iPods, tablets, PDAs)


Midsize (1,000 to 9,999 employees)

Large (10,000 or more employees)

Training Delivery Methods by Company Size 2012

Executive Development Management/Supervisory Training

Interpersonal Skills (e.g., communication)IT/Systems Training (e.g., enterprise software)

Desktop Application TrainingCustomer Service Training

Sales TrainingMandatory or Compliance Training

Profession/Industry-Specific (e.g., engineering)

Online Method Use for Types of Training

n No Online n A Few Online Programs n Some Online n Mostly Online n All Online

33% 39% 20% 6% 2% 17% 41% 34% 7% 1% 24% 34% 33% 8% 1% 13% 28% 31% 25% 3% 16% 26% 30% 22% 6% 29% 28% 32% 9% 2% 31% 27% 32% 10% 0% 11% 15% 18% 33% 23% 19% 36% 36% 8% 1%

25.3% 49.6% 13.9% 22.8% 0.9%

26.4% 45.1% 12.4% 24.4% 1.5% 25%

29.2% 37.6% 13.4% 28.5% 0.9%

TRAINING DELIVERY



TRAINING DELIVERY TRA IN ING OUTSOURC ING


0 20 40 60 80 100

2012 saw a very slight dip in the average expenditure for training outsourcing: $592,679, down from $606,563 in 2011. Like last year, an average of 23 percent of the total training budget was spent on outsourcing. Small and large companies tended to have slightly higher percentages than midsize companies.

On average, 23 percent of companies mostly or completely outsource LMS operations/hosting (vs. 18 percent last year). LMS administration and learner support, however, continue to be mostly handled in-house, with only a small amount outsourced.

• Outsourcing LMS operations/hosting increased to 55 percent from 40 percent in 2011.

• Instruction/facilitation again is the most often considered for some degree of outsourcing, up from

47 percent last year to 49 percent this year.

As with 2012, the level of outsourcing is expected to stay relatively steady in 2013—some 81 percent of organizations said they expect to stay the same in the outsourcing area. And the percentage of companies expecting to increase use is almost exactly offset by those organizations expecting to decrease outsourcing for the same functions. On balance, midsize companies may outsource slightly more across the board, especially for LMS operations/hosting and administration. Large companies will stay the same overall, but may outsource more custom content development.

The area with the least outsourcing this year, LMS administration, anticipates slightly more outsourcing vs. slightly less (8 percent vs. 6 percent), although 46 percent said they have no intention of outsourcing that function.

2012 saw a very slight dip in the average expenditure for training outsourcing: $592,679, down from $606,563 in 2011. An average of 23 percent of the total training budget was spent on outsourcing. The level of outsourcing is expected to stay relatively steady in 2013.

0 20 40 60 80 100

0 20 40 60 80 100

0 20 40 60 80 100

0 20 40 60 80 100

Learning Technologies Current Usage All Companies

Extent of Outsourcing All Companies

Small Companies

Midsize Companies

Large Companies

17% 74% 9% 23% 63% 14% 56% 38% 6% 43% 52% 5% 70% 28% 2% 22% 67% 11% 73% 24% 3%

51% 45% 4% 78% 17% 5% 55% 22% 23% 80% 16% 4% 54% 40% 6%

13% 80% 7% 15% 76% 9% 48% 50% 2% 28% 68% 4% 62% 37% 1% 18% 77% 5% 56% 41% 3%

13% 78% 9% 26% 62% 12% 58% 33% 9% 48% 49% 3% 72% 26% 2% 20% 67% 13% 81% 18% 1%

25% 60% 15% 30% 46% 25% 64% 29% 7% 54% 34% 12% 78% 18% 4% 33% 51% 16% 86% 8% 6%

PodcastingOnline Performance Support or Knowledge Management System

Rapid E-Learning Tool (PowerPoint conversion tool)Application Simulation Tool

Virtual Classroom/Webcasting/Video BroadcastingLearning Content Management System (LCMS)

Learning Management System (LMS)

Instruction/FacilitationLMS Administration (registration, upload data)

LMS Operations/HostingLearner Support

Custom Content Development













n Use currently n Do not use n Not sure




n No Outsourcing n Some Outsourcing n Mostly or Completely Outsourced



TRA IN ING OUTSOURC ING


0 20 40 60 80 100

0 20 40 60 80 100

0 20 40 60 80 100

0 20 40 60 80 100

0 20 40 60 80 100

0 20 40 60 80 100

0 20 40 60 80 100

In 2013, midsize companies may outsource slightly more, especially when it comes to LMS operations/hosting and administration. Large companies may outsource more custom content development.

Extent of Outsourcing Small Companies

Midsize Companies

Large Companies

55% 40% 5% 76% 18% 6% 46% 27% 27% 78% 19% 3% 52% 42% 6%

53% 45% 2% 87% 9% 4% 69% 12% 19% 88% 10% 2% 71% 25% 4%

44% 52% 4% 69% 25% 6% 50% 26% 24% 70% 21% 9% 35% 58% 7%













Projected Use of Outsourcing All Companies

Small Companies

Midsize Companies

Large Companies

9% 46% 8% 37%5% 36% 3% 56% 9% 45% 2% 44%2% 35% 7% 56% 10% 34% 10% 46%

8% 47% 10% 35% 13% 39% 6% 42% 17% 48% 5% 30%5% 41% 10% 44% 17% 34% 15% 34%

10% 46% 11% 33% 8% 41% 6% 45% 11% 49% 5% 35%5% 38% 8% 49% 16% 35% 14% 35%

13% 45% 18% 24%4% 51% 10% 35%6% 58% 10% 26% 11% 39% 9% 41% 25% 37% 18% 20%













n More Outsourcing n The Same n Less Outsourcingn We Don’t/Won’t Outsource This Function





Documents

TRAINING EXPENDITURES INDUSTRY REPORT TRAINING INDUSTRY REPORT TRAINING EXPENDITURES TRAINING BUDGETS 0 5 10 15 20 17.5 from last year, when 32 percent said 15.2 18.6 0 10 20 30 40