It’s no secret that software companies operate in a very competitive space where rivalry is increasingly fierce and where profit margins can be razor thin. New, smaller software companies are sprouting up each month and
leading software companies continually make strong advancements forward leveraging massive cash flow reserves. This cycle makes it difficult for mid-sized software company to compete because (a) they don’t typically have cash flow necessary to take giant leaps forward in industry and (b) because they need to continually move forward to stay ahead of smaller software companies that are vying for their slot in marketplace. Consequently, making jump from an unknown to a mainstream brand can prove to be very difficult for mid-sized software company.Finding ways to create new revenue streams and to decrease current costs is imperative to success of companies caught in this cycle. They need to be thinking on their feet, thinking ahead and thinking creatively, all at same time. This can be a daunting task, as any software executive will tell you.
Despite all of challenges that face mid-sized software market, there are several ways to create these much needed revenue streams and to decrease current costs. New advancements in technology and its use in training and development make generating these revenue streams possible.
Setting Stage
It is almost taken for granted that when an organization purchases a software package from a reputable vendor, a certain amount of end-user, customer training will be either bundled into purchase price or made available to them for an additional cost. If training isn’t available to end-user customer, learning curve on new software package is going to be fairly steep, depending on complexity of software.
Typical training expense categories associated with most mid-sized software companies include:
1.The salaries of offline trainers 2.The travel expenses of offline trainers 3.The costs of producing hard-copy training manuals 4.The time involved in offline, onsite customer training
These expenses should be under a watchful eye and should be consistently viewed as expenses that could be alleviated to some degree to not only improve company’s attractiveness in competitive bid situations but to increase profit margins of supplemental training services provided by company.
At same time, in background, mid-sized software companies should be looking for ways to create new revenue streams that they aren’t currently capitalizing on to work in collaboration with their cost-reduction initiative.
Step 1: Lowering Training Costs Using Custom e-Learning Content
The first step to any well laid-out cost-reduction plan is to decrease costs organization currently incurs in order to get a better handle on profit potential from sheer cost savings. Previously we outlined what our target cost categories are…now we’re going to lower costs associated with those categories by leveraging custom e-Learning content.
Take this scenario: A mid-sized software company that develops intranet portal systems currently employs 3 trainers that are onsite with clients for end-user training 3 days per engagement and they each average approximately 50 engagements per year for a grand total of 150 days on road per trainer or 450 days on road collectively.
For these trainers, onsite training program for end-user customer may look something like following:
Day 1:Software Introduction and Primary Functions Day 2:Functional Use and Administrative Actions Day 3:Real-World Functions and Labs
Lowering costs: By leveraging custom e-Learning content, company used in above scenario, can effectively reduce onsite time required for each trainer, thereby reducing all costs associated with training program across board.
By using a professionally designed, self-paced, custom e-Learning module to focus on Software Introduction and Primary Functions training that normally occurs on Day 1 and then delivering that learning module online to their end-user customers at time of purchase through an e-Learning Management System (LMS), this company could decrease travel time for all 3 trainers by 1 day per engagement. This would decrease travel time for each trainer by 50 days per year, or 150 days collectively during year. In addition end-user customers will already be familiar with software package before trainers ever set foot in front door.
This would successfully: 1.Decrease costs associated with those 150 days of travel that are now being saved.
2.Enable company’s trainers to perform more training engagements OR enable company to decrease number of in-house trainers it employs. 3.Decrease costs associated with creating and publishing sections of hard-copy training manuals that deal with Software Introduction and Primary Functions training session that normally occurs in-person on Day 1 of training engagement.
Taking it one step further: Reducing each trainers travel schedule by 1 day is good, but it isn’t good enough. Software companies employing this cost-reduction method should take it one step further to enhance their end-user customer’s experience. They need to make sure that their end-user customers are learning what they need to know to ensure time isn’t being wasted covering same topics when trainer visits customer site in-person.
