In these recessionary times, L&D teams are under pressure to maintain training activity, yet cut the cost of learning. Kevin Lovell claims that 30% can be shaved from learning costs by tackling four areas of inefficiency.

Of course, one way to reduce your costs is by working harder - fully utilising internal resources and getting the best deal from your suppliers - which might cut your costs by around 5%. However, many organisations are looking for savings of several times that level.

Although all organisations are different, many L&D teams will be able to make savings of around 20-30% by addressing four areas of potential inefficiency. These are: supplier management, administration, scheduling and solution design.

"It may seem that the obvious place to look, when making learning budget cuts, is external supplier costs. But far greater reductions are possible through 'intelligent' scheduling and solution design."

What are the costs of learning?

Let's break the costs down. A company with a £1m learning budget would typically spend: £50,000 on L&D management; £100,000 on consultancy, needs analysis, learning design and development; £250,000 on L&D administration; £200,000 on learning delivery (internal resources) and £400,000 on learning delivery (external, third-party costs).

While the figures may be different, the proportions of your learning spend may well be similar. So how could you cut your learning costs by 30%?

Supplier management

You could save 7% of your supplier costs by improving supplier management. That equates to a 2.8% reduction in overall learning spend. Creating a preferred supplier list for all external training minimises the number of supplier relationships you have to manage and maximises the potential for discounts. But you should also:

• Monitor the quality of delivery
  Training organisations change over time and even the best can vary in quality from year to year. Unless you constantly monitor quality (for example through a Kirkpatrick Level 1 reaction questionnaire), you may be getting poor quality without realising it.
• Make sure you get the best deal
  Some L&D teams are good at negotiating but others either don't have the skills, experience or time to regularly review their suppliers and benchmark them against others in their area. The benchmarking process is what gives you the data to negotiate effectively.
• Enforce your preferred supplier list
  After negotiating the best deals, it is important to ensure that everyone uses only those suppliers. Most suppliers will offer volume-based discounts but you will only maximise benefit from these if you channel all the relevant spend through the chosen supplier. Rogue spending, if allowed to go unchecked, undermines all the good effort invested in negotiating with preferred suppliers.

• Administration
  The administrative aspect of learning and development is probably today's greatest single source of frustration. Many organisations still process large volumes of course bookings and post-course evaluations manually. This repetitive and labour-intensive work swallows up a huge amount of resources.

Specialist technology now exists which can automate the administrative processes, leading to dramatic increases in efficiency and substantial cost reductions. It also frees-up your L&D resource, enabling you to focus on other improvements.

By using specialist technology to automate the booking, authorisation and post-course evaluation of training, you could cut your L&D administration costs by around 30%, which equates to a 7.5% reduction in the overall cost of learning.

Scheduling

A focus on scheduling efficiency by the admin team will yield savings of around 12% of the overall cost. The specific areas to focus on are:

L&D administration often becomes more flexible in the well-intentioned desire to offer a great service. The ability to react to short-term changes is a virtue, but don't underestimate how much it costs. One of the bigger losses in this flexibility drive is proper demand planning, which allows events to be booked in bulk and therefore more cheaply.

With the right information, you should be able to predict the demand, plan ahead and buy your training more efficiently. The better the demand information, the more accurate your predictions will be.

Solution design

Finally, you could achieve a net cost reduction of 9.5% by redesigning your learning solutions.

The relevance and effectiveness of training interventions should be reviewed at least every two years. Business needs change; ideas about best practice change; technologies change and training delivery methods change. Some courses have surprising longevity, but others look tired very soon. Course catalogues easily get clogged with outdated content that obscures the good and useful titles.

Having reviewed your interventions, the next step is to consider redesign. Training is still dominated by classroom-based courses. There is often considerable scope to redesign these into shorter classroom events (perhaps modularising one long course into several shorter ones) or turning to blended solutions. A traditional classroom-based event may become a combination of self-study, elearning, webinar, shorter classroom course or some other face-to-face event: seminar, coaching session, etc.

Thoughtful and creative introduction of new learning modes (particularly those related to technology), coupled with a keen sense of the business needs, have the capacity to make a significant impact on costs.

It may seem that the obvious place to look, when making learning budget cuts, is external supplier costs. But far greater reductions are possible through 'intelligent' scheduling and solution design. A 30% cut in learning costs may sound extreme, but you'd be surprised how often it can be achieved.

Kevin Lovell is learning strategy director at KnowledgePool, which has produced a whitepaper entitled 'Are you cutting it?: How to reduce your cost of learning by 30%'. The paper can be downloaded free here For more information contact KnowledgePool on 0870 320 9000 or email