CASE STUDY: VIRTUAL TRAINING—IN A CLASSROOM
Reprinted by ONLC Training Centers with permission.
ONLC Training Centers has used their many locations to drive significant sales growth and become one of the leaders in the IT training industry—an industry that was in rapid decline from 2000 through 2009. Today, ONLC has over 250 locations from coast to coast; but as recently as 2004 they only had offices in Philadelphia, Wilmington, Delaware, and Princeton.
In 2009, ONLC Training Centers was named the eighth fastest growing education company on Inc. Magazine’s list of fastest growing companies. How have they achieved such remarkable growth in a declining industry during the worst economic downturn in 70 years?
Bucking the industry and economic trends, ONLC was able to realize multiple new revenue streams by rapidly expanding their geographic distribution of classroom training. In 2009, approximately 50 percent of ONLC’s revenues came from sites that were not open a year earlier. Two of the key drivers to their success were the strategic use of locations to accelerate sales and the redefinition of “classroom” training.
A Company founded on “traditional” IT training
Andy Williamson and Jim Palic formed the company in 1983, and were at the leading edge of the PC revolution when they began offering classroom training to individuals using personal computers in the workplace. Throughout the 1980s and 1990s their original facilities were traditional IT classrooms designed for face-to-face instruction. However, as corporate training and travel funds dried up after 2000, the demand for such services dropped precipitously and the industry consolidated rapidly. Many companies with large computer training facilities closed or switched to other lines of business, such as IT consulting.
Andy and Jim recognized that although the demand for training had significantly declined, it had not disappeared. To serve the smaller market demand for public IT training, they needed to transform their business model. They considered offering “virtual” training where people would join ONLC’s classes from their homes or offices. That would certainly lower their costs. However, their years of industry experience taught them that people preferred classroom training for many good reasons. A formal classroom provides an interruption-free environment in which to learn. There are fewer technical issues when training is conducted in a classroom. And last, but not the least important, going to an offsite location elevates the importance of the event and helps people focus on the job of learning.
They thought that maybe they could design a training offering that would include the classroom as an important part of the mix. Adding the classroom to a “virtual” training offering would significantly increase their costs, but provide a better learning experience. In addition, they saw that their competitors were beginning to offer virtual training. If hundreds of other companies started to offer training virtually, how would ONLC be able to differentiate itself?
Going deeper into a bricks and mortar strategy
So, instead of abandoning bricks and mortar classroom-based training, they decided to go deeper into that strategy. They designed a “virtual” training solution that keeps the classroom as part of the solution and called it Remote Classroom Instruction (RCI). This provides their clients with a higher quality learning solution and gives ONLC a more defensible position in the market.
Their solution works like this. A single national training schedule is promoted on the ONLC Web site. If someone sees class that they want to take that is running on January 15, for example, they can register for that class in any one of over 250 locations around the country. These locations contain small “classrooms” that can seat 2 to 4 people at a time. The class running on January 15 might be taught in a traditional classroom in Philadelphia with an instructor teaching three students “face-to-face” in that room. In addition, as many as nine other people could be joining the class from up to nine other physical locations around the country.
“It is our ability to easily aggregate low demand for public training that makes our model successful,” said Andy. By combining the enrollments from hundreds of locations they are able to have fewer classes cancel because of low enrollments. In any given city, there might only be one or two people interested in an event. While competitors who needed a large number of students in a room with an instructor would have had to cancel the event, ONLC is able to run the event with one person.
ONLC management has carefully studied potential opportunities and identified strategic roll-out priorities by looking at US Census data by Metropolitan Statistical Areas (MSAs). Unlike its old business model where leases were secured for multiple years and each site had to be staffed, the new model relies on the network of executive suite locations. The company can sign short-term, 6-month leases for only the needed space. They can start by renting a single classroom in any city. If demand becomes strong enough, they can rent additional rooms; if demand is low, they can cancel the lease at the end of the term and redeploy their computer hardware to a new, more productive location.
Training sites in areas with greater population densities have survived because there were more people. However, some rural areas are also successful. While those areas have lower demand, there are typically no competitors. So while the total demand in the area might be relatively low, the “demand facing the firm” is higher because ONLC is able to capture a larger share of the market. In addition, their small site strategy helps them be more cost effective.
Areas in the US under 1 Hour's Drive Time from an ONLC Facility
ONLC estimates that over 80 percent of the U.S. population is within an hour’s drive from one of their training sites. Andy explains how ONLC has overcome the “tyranny of geography” that author Chris Anderson defines, as when an audience is spread so thinly that it is the same as no audience at all. Andy observes, “People wanting training in remote locations have been suffering from the tyranny of geography where no classroom training is available to them because demand is so low. When demand for a particular class drops below a certain point, a traditional face-to-face class is taken off the schedule of the local training company. When demand for IT training in general drops below a certain point, the traditional training company closes its doors.”
By rapidly expanding their number of training facilities to give them nationwide coverage and by re-defining “classroom” training with their RCI model, ONLC can cost-effectively deliver classroom training where its competitors can’t. As Andy says, “lowering the cost of delivery has radically changed the economics of providing training, and has democratized distribution. It has also positioned ONLC for a successful future delivering virtual training in a classroom.”
Case Study Analysis
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