Global Headquarters: 5 Speen Street Framingham, MA USA P F

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F WHITE PAPER The Rise of Dell Training & Certification Sponsored by: Dell Inc. Ellen H. Julian Michael Brennan August 2004 IDC OPINION Doug Chandler IDC research studies in recent years have shown that well-managed and multidisciplinary (i.e., supporting varied technologies built on open platforms) training and certification programs can enhance the capabilities of individuals and the IT competence of an organization through measures such as faster project implementations, greater system reliability, and lower support costs. As Dell offers more services to its clients to ease the adoption and use of IT systems, training and certification will be crucial elements to its customer relationships. The "Dell Model" forms the essence of the company's overall mission and is a strategy that has proven very successful for its hardware business. The company's success in applying this strategy successfully to IT training through a select portfolio of learning content, technology, and services is reflected in the growth of Dell Training & Certification and the company's appearing for the first time this past year on IDC's Top 15 Worldwide IT Training Providers list at number 9. IDC believes Dell is positioned to further expand its role as a leading provider of training services by offering quality training and certification programs combined with a strong value proposition for the customer.. IN THIS STUDY This white paper provides an analysis of the growing trend toward leveraging external training services to facilitate the return on investment (ROI) of IT hardware and software initiatives. It also addresses the value of leveraging Dell Inc. as a provider of training services on complex technologies. Based on IDC's research of the IT and corporate training markets as well as its knowledge of Dell Training & Certification's capabilities, this paper examines:! Market needs for training to exploit technology investments! Dell's product leadership and growing market share in systems and storage! Dell's impressive training revenue growth! Opportunities/challenges for Dell's Training & Certification group going forward This document is based on information reviewed and/or published by IDC as of June 2004.

2 SITUATION OVERVIEW Well-Designed Training Helps Exploit IT Investments and Drives Performance Across All Functional Areas IDC's latest market forecasts show that worldwide spending on IT hardware and packaged software will grow by a moderate 5.3% in 2004 to over $562 billion. Those who spend wisely will execute with the conventional wisdom that technology will not create value simply by its deployment. Consequently, executives across all industries have been purposefully increasing their focus on the return on investment (ROI) of IT initiatives. Those who spend wisely will execute with the conventional wisdom that technology will not create value simply by its deployment. The training and IT industries are evolving to meet customer needs by honing curriculum to support people whose jobs involve implementing, managing, and/or using the technology. In addition, vendors have been developing new technologyenabled delivery methods to make education and performance support more accessible. IDC research studies in recent years have shown that well-managed and multidisciplinary (i.e., supporting varied technologies built on open platforms) training and certification programs can enhance the capabilities of individuals and the IT competence of an organization through measures such as the following:! Reduction in implementation time! 35-45% reduction in both scheduled and unscheduled downtime! 40-50% improved system reliability! Less time to resolve user support issues! 40% fewer end-user support requests Indeed, an IDC survey of 159 IT training purchasers conducted earlier this year showed that the use of elearning (i.e., Web-based training) is expected to grow at over 5 times the rate of classroom training in This trend is not limited to IT training and has been underway for the past 5 years. Many senior training executives with whom IDC has spoken in recent years recognize that there is a great deal of value in leveraging Web-based technologies to facilitate both formal and informal learning (i.e., performance support) and are turning to vendors with both the subject matter expertise and the infrastructure to meet their needs. Their organizations' growing acceptance of and dependence on the Web as a means of complementing classroom instructional delivery are driving them to link educational resources (such as courses and test prep guides) to proprietary and commercially available information (such as product information or presentations). They are leveraging physical and Web infrastructures to build toward what IDC calls the "Five As of an Effective Enterprise Learning Chain" (see Figure 1). An IDC survey of 159 IT training purchasers conducted earlier this year showed that the use of elearning (i.e., Web-based training) is expected to grow at over 5 times the rate of classroom training in # IDC

3 FIGURE 1 The Enterprise Learning Chain Benefit to Organization Available Appropriate Accessed Absorbed Applied Benefit to Individual Source: Future-Proofing Learning Infrastructure: The Five As of the Enterprise Learning Chain, IDC #31514, 2004 Such chains are designed to make learning more actionable by tightly integrating it with an organization's business processes and individual job roles. Make no mistake "training for the sake of it" has become a thing of the past. Make no mistake - "training for the sake of it" has become a thing of the past.! Content, be it in the form of a formal class or a piece of information, must be simultaneously available and appropriate to a set of potential problems. If the solution is believed to be available and appropriate, it is more likely to be accessed.! If it is accessed, it is more likely to be absorbed.! If it is absorbed, it is more likely to be applied.! If it is applied, it is more likely to drive individual performance and execution of business processes. Dell Training & Certification Enables Individuals and Organizations Alike Dell Training & Certification has developed a robust set of educational offerings that are clearly resonating with customers, many of whom have cut both IT and training budgets in recent years. Compared to the flat and declining growth rates of the corporate IT training market over the past two years, Dell's training revenue growth has far exceeded the overall market average. Year-over-year growth for the U.S. enterprise IT training industry was -14.3% and -4.1% for and , respectively, in sharp contrast to the 107% and 247% growth posted by Dell Training & Certification over the same period (see Table 1). Company officials report this momentum has carried itself into IDC believes Dell's relative strength in training can be attributed to its meeting commercial IT training buying preferences, which are summarized in Figure 2. The results depicted in the figure come from a recent survey Compared to the flat and declining growth rates of the corporate IT training market over the past two years, Dell's training revenue growth has far exceeded the overall market average IDC #4200 3

4 of U.S.-based corporate IT training buyers. These preferences tie very closely to the five tenets of an effective enterprise learning chain discussed earlier. Dell Training & Certification's capabilities relative to each of the criteria noted in Figure 2 are described in further detail below. TABLE 1 Notable Dell Training & Certification Developments FY 03 Training Revenue Growth Public course enrollments Enterprise onsite delivery growth Consumer revenue growth Increased 247% from FY02 Up 94% Y/Y 50% Y/Y 76% Y/Y Source: IDC, 2004 FIGURE 2 IT Training Purchase Influencers Question: What are the 3 most important characteristics when deciding to work with an IT training vendor? Provides high-quality training Employs trainers with real-world experience Knows technology and its impact on my business Can create customizable training content Offers the lowest price Sells both technology and training (% respondents) Note: Figure depicts six characteristics most frequently cited in top 3. N = 159 IT training purchase decision makers and influencers Source: IDC, # IDC

5 Reasons 1 and 6: Provides High-Quality Training, Sells Both Technology and Training Through its direct model and efficient supply chain, Dell has set itself apart from most competitors, which have not weathered the slowdown in corporate spending as well as the company. Dell customers are increasingly turning to the company for business solutions that comprise hardware, software, and services. When delivering training services, Dell has the advantage of being recognized as the expert on its own products and the components comprising these products. The company is positioned to leverage its expertise in developing and supporting these products to build and deliver valuable training content. In other words, Dell is adept at developing training content that is appropriate to the needs of its customers. They turn to the company for knowledge they can apply on the job. Dell training is focused on the same technology areas the company focuses on because with the increasing sale of its products into markets in which the company already has a leading share comes a natural need for being able to not only operate the products well, but also to integrate them. For example, a key element of Dell's growth strategy has been to create more depth around its systems and server products, and storage in particular is one of Dell's growth engines. Dell moved into the storage market in recent years because it is adjacent to the company's core server business. Dell has experienced high growth in the last 12 months in the storage segment, buoyed by its partnership with EMC. Dell Training & Certification has been both a driver and beneficiary of this high growth. A recent study Dell conducted of organizations that have purchased its SAN products indicates the company's training helps customers make the most of their storage investments. The study covered nearly 60,000 Dell/EMC and PowerVault devices shipped to customers and isolated those organizations that had received Dell SAN training from those that had not (i.e., the control group). The results of the study show Dell warranty and technical support cost reductions of over 40% for customers who have been trained by Dell SAN training. Dell is adept at developing training content that is appropriate to the needs of its customers. A recent study Dell conducted of organizations that have purchased the its SAN products indicates the company's training helps customers make the most of their storage investments. Reason 2: Employs Trainers with Real-World Experience Dell's core group of instructors averages close to 20 years of IT practitioner experience. Complementing the group's practical expertise is its 7 years average experience as technology instructors conveying information and transferring knowledge to students. This expertise is augmented by consultants in Dell's Professional Services organization who prescribe training through Dell Training & Certification or through one of its local training partners based on their clients' business requirements. When Dell partners implement equipment and impart training on customers, the company uses customer feedback to ensure their instruction targets the customers' "in-the-field" needs in addition to discussing the theoretical. Reason 3: Knows Technology and Its Impact on My Business Dell's entire business has been built on increasing individual and organizational productivity through IT products and services. Since the company's inception, it has helped customers solve the challenge of exploiting technology investments. Dell, through its direct business model, designs, manufactures, and customizes products and services to customer requirements. Indeed, the company can be credited with 2004 IDC #4200 5

6 much of the productivity boom that has helped sustain global economic growth since Thus, Dell is in a strong position to develop training content that reflects the business needs of its clients when it comes to leveraging technology. The company's offerings are summarized in Table 2. As one would expect, its offerings run deepest for IT professionals. However, the company has broadened its portfolio to address professional development needs outside IT: Dell is in a strong position to develop training content that reflects the business needs of its clients when it comes to leveraging technology.! Training solutions for IT professionals: Dell offers its own certification for its servers, storage, and hardware maintenance as well as OS migration (MCSE, Red Hat Linux Certifications), database (Oracle), programming and development (Java, C++), networking (Cisco), and vendor-neutral certification training (CompTIA).! Training solutions for business professionals: PC skills (Lotus Notes R6 End-User Complete, Macromedia DreamWeaver), peripherals, wireless networking, business and finance, and interpersonal development.! Training solutions for professional educators (K 12 and higher education): Assessments, IT fundamentals, integrating the Dell Wireless Notebook into curriculum, and leadership development! Home and home office: PC skills (Microsoft Office XP, Adobe Photoshop), peripherals, personal finance, personal development (time management); courses are available for consumers and small business owners operating out of their homes, as well as at a discount for employees of Dell enterprise customers (through employee purchase programs) In recent years, Dell has made its training offerings increasingly available to customers over the Internet infrastructures the company has helped them build. Dell has recognized the trend from traditional classroom instructor-led training to the use of multiple learning vehicles and media that support the five As of an effective enterprise learning chain. Dell's multimodal delivery capabilities are as follows: Dell has recognized the trend toward blended learning environments that support the five As of an effective enterprise learning chain.! 24 x 7 access to course registrations and elearning content at LearnDell.com! Classroom and hands-on training at company-owned center in Austin, Texas # Contains three full SAN labs with current technologies! Customer site delivery # For SAN training prior to equipment deployment # Instructor led at your facility! External site training # Instructor led in major metropolitan areas # Access server equipment 6 # IDC

7 # Simulate storage equipment labs! Testing via 3,500 locations worldwide TABLE 2 Dell Training & Certification Portfolio CUSTOMER TARGET OFFER DELIVERY Consumer Home & Home Office Desktops, Notebooks, Electronics & Accessories Complete PC Package Electronics & Accessories Training Partner Exclusive Package Home Online LearnDell.com Small & Medium Business Business Professional Desktops, Notebooks, Software & Peripherals IT Professionals Servers, Storage Complete Small Business Professional Package Software & Peripherals Training Dell Certification Program and Training Server and Storage Training HW Maintenance Training Technical Training & Certification Online LearnDell.com Classroom- based Customer Site Simulation Labs Regional Locations Simulation Labs Austin Location Dell facility, Hardware Labs K-12 Education & Higher Education Faculty, Student, Staff Desktops, Notebooks, Software & Peripherals IT Staff Servers, Storage Complete PC Package Software & Peripherals Training Professional Development Dell Certification Program and Training Server and Storage Training HW Maintenance Training Technical Training & Certification Online LearnDell.com Classroom-based Customer Site Simulation Labs Regional Locations Simulation Labs Austin Location Dell facility, Hardware Labs Healthcare, Government, Corporate, Global Business Professionals Desktops, Notebooks, Software & Peripherals IT Professionals Servers, Storage Complete PC Package. Software & Peripherals Training Dell Certification Program and Training Server and Storage Training HW Maintenance Training Technical Training & Certification Online LearnDell.com Classroom-based Customer Site Simulation Labs Regional Locations Simulation Labs Austin Location Dell facility, Hardware Labs Source: Dell, 2004 Reason 4: Can Create Customizable Training Content Recent research indicates that customized content will play a growing role in training and development going forward. Content customization that is prescriptive for the learner makes the learning experience more relevant, and thus, more engaging. In other words, it increases the likelihood of instruction being absorbed. That Dell Training & Certification grew its customer onsite training business by 50% in FY03 speaks to the company's focus on targeting its training offerings. So too does its content customization capabilities. Dell tailors its online, classroom-based, and lab offerings to meet customer needs based on an organizational needs assessment that takes the following characteristics into account:! Number of employees needing training and their skill base! Existing infrastructure current hardware and software used 2004 IDC #4200 7

8 ! Current challenges with managing and maintaining that infrastructure! Budget for training! Evaluation of preassessment exam scores Reason 5: Offers the Lowest Price The Dell brand is associated globally with efficient supply chain management and price competitiveness. Dell will only enter a market when customers voice growing demand for a particular service or product; when the features of that product or service are a natural extension of the Dell business model and when the opportunity exists to show excellence in execution. In addition, the scalability of elearning will help Dell drive down the prices it charges customers. CONCLUSION Through its product leadership, market share, brand strength, and portfolio of training offerings, Dell can deliver flexible, and effective forms of training and education to its customers. Given Dell's product market share and growth over the past two years and its commitment to developing high quality training and certification programs to facilitate effective deployment of its products, IDC believes that the company has the opportunity to increase its training-related revenue stream and continue to gain share in the IT training market. In order to accomplish this, Dell must continue to enhance course offerings to meet the changing needs of customers, invest in infrastructure to make its training content even more accessible, and provide concrete examples of customer benefits by building on efforts such as its SAN training. Through its product leadership, market share, brand strength, and portfolio of training offerings, Dell can deliver flexible, and effective forms of training and education to its customers. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2004 IDC. Reproduction without written permission is completely forbidden. 8 # IDC