E-business: Strategy, skills and careers issues

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E-businessStrategy, skills and careers issues

• Dr Jonathan Reynolds
• Oxford Institute of Retail Management
• Saïd Business School Templeton College
• University of Oxford

2
Outline

• What do we mean by e-business skills?
• Trends in in demand and supply
• Understanding eBusiness skills needs the example
  of the retail sector

3
The rationale

• ICT as a major driver of economic growth
• Development of new products and services
• Productivity improvement in existing tasks and
  processes
• Concerns about e-skills an important element of
  policy at all levels of government
• Supply of properly qualified people seen as
  lagging behind demand
• One perceived contributor to the extent of
  outsourcing/offshoring being undertaken

4
A definitional reminder

• E-skills often interpreted as ICT skills -
  incorrect
• ICT skills
• Basic/advanced/professional (OECD)
• User/practitioner (e-Skills Forum)
• eBusiness skills
• Strategic in nature
• skills needed to exploit business opportunities
  provided by ICTs
• Contribute to development of new products
  services and business efficiency improvements
• Our interests focus on ICT professional
  eBusiness

Sources RAND Europe e-Skills UK, 2005
5
But just what are eBusiness skills?

• Few attempts to qualify/quantify specific set of
  skills (RAND Europe)
• Agreed that need to go beyond pure technical
  matters
• Business, creative and technical skills partially
  learnt in
• Business studies, commerce, multimedia,
  multimedia, information systems, fine art,
  librarianship, journalism, film studies,
  photography . (Irish Expert Group, 2000)
• Useful?
• Those skills needed by
• Internet business strategists
• Internet-dependent professionals (IDC/EITO,
  2001)

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Shortage, gap or mismatch?

• Shortage (recruitment need)
• Not enough people to perform ICT/eBusiness jobs
• Gap (retraining need)
• Competence shortfall amongst ICT professionals
• Mismatch (curriculum need)
• Difference between observed and expected ICT
  professional competences
• A dynamic workforce
• New developments require new skills
• Periodic curricular updates required to remedy
  mismatches
• CPD needed to mitigate skill gaps

Sources European e-skills Forum, 2004
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Origins destinations of IT graduates

• Overestimation of skills needs in 2000 (Internet
  bubble/millennium)
• Graduate entry into the IT workforce fell by 36
  between 2000 and 2002
• The slowdown affected Computer Science less than
  other subjects
• But the recruitment of graduates into
  professional roles is still higher for non CS
  subjects than for CS
• Also gender issues
• How does this hold for e-business occupations?
• More recent evidence?

Source e-Skills UK, 2005
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Supply UK and Europe

• ICT skills and skills gaps have ample attention
  in the UK (RAND Europe, 2005)
• Nordics and UK have highest proportion of
  professional e-skilled employment
• European curricular concerns (CEDEFOP, 2004)
• Lack of common definition of skills and skill
  levels relevant for employment
• Lack of qualification definitions/levels relevant
  to ICT
• Few common approaches to skill training
  standards and assessment/certification
• No way to validate training

Computer professionals as of employees
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Demand UK

• 65,000 vacancies amongst 41,000 establishments
• 34 of establishments (15,000) finding these
  vacancies hard to fill
• 9 business units in the UK reported skills gaps
  (ie retraining need)
• Focussed on development/implementation skills
• This constitutes only 3 of all ICT professionals
  employed

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The example of the media sector

• During the first Internet boom, there weren't
  enough talented, skilled people because it was
  such a new industry, but then the reality was
  that clients knew nothing anyway. You could put
  someone with one or two years' experience in
  front of them interactive was easy to blag.
  (Tribal DDB)
• "Clients now have six, seven or eight years'
  experience in interactive media, so if you put a
  junior person in front of them, then the skills
  gap becomes clear very quickly. (Tribal DDB)
• Chronic shortage of skilled people
• Hiring outside digital arena

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The example of the retail sector

• 1980 Tescos Shopping Information Service,
  Gateshead
• 1987-8 Teleshopping Consortium
• 1995-05 - Oxford Retail Futures Group
• 2000 Marketspace technology monitoring
• 2002 Retail technology scenario planning
• 2004 Retail IT project management research
• 2004 IT and retail productivity research
• 2005 Retail technology roadmaps

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Retail attitudes towards ICT in the 1990s

• Retailers are conservative
• Are adapters rather than innovators
• Use ICT to support existing operations
• As a result it confers little competitive
  advantage
• But can raise rudimentary barriers to entry

Source CEC/IRS, 1992
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Retail attitudes towards ICT in the 1990s

• Successful retail ICT for many
• doesnt involve long term RD
• provides visible financial benefit
• no extensive capital commitments
• low risk, staged implementation
• Exceptions for a few
• Use IT to deal with large, strategic issues
• Use IT to seek integration
• Undertake their own RD
• Use IT to enable a new strategic mission
• Who were the few?

Source CEC/IRS, 1992
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Lack of innovation?
General retailing
Food retailing
European E-Business Scoreboard 2004. Index for
the e-business intensity in four categories A
Connectivity of the enterprise. B ICT use for
internal business process automation. C
E-procurement and supply chain integration. D
E-marketing and sales.
Source DTI, eBusiness W_at_tch, 2005
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Major achievements

• For all the technologies weve seen developing
  over the past 25 years, the two that were really
  embraced by retailers were the introduction of
  the barcode and point-of-sale terminals (Retail
  Week, 2005)
• So where do we go from here?

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Why?

• Risk averse retailers?
• Scale, cost and complexity of transformational
  technology projects
• Organisation of IT investment
• Project management problems
• Lack of training
• Customer need?
• Lack of products delivering genuine and
  measurable customer benefits

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(1) Scale and complexity of transformational ICT
projects

• Aging technology investment and aging stores are
  the primary limitations to productivity (US
  retailer)
• We celebrated our 30-year anniversary this year,
  and so did our systems. It means that the system
  is capacity-constrained, things that you do are
  not particularly sexy, and also you cannot do
  many things you want to do. (UK non-food
  retailer)
• At any one time we may be actively considering
  between 75-150 technology-related projects across
  the business (UK mixed goods retailer)

Source OXIRM, 2004
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(2) Organisation of ICT investment

• The companies I looked at in the UK tended to
  have the in-house IT departments because it was
  seen as being a key competitive advantage. In the
  US, the systems companies tend to develop retail
  company systems more generally which then every
  retailer took up. It would appear that internal
  IT capacity was not seen by US retailers as the
  key competitive advantage hence everyone became
  efficient at the same rate. In the UK, on the
  contrary, retailers had to replace their systems
  at different speeds and thus have different
  systems capabilities and they retain in-house IT
  systems which may be extremely costly. (US
  non-food retailer)

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(3) Project management
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How are UK retail projects doing?
Source OXIRM, Computer Weekly, 2004
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(4) Training in the retail sector

• Only 34 of those working in retail are qualified
  at Level 3 or above (compared with 52 of the
  whole economy).
• At management level, 13 are without any
  qualifications at all (75,000), while only 22
  are at Level 4 and above (compared with 39 of
  the whole economy)
• Key skill needs
• Customer services
• Management and leadership
• Information technology

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(5) Lack of products delivering genuine and
measureable customer benefits

• Theres a lot of it out there
• 22,000 screens being used for promotional
  purposes by UK retailers (POPAI)
• were still writing the book on this. Most
  (retailers) still have more questions than
  answers.
• There is a continuing need to
• sell the benefits, not the product, to create
  more interesting interiors and captivate
  shoppers attention. (review of Multi-channel
  trade show)
• To what extent do we still see solutions in
  search of problems? E.g. 3G

23
(5) Lack of products delivering genuine and
measureable customer benefits

• How come not much of the wizardry in
  non-customer facing technology has made its
  appearance in front of customers? As usual, we
  have been short-changed with a lacklustre series
  of electronic knick-knacks (Bernard Dooling,
  20/20)
• What does the customer want?
• E.g. Self checkout
• Today, I confront 40,000 items in my grocery
  store -- and I get nowhere near Amazon.com-like
  levels of help when I walk in the door. The first
  retailer, producer, or marketer who figures out
  how to do this cost effectively has me, and my
  self-directed, price-insensitive, high-margin
  brothers and sisters, for life. (Andrew Zolli,
  Foresight Strategist, FMI Washington, 2005)

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The Few Tesco.com

• First trialled in 1996
• 577mn 2003/4 turnover (29) (401mn H10506)
• 65 online market share
• 28mn profit (21mn H10506)
• 270 outlets
• 96 population
• 170,000 orders per week
• Average customer spend 7 over past three years
• Range extension
• Multichannel data insights

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The Few Argos

• Leading UK general merchandise catalogue store
  retailer
• Low cost/value positioning
• 2004 3.3bn sales (12) 297mn profit (23)
• 561 stores, multi-channel
• 13,000 products in main catalogue (17k Argos
  Extra)
• 2/3 households collect catalogues from stores
• 34 mn catalogues produced per year (2 issues)
• Argos Direct 20 sales (including 2.6mn telephone
  orders)

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High level of system process integration

• Early adopter of ICT
• Website launched 1995
• SMS service launched 2002
• Argos Direct home shopping infrastructure
• UPS Supply Chain Management solution consolidates
  deliveries
• 15,000 full vehicle loads (comp up to 55,000 part
  loads)
• Delivers to 1 in 7 UK homes
• Gains from supply chain initiatives re-invested
  in lower prices, which are down 5 per cent on
  last year.

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What does the future hold?CIES CIO IT
Priorities, May 2005

1. Improving Business Processes
2. Gaining Competitive Advantage
3. Demonstrating Value of ICT Projects which help
   Drive Business Growth
4. Cost Control
5. Faster Innovation

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Management Information Systems

• Data fusion
• Extracting meaningful data from multi-sensor
  acquisition
• Data standardisation, especially at the product
  level
• Data mining
• Information management
• Reward and loyalty schemes
• Customer profiling and scoring
• Personalisation
• Intelligent agency

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Imaging

• Imaging Intelligent CCTV
• Self-learning systems
• Theft prevention
• Customer/employee monitoring and tracking
• Trajectory analysis
• Brain Science
• Improving awareness of social behaviours
• Brain scanning, neuroeconomics and
  neuromarketing
• Beware the cognitive paparazzi

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Design simulation and modelling

• Store design layout
• Immersive visualisation and 3D design
  applications
• Customer flow modelling
• Realtime walkthroughs
• Layout optimisation
• Promotional placement
• Energy efficiency
• Store environment simulation

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Security e.g. biometrics

• Incremental
• Employee access control to stores, time and
  attendance at work
• Management of customer records, control of fraud
• Significant
• Voice recognition, bank transaction
  authorisation, electronic point of sale, secure
  operation of ATMs
• Sustainable, differentiating market offerings
  e.g. Fully Automated Seamless Shopping/Travel

Source Heracleous Wirtz , 2005
32
RFID

• Impartial advisory role
• Standards development
• Costs vs payback modelling
• Innovation by suppliers to match industry needs
• E.g. Digital receipt technology
• E.g. Locational positioning logistics
• Dissemination of best practice for both large and
  SME retailers
• RFID and the consumer

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Pervasive computing

• The creation of environments saturated with
  computing and wireless communication, yet
  gracefully integrated with human users
• wearable and handheld computers,
• high bandwidth wireless communication
• location sensing mechanisms
• Swiss Army Knife vs Wallet approach
• Social economic drivers of ubiquitous computing

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How do we decide upon need?
RESEARCH
Scholarship
Consultancy
EDUCATION
PRACTICE
Training
Source Christine Cuthbertson, 2003
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Conclusions

• What do we mean by e-Business skills?
• How do we tackle gender inequalities and
  shortages, gaps and mismatches?
• What are the evolving needs of existing
  practitioners?
• Dont forget entrepreneurship
• Sector-specific insights and futures