© Jonathan Reynolds, 2005 E-business: Strategy, skills and careers issues Dr Jonathan Reynolds...

© Jonathan Reynolds, 2005

E-business:Strategy, skills and careers issues

Dr Jonathan ReynoldsOxford Institute of Retail Management

Saïd Business School & Templeton College

University of Oxford


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


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


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


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)


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


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


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


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


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


The example of the retail sector• 1980 – Tesco’s 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


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


Retail attitudes towards ICT in the 1990s

• “Successful” retail ICT for many– doesn’t involve long term R&D– 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 R&D– Use IT to enable a new strategic mission

• Who were the few?

Source: CEC/IRS, 1992


Lack of innovation?

Source: DTI, eBusiness W@tch, 2005

Food retailingGeneral retailing

Retail

-1,5

-0,5

0,5

1,5A

B

C

D

Max Average Retail

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.


Major achievements

• “For all the technologies we’ve 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?


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


(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


(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)


(3) Project management


How are UK retail projects doing?

ALLPROJECTS

Schedule Budget Spec

ON/AHEAD 48%

BEHIND 46%

ABANDONED 6%

ON/BELOW 42%

ABOVE 6%

ON/ABOVE 23%

BELOW 19%

ON/BELOW 23%

ABOVE 23%

ALLPROJECTS

Schedule Budget Spec

ON/AHEAD 48%

BEHIND 46%

ABANDONED 6%

ON/BELOW 42%

ABOVE 6%

ON/ABOVE 23%

BELOW 19%

ON/BELOW 23%

ABOVE 23%

Source: OXIRM, Computer Weekly, 2004


(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


(5) Lack of products delivering genuine and measureable customer

benefits• There’s a lot of it out there

– 22,000 screens being used for promotional purposes by UK retailers (POPAI)

– “we’re 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


(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)


“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


“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)


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.

Click and CollectReserve items at your local store online!

Shop online at argos.co.uk and you can either:

- Order for home delivery, and pay online.

- Reserve items* at your local store, and pay in store when you pick up your order.

Text and take home

Vodafone Live!A new way to browse our catalogue on the move


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


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


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’


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


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


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


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


of

RESEARCH

EDUCATION PR

ACTICE

Training

Consultancy

Scholarship

Source: Christine Cuthbertson, 2003

How do we decide upon need?


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?

• Don’t forget entrepreneurship

• Sector-specific insights and futures

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