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© Jonathan Reynolds, 2005 E-business: Strategy, skills and careers issues Dr Jonathan Reynolds Oxford Institute of Retail Management Saïd Business School & Templeton College University of Oxford
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 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)
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 Retail attitudes towards ICT in the 1990s Successful retail ICT for many –doesnt 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
© Jonathan Reynolds, 2005 Lack of innovation? Source: DTI, eBusiness W@tch, 2005 Food retailing General 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.
© Jonathan Reynolds, 2005 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?
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 (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
© Jonathan Reynolds, 2005 (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)
© Jonathan Reynolds, 2005 (3) Project management
© Jonathan Reynolds, 2005 How are UK retail projects doing? Source: OXIRM, Computer Weekly, 2004
© Jonathan Reynolds, 2005 (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
© Jonathan Reynolds, 2005 (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
© Jonathan Reynolds, 2005 (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)
© Jonathan Reynolds, 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
© Jonathan Reynolds, 2005 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)
© Jonathan Reynolds, 2005 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 Collect Reserve 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 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
© Jonathan Reynolds, 2005 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
© Jonathan Reynolds, 2005 of RESEARCH EDUCATION PRACTICE Training Consultancy Scholarship Source: Christine Cuthbertson, 2003 How do we decide upon need?
© Jonathan Reynolds, 2005 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
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