Elixirr: Education to boost digital capabilities UK SMEs

11 February 2015 Consultancy.uk

The training of future digital experts could boost the digital capabilities of UK’s SMEs, which subsequently could boost the country’s GDP, research by Elixirr shows. According to the firm, SMEs are experiencing four barriers to adopting digital, of which education is one. In addition to focussing on digital training in the educational lifecycle, businesses should invest in training on the work floor.

Management consulting firm Elixirr recently released two research reports focussed on small and medium-sized enterprises (SMEs) and digital skills in the UK. In its research the firm investigates the barriers SMEs face to operate in the digital economy and how businesses can help equip the UK workforce with digital skills.

SMEs and digital in the UK economy
Digital is often associated with business growth, innovation and consumerism. According to the consulting firm this is for a very good reason; in 2011 it was estimated that if the UK had fully embraced the potential of digital and had exploited all of the digital capabilities, the country would have experienced a £63 billion uplift in total GDP in that year. As SMEs account for 99.9% of all private sector business in the UK and make up almost half of private sector GDP in the country, SME engagement with digital technologies is especially significant if the UK is to embrace the potential of digital. Elixirr’s research shows, however, that many SMEs fail to embrace digital. So, how come many SMEs are experiencing difficulties in becoming digital organisations?

Elixirr - Digital SMEs

Education as barrier to digital
One of the barriers* for SMEs to embrace digital is education and skills. Equipping the workforce with the skills needed to succeed in a digital economy starts at schools, needs to be reinforced throughout university and constantly refreshed in the workplace. According to Elixirr, the limitations in the current education lifecycle restrict this process from happening. Research shows that 36% of small businesses in the UK are experiencing a shortage of skills and around 745,000 additional workers will needed between 2013 and 2017 to close the gap in skills demand.

The ‘education’ barrier can be broken down into three areas: a skills shortage (there is a lack of the necessary skills), a skills gap (misalignment in current skills and the necessary skills) and underutilisation of skills (incorrect use of existing skills) and is caused by limits in Science Technology Engineering and Mathematics (STEM) education and training, the gender gap in STEM related careers, and the fairly unresponsive educational system to changes in industry patterns.

Education to boost digital skills

Education as enabler of digital
To overcome the educational barriers and to use education as an enabler of digitalisation, education should become more STEM focused, the researchers say. STEM subjects should become core subjects, STEM curriculum and content should be offered online to support content refreshing, STEM teachers should be encouraged by increased rewards and training, and industry-led initiatives should be encouraged to reduce the gender divide in STEM careers and to facilitate the most current learning in the classroom. “STEM subjects need to take a more prominent role in the educational curriculum to ensure that training in digital is started early so that future generations can offer the labour market the much needed digital skills to succeed,” the researchers explain.

Digital network

In addition to this, the report lists four methods education and training by business as key to up-skilling the UK workforce. The first is ‘on-the job-training’, which involves traditional self-service training, social media training, and reverse mentoring. ‘Training outside the day job’ is the second method, which involves cross skilling between businesses and the education of digital skills outside the day-to-day role as well as the reducing of inequality in skills. The third method is ‘investment in industry, the community and the current workforce’ and the last the ‘business influence on training the next generation’, as businesses know which skills they need to succeed in the digital era.

According to Elixirr, the education barrier, as well as the other three barriers, needs to be addressed to prevent the UK from falling behind other countries and compromising future business sustainability.

* The four barriers are education and skills, culture, change, and investment.


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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”