When I sat down with the co-founder of DataStax last week, Matt Pfeil, he brought up something that is becoming increasingly common in my conversationswith those working in, or those in contact with, the enterprise IT sector. Pfeil was expressing his concern about the lack of digital skills in the marketplace at the moment. He said:
There's a shortage of software developers for every company on the planet right now. It used to be you needed software developers if you were at a tech company, but now a brick and mortar needs software developers. It's sort of scary. Computer science has not been an attractive course for people to enrol in and I don't know why, because you're actually compensated really well from a financial angle. People don't like the nerd mentality. But every company on the planet needs more software developers and not enough exist. There's a lack of supply for really qualified individuals to build stuff.
And herein lies the problem. As the need for digital skills has extended outside of the more traditional software houses and into businesses that needed an online presence (predominantly retail, publishing and finance to date), the demand has begun to rapidly outstrip the supply. It is becoming less feasible to simply outsource the design and build of a website as a one off job that gets updated every couple of years, as businesses are becoming increasingly aware of the possibility of multi-channel digital products and as a result are trying to embed these skills across the enterprise.
Pfeil raised another point that although at the moment this has largely been extended to those that have a need for online transactions – e.g. commerce – with the internet of things threatening to go mainstream, this increased demand and competition for the best digital skills is only going to get worse. So, in the future not only will you need the right people to build digital products across web and mobile, but you will also need developers to build products for 'things'. This will touch every industry, from health to manufacturing to shipping to electronics. If you think you have a skills problem now, give it five years or so when you want your products to be talking directly to your customers...
And the figures aren't looking good at the moment. A recent piece of OECD research found that the United States is below average when it comes proficiency in problem solving in “technology rich environments” (digital) - falling behind Finland, the Netherlands, Australia, Canada, Germany, and others – highlighting a fundamental skills gap across the whole economy. Others have also estimated that the problem “bleeds” $1.3 trillion a year from US businesses. Obama has of course made moves to address this with his Educate to Innovate programme and with plans to welcome more immigrants with strong technology skills – but unfortunately, skilling up a nation isn't a quick fix.There are also problems in the UK, with the government recognising that businesses are calling out for digital graduates, and yet have only just begun to shake up the school curriculum to include coding – instead of just teaching students how to use Powerpoint and Word (seriously). A new Digital Skills Committee of the House of Lords has also been put together and will be conducting an inquiry into digital skills across Britain to “explore how the UK can be prepared to compete in a global digital economy”.
I can tell you now what this inquiry will discover – the UK is most certainly not equipped to compete (shock horror). Thanks to a decade or so of poor education and training. Just this morning I've had a couple of press releases in my inbox from companies looking to address the lack of digital skills – including one from Lloyds Banking Group that is attempting to increase the digital capability of SMEs and charities across the UK, to help the government work towards its target of reducing the number of people with basic digital skills by 25% by 2016.
I also received some new research from the Management Consultancies Association (MCA) this week, which found that 94 percent of senior executives view digital as important or very important to their business, and yet a fifth report that the quality of digital skills amongst graduates is average to poor. But more interestingly, it seems that those being polled (CEOs, CIOs, CDOs and CFOs) have some very 'interesting' and diverse ideas about what digital actually is. Rachel Barton, Managing Director at Accenture for Customer Strategy, noticed this too and said:
Boards do recognise that Digital is important. But I do not believe that boards understand it and they certainly do not recognise the fundamental shift it is going to have in their organisation beyond the introduction of a new channel.
Just for your entertainment, here are some of the comments from those that were polled about how they would describe digital:
- Latest buzzword
- Not analogue (someone's being clever)
- Without wires (?!)
- Phones and TV (?!!)
- Done with fingers (?!!!!)
There were some better informed responses, with people describing it as “technology as a medium” and “the use of mobile and technologies for competitive advantage”, but generally there seems to be a lack of understanding from those high at the top about what exactly digital is – and if you don't understand what digital is, I don't believe you understand how or why it should be used internally to drive your company forward.
- How do we solve the Enterprise UX skills gap? (diginomica.com)
- Do we really need Chief Digital Officers? (diginomica.com)
- UK government pitches digital skills charter, but is it inclusion or delusion? (diginomica.com)
- Barclays is training thousands of 'Digital Eagles' to tackle digital exclusion (diginomica.com)
And this is why you should be panicking. With the lack of supply in the market, software developers and those that are digitally savvy are presented with a certain amount of choice, which allows them to be more picky than those in other fields. With companies from all spaces crying out for the best digital talent, the best graduates and digital candidates out there will not be begging for positions, but rather looking at where they would like to work. If these candidates sense that those at the top of the company don't get what digital is and how much of an asset they would be to the business, do you really think they would take the the job? I doubt it.
Companies need to make some changes to become digitally desirable. And this shouldn't be just the IT department's and the CIO's job, it should be a programme that runs through the entire enterprise, from the top down. A recent Capgemini report addressed this exact problem and identified some ways that companies can stay relevant. It states:
The reasons driving this skills shortage are not hard to identify. The usage of mobile, social and analytical tools is permeating the length and breadth of every function across the organization. Unlike the past, the impact of these digital technologies and tools is felt not just in the IT department.
This means that the magnitude of training and re-skilling that is required is enormous. Moreover, each new technology cycle has brought forthnew requirements and these cycles are increasingly getting shorter. Employees must now refresh their skills more frequently if they wish to stay relevant in this rapidly changing digital environment
So how can companies make moves to plug this skills gap? Capgemini suggests the following:
- Employee Exchange Programmes – The report highlights an example, where multi-national consumer goods company P&G needed to scale its internet marketing initiatives and its digital skills and as a result started an employee exchange programme with Google. Employees from both companies took part in each other's training programmes, as there was something to gain for both sides – presumably Google got an insight into the consumer goods market and the requirements of such businesses, whilst P&G gained expertise on digital and search marketing. If you can partner with other companies to skill up, do it. You don't have to attempt it on your own.
- Digitize the recruitment process – Capgemini states that over 49% of digital candidates are more likely to consider a job advertised in an innovative way. For example, L'Oreal uses gamification on its recruitment website by allowing candidates to take part in real-life problem solving scenarios, within a virtual environment. Candidates collect points and receive feedback, and those with the highest points compete for job opportunities within L'Oreal. The report also states that if you're a company that needs to build up a certain digital skill set, look to recruit out of certain industries that have been early movers in those fields e.g. analytics and the financial sector.
- Company acquisitions – if you're building up a certain capability and there's a company out there that you could acquire that is complementary and fills those gaps, then consider it. Buy in the skills.
- Incubators – We have begun to see more and more of this as companies across all sectors begin to look for start-ups out there that may fill certain gaps and give them a competitive advantage. By nurturing desirable start-ups while they are in the early stages of development, not only may you get access to the skills you require, but you could end up with an investment in a company that generates revenues too. There's a risk involved, sure, but definitely something to consider.
If you're reading this because you think you may have a skills gap within your organisation – don't sit around and assume that it will sort itself out. This is a highly competitive market and if you want the best candidates out there, you're going to have to fight for them. Invest in recruitment, invest in training and make your company a desirable place to work for those that want to use their digital skills within an innovative organisation.