Martin Sundblad (Research Manager, IDC European Skills Practice)

Paying for Skills — A Problem as Old as Mankind

The large organ of the church in the innermost part of Sweden had broken down and refused to contribute to Sunday sermons. The parish grew tired of psalms without music, and the vicar was finally forced to call for the carpenter from town.

The carpenter came, crawled into the inner parts of the organ, replaced one screw and came out again. The bill was presented — “Fixing One Organ in Church: 543 Krona“. The vicar — taken aback by the amount and seeing that a large part of that year’s budget would be spent in one blow — claimed that the replacement of one screw could not possibly be that expensive and asked for an itemised invoice. The bill was presented anew:

  • One Screw Replaced: 32 Öre.
  • Knowing Where the Screw Was: 542 Krona 68 Öre

Skills are one of the most valuable assets in the world. On average, we spend 16 of our first 25 years in intense training to acquire the most basic skills to be worth a salary, or to be worthy of building a company.

Technology Budget for Skills’ Development

The sourcing, development and planning of skills takes an increasing part of the technology budget, as the alternative of failure or delay of projects is costly indeed, only because the right skills were not available at the right time. As part of our research programs, we continuously survey the success factors and inhibitors in the adoption of new technology.

A lack of skills and lack of experience are in the top 5 factors in 20 of our 25 most recent surveys. For example, it is number 4 in European priorities for digital transformation — 41% of respondents say that talent excellence, change management and innovation culture is the top priority.

The strength of the digital transformation of enterprises and society is tremendous, and it has so far withstood the crisis. The crisis has changed the shape of DX, but it has not weakened it — mobility, virtual collaboration, remote learning and automation will replace other technologies in priority. AR/VR, blockchain and other technologies with longer term benefits will be given lower priority.

The Right Skills at the Right Time

What has this done in terms of our need for skills — the right skills, at the right time in the right amount? Apart from a slowly wakening understanding that there (indeed!) is a gap between the skills we have and our future needs, people are starting to realise the true meaning of life-long learning. What we learnt yesterday is not necessary what we need to understand next week.

The awakening has also reached management level. If the right skills are scarce, what do you need to do to attract the right talent, to develop the right skills in the right people, to retain the right people and build loyalty?

Employee experience and employee value proposition obviously has room for improvement. Our research shows that 62% of European respondents still consider the employee feedback provided by the ever-present surveys something relevant for the respective departments, but without impact on business strategy.

Skills Management

Part of the answer lies in the separation of workforce and skill. You can make an inventory of the skills you have and the skills you need without identifying the individuals you need.

This will also allow you to measure, develop and match supply and demand more easily by treating skills as an asset you can and should measure, develop and match, and bring that approach to skills management up to a strategic level in your company.

Skills management is about:

  • Sourcing the right skills. How to recruit talent, and how to mix your in-house skills with externally sourced.
  • Skills development. What investments you should make to enable your workforce to develop the skills you need.
  • Skills planning. The strategic planning on future demand for skills in your organisation, and the matching of skills demand against skills supply, and what measures need to be taken to meet business goals.

We recently released the update of our Technology Employment Impact Guide, in which we measure employment in 40 of the most relevant job roles worldwide and provide detailed forecasts for each industry and region. This is, in our opinion, the foundation for any skills strategy.

The report shows that even though we have modest growth overall in tech-related roles, there is a massive shift within the technology community. Data scientists, security specialists and machine learning grow quickly, whereas database administrators, graphic designers, and social media managers have a flat to negative curve.

We are facing a move from IT operations to datacentric and business-oriented roles. The same will happen with the skills we develop; most IT professionals will have to develop some in-depth skills in data analysis, security and computerised intelligence, for example in automation.

Fulfilling the Skills’ Gap

We have estimated that by 2025, $229 billion will be lost in Europe due to the delayed release of products/services, missed revenue, or increased cost. It is a massive amount, but we have all had our experiences from delays and failures in projects where the ambition and business case were sound, but the execution did not get the resources it needed.

The reasons for this skills’ gap come from the rapid development in technology, the tremendous pace of digital transformation and the inherent slow change of the educational system. But — and this is something that is about to change — it also comes from cost pressure in IT delivery in the 2000s and 2010s. It has been far more profitable to allow people to remain in a role they have proficiency in than to plan and train them for future needs.

Which brings me to the last point. This massive shift in technology that we are facing cannot be filled with new recruits and generation Z only. We as individuals as well as our employers will have to look at the skills needed five years from now, build that strategy, and start to make the inventory — what skills we have, and what skills we may need.

Continuous upskilling is probably an answer, but what kind? Reskilling and career shifts may also be an answer, where the skills supply has become outdated. The point being — skills need to be quantified, measured and strategized, and it is a matter for the business as a whole, not only HR.

If you want to learn more about this topic or have any questions, please contact Martin Sundblad, or head over to https://uk.idc.com and drop your details in the form on the top right.

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