ASEE PRISM - October 2000

Engineering educators can help make their students more marketable by adding e-commerce to the shopping cart of skills

By Dan McGraw

TEN YEARS AGO--NO, MAKE THAT FIVE YEARS AGO--the kind of engineer a company like J.C. Penney would have looked for to help streamline its catalog sales division would be different than who it would want today. Back then, the ideal candidate would have a good solid engineering background, and be able to solve the problems of how to get products more efficiently from the warehouse to the loading dock. Maybe that would involve developing an automated system that would move products quicker, or a better way of tracking orders as they moved through the system--perhaps even getting orders more quickly from order-takers to the people actually packing boxes.photgraph by Kevin Mackintosh for Tony Stone Images

But there would be several areas of expertise that the engineering candidate would not have to bother with. Customer preferences, marketing strategies, and new products initiatives would be left to the marketing whizzes. Just-in-time inventory controls, vendor relationships, and synergies between the retail stores and the catalog division would be left to the management gurus. The cost for making improvements to the system would be left to the bean counters at corporate headquarters.

Candidates today might not have to be experts in all those areas, but they certainly would have to be familiar with the overall business and be conversant in the business language. The reason is, of course, the boom in e-commerce. And as more and more traditional consumer products companies shift their sales strategies to online business models--Penney's did $102 million in Internet sales last year, a 227 percent growth rate over the previous year--software engineers and logistics experts are being called upon to know more and more about the online business model.

BRAVE NEW WORLD

The Internet has changed everything in business, including the roles engineers play within the corporate world--the line between the back of the house and the front of the house has been forever blurred. But the challenge for engineering educators is daunting. Technical skills, such as programming languages and creating databases, are already part of the computer engineer curriculum. The question is: should engineering schools also turn their students into marketers, into experts on consumer behavior and financial strategies? And does pure science education suffer as these "soft skills" are folded into curriculum?

The first answer is that engineering educators have little choice but to keep up with this new wave. "We have to teach the soft skills, the ability to negotiate, the ability to synthesize tangible and intangible data," says Thomas H. Byers, an associate professor of management science and engineering at Stanford University and program director of the Stanford Technology Ventures Program. "This is stuff you don't normally teach--but it is absolutely critical for success in the entrepreneurial economy." In fact, it is one of the major factors behind ABET 2000, which calls for engineering students to master both the rigorous technical skills as well as the "soft skills."

Just about every engineering school in the country is reassessing how to prepare their students for the Internet economy. Many of the changes involve melding management courses into traditional engineering curricula, and the changes are being made because of the new way that companies are doing business in the e-commerce world. With increasing frequency, businesses are demanding that their new employees have expertise in both the hard sciences and business applications. Students are demanding those changes as well, because their value on the job market rises as they acquire more, and diverse, skills.

There has been some speculation that the role of e-commerce has somehow peaked and will become less important with time. The evidence for this downturn came with this year's devaluation of dot-com stocks, and the business failure rate of so many pure Internet companies. But the data suggest that e-commerce is still growing at an exponential rate, and has actually entered into a new growth phase. Many "traditional" consumer product companies--J.C. Penney, Wal-Mart, Procter & Gamble--had delayed entry into the new arena for a variety of reasons. One major reason was that these companies spent lavishly to prevent the Year 2000 computer glitch, and postponed information technology spending until that problem had passed. No longer distracted by the Y2K bug, these companies are focusing their technological resources on e-commerce.

The result is that the traditional brick-and-mortar businesses will be driving the next big push in e-commerce. According to Forrester Research, an Internet research firm, U.S. consumers will spend $38.8 billion on online purchases this year. By 2004, that figure could rise to $184 billion, or 7 percent of all retail sales. The global Internet economy could reach $6.9 trillion by 2004, while business-to-business online sales could hit $1.8 trillion by 2003. And, according to Forrester, as companies build out their online businesses, software spending by U.S. companies could grow from $3.1 billion in 1999 to $14.5 billion in 2003, and large companies will be responsible for fully half of that software market growth.

"To thrive in these competitive arenas," says Forrester analyst Eric Schmitt, "firms will need software tools to promote brands, analyze trends, and capture market share, as well as the support tools to retain buyers--all of which will require a reliable, high-performance software infrastructure."

STAYING ON TOPphotgraph by Kevin Mackintosh for Tony Stone Images

The challenge in teaching expertise in e-commerce is that the target is continually moving. Would anyone have thought last year that Amazon.com would fall out of favor with investors who would question the giant e-tailer's core business model? Would anyone have predicted that the failure rate of dot-com businesses would run so high this year? And if the dot-coms are having trouble making it, what does that say about the entire e-commerce business model?

Michael Rappa, a technology management professor at North Carolina State University in Raleigh, contemplates the changes in the Internet economy and tries to keep his students apprised of the changes. His "Managing the Digital Enterprise" course is an e-commerce offering for both engineers and management students. The thread that connects the students is that the new way of doing business combines old and new business rules in a way that is quicker and more diverse than in the past.

"The market is really looking for engineering students who have some understanding of the business model of the organization they will be working for," Rappa says. "They want solid engineering students, students who are well-versed in technology. But the marketplace is also seeking students who have business savvy, students with a broader understanding of the big picture."

"We shouldn't get confused here, though," he continued. "The marketplace doesn't want engineers to be strictly marketers, but they need engineers to know about the challenges of marketing and finance and legal issues and not ignore them. That means getting students to understand the language of marketing and finance so that they are conversant and have a real understanding of the different roles they will have to play. The Internet has pushed technology and business closer together--it is unlike anything we have ever seen before."

Rappa's course reinforces the fact that e-commerce does not simplify the number of business models, but instead expands them. Some businesses may find success acting as virtual brokers, either in the consumer-to-consumer market or in the business-to-business market. Other e-businesses may follow the traditional merchant model, using the efficiencies of the Web to offer their products cheaper and to a wider audience. Others may follow the free services model, where their product is given away and the revenue streams come from increased advertising opportunities.

"The challenge in teaching about e-commerce is that there are increasingly more and diverse valid business models," Rappa says. "The old business model says there are one or two ways to sell a product or service. The Internet expands that into dozens of business models, some of which we probably haven't seen yet."

TAKING IT ONLINE

Rappa's approach for teaching e-commerce to engineering and management students has opened some eyes in academia because he offers it free on the Internet. While the physical classroom accommodates about fifty students, the number taking the course online is unlimited. And Rappa believes he is among the first to teach a course like this without the use of a single textbook; every bit of information relating to the course can be downloaded from his Web site (www.ecommerce.ncsu.edu).

While many in the academic community have wondered about the wisdom of offering courses for free on the Internet, Rappa sees opportunity--and a lesson in e-commerce. He likens his course to National Public Radio. NPR is offered free to listeners, and those who like the programming donate funding to keep the service viable. Likewise, Rappa has formed corporate partnerships with companies with large e-business components--including Cisco Systems, AT&T, IBM, Eastman Kodak, and Glaxo Wellcome--who welcome the free coursein e-commerce for their employees. The corporate partners have a combined revenue of $250 billion and employ 900,000 worldwide. Rappa says that these corporate partners have donated $300,000 since January, which pays for faculty research, student projects, and Web-based education resources at North Carolina State.

These kinds of partnerships are good investments for corporate America. "It gives us a vested interest in much of the research that the N.C. State e-commerce initiative will produce." says Selby Wellman, senior vice president and general manager of Cisco Systems' Interworks Business Division.

Members of the consortium use Rappa's virtual course as a way to keep their employees up-to-date on the newest research on e-commerce. Some of the companies plan to use it on their intranets to provide educational content to their employees worldwide. The site has more than 1,400 hyperlinks and has as many as 1,000 users every day.

The controversy of offering such a course for free goes to the very core of the educational mission--and to the core of how e-commerce has changed all of business. Rappa likens his course to people going to see a movie in a theater. The old business model was that you charge admission to everyone going into the theater. Rappa says his model is like opening up the theater to everyone for free.

"What we are saying is that we will let you in for free, "Rappa says." And while you are in there, we will show you some advertising and sell you some products. The charge for the service comes with certification. If you want to be certified by North Carolina State, we will charge you accordingly. But we are not going to charge directly just for students to learn. In that way we can expand our educational mission as wide as possible, yet still have a course that is up-to-date and constantly changing."

Given that e-commerce is where business management and technology come together, most schools are offering hybrid degrees or course work that combines engineering and management degrees. Massachusetts Institute of Technology's Sloan School of Management offers a specialization in e-commerce. Vanderbilt University's Owen school of Business offers a program that mixes e-commerce with telecommunications. For the past two years, Carnegie Mellon University has offered a one-year master's of science in e-commerce.

Other schools are putting their resources into research. At Georgia Tech, $5 million was recently raised to build an e-commerce research center. Stanford University has used grants from Silicon Valley e-commerce entrepreneurs to fund a new Center for Electronic Business and Commerce.

BACK TO THE FUTURE

Deciding what kind of emphasis to put on e-commerce and entrepreneurial skills can be difficult for educators. Rather than treating e-commerce like a new discipline, engineering students need to know how it relates to a multitude of businesses. And educators must realize that the new paradigm for e-commerce is actually based on long-established rules of business and marketing.

Mel Horwitch, chairman of the department of management at Polytechnic University of New York, says that any real education in e-commerce must come from showing and understanding how e-commerce is similar and different from the conventional business models. "What is important is that engineering students learn that technological innovation is always based in the market economy," Horwitch says. "You can't learn about technological innovation just by taking science courses. The Internet economy only makes that more important."

Horwitch says the important business principles for engineering students to learn can be broken into three areas. The first group, he says, are the tried-and-true skills that were as good thirty years ago as they are now, such as leadership, communications, and mass marketing. The second group would be those skills more recently adopted, such as aligning technologies and learning to reduce product life cycles. The third group would be centered almost exclusively in the world of e-commerce. These would include managing feedback on the fly, gathering data on customers, and linking up suppliers via Web sites. The result, Horwitch says, is the ability to develop courses that are less experimental and more grounded in basic business principles.

"You can't simply say that e-commerce or e-business is a fad--it's not," Horwitch says. "We realized that to address these necessary business skills, we had to blend courses and concepts related to e-commerce and technology. The key thing today is complex integration. You don't want narrow-based science and engineering."

The problem for engineering schools is that for every new business course added to curriculum, something must give. Rappa says that he sees many students taking courses in e-commerce, regardless of whether they fit into the degree program they are pursuing. "We see more and more engineering students taking these classes because they feel they need to, not because they need the course to graduate," Rappa says. "The issue is that a qualified engineering graduate is being called upon to do and know more. But nothing is being replaced in terms of curriculum. It is something the academic community really has to think about."

There are going to be some trade-offs. Science and technological innovation are inextricably linked with the market-place. And yet, pure science and pure research has often yielded its greatest results when it has been divorced from the strict market forces. At the same time, engineering grads are required to have more skills in the current marketplace. And the driving force in the new economy will be e-commerce, a place where engineering graduates will have the most impact.

"This is an experiment," Stanford's Byers said in a recent interview. "We don't know all the answers. We'll see five or ten years down the road what impact it's had. I do know it will enhance students' chances for success, because knowledge is power. But being an entrepreneur is a mindset. It's a way of living your life. It's being obsessed with thinking about opportunity. And it's understanding what it takes to go from an idea to a business."

 Dan McGraw is a freelance writer living in Fort Worth, Texas.

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