Introducing EPOS at WIlliam Hill
Disclaimer: This work has been submitted by a student. This is not an example of the work written by our professional academic writers. You can view samples of our professional work here.
Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
Published: Thu, 12 Oct 2017
THE EPOS SYSTEM AT WILLIAM HILL
POTENTIAL BENEFITS AND LOSSES
William Hill is a major bookmaker worldwide, with over seventy years experience in offering betting services. It is currently one of the leading gaming companies in the UK, where it operates over 1600 betting shops, serves over 800,000 betting slips each day via phone (standard and mobile), and recently began Britain’s first interactive digital television channel devoted entirely to gambling (Lee 2004). It is the country’s most successful Internet gambling company in a country where over four million people bet in online gaming rooms every month (Thomas 2004). William Hill was the first major gaming organisation to offer online betting, opening its website in 1996 (Lee 2004).
The William Hill culture pairs low-cost, low-risk emphasis in business decision making with a willingness to be innovative, particularly in regards to use of technology (Hargrave 2004)). This makes it all the more surprising that the organisation has waited so long to implement electronic point of sale (EPOS) machines in its betting shops. While these are expected to make the company more profitable, efficient, and competitive, the implications of these machine span across the organisation. Of specific interest is the effect of the system on the people involved, traditionally an important part of William Hill’s success.
This study seeks to consider the possible benefits and losses to William Hill from the implementation of the EPOS system. Three specific areas of consideration are the effect of the machines on corporate and local shop culture, whether the EPOS system will increase efficiency, and whether the system will contribute to increased competitiveness.
The objectives of this study are to critically examine the introduction of an electronic point of sale system as implemented at William Hill. Specifically, this study aims to examine the strategic considerations of the EPOS and how its effectiveness can be optimised. The study begins with a review of literature and research available about William Hill, the firm’s operations, and EPOS systems in general. This Literature Review serves as a foundation for understanding analysis of the rest of this work.
Following the Literature Review, of first consideration will be the effect of EPOS on the corporate and local culture of William Hill. Will EPOS enhance or detract from positive aspects of current culture? Will the increase in customer information and the ease of its analysis draw new customer groups into traditional betting shops? If so, what will be the effect of this on the shops and their regulars? How will staff react to the changes caused by the EPOS system? Will EPOS change how customers and staff interact? How does the introduction of EPOS compare to the effect of technological advances on workers in general?
The second objective is consideration of the efficiency of the EPOS system. It will be compared to the traditional manual betting system it replaced, with analysis of improvements in or negative effects on time and cost. Has William Hill become more efficient, and more importantly more effective, with the introduction of EPOS? It is a better organisation as the result of automation?
Finally, the study seeks to project the effects of EPOS on William Hill’s competitiveness. Will the system encourage customers to switch to William Hill? Can the organisation’s market share be expected to increase? What are the overall results on a holistic, corporate level of automation, and how can the firm best implement such technology without undermining its established strengths? What is the most strategic way the system can be implemented, and how can it most greatly benefit the organisation as a whole?
This study seeks to address these questions through the study of information and data provided by William Hill and in literature available about the firm, similar gambling companies, and electronic point of sale systems in general.
It is anticipated that the EPOS system will be found to increase efficiency and competitiveness for William Hill, albeit at some change to and possible loss of culture. This is anticipated to be an overall positive innovation, however, increasing profit across several gaming platforms, allowing for improved marketing activities, and increasing market share for the company. The system is anticipated to provide a faster, more accurate, and more secure way of processing bets, in addition to generating data relevant for market analysis.
Many articles about William Hill, including the company’s own publications, describe the organisation as an innovator (William Hill 2005). This is certainly the case, and low-cost, low-risk strategy hasn’t kept the firm from pursuing technological advances and market expansion in many areas, the most recent being the installation of an EPOS system in its betting shops. The company currently provides four vehicles for gambling: traditional betting shops, phones-based betting, including via mobile phones, Internet gaming, and interactive digital television. Plans to expand into casino gambling have been temporarily shelved, as the Gambling Bill under consideration by the government now appears less likely to benefit gaming organisations who expand into casinos (WH Annual Report 2005). All of these may be effected and possibly benefit from the introduction of EPOS machines. EPOS can support all four major betting vehicles, and enhance how they can work toget her to increase the number of customers, repeat customers, and customers’ spend.
Traditional betting shops, also called retail shops, remain the backbone of William Hill’s operations. The retail division contributed 166m of the pounds 232m, or almost seventy-two percent, of the total profits brought in by the organisation in 2004 (WH Annual Report 2004). The shops also provide a credibility and recognisable brand seen as contributing to the success of other gaming vehicles (Thomas 2004). The retail shops are the location of the EPOS machines, and are likely to be most effected operationally and culturally by their implementation. Demographically, the customers of William Hill’s betting shops tend to be older than customers using other betting vehicles (Hargrave 2004). It has been observed that shop customers are also predominantly male.
Internet gamblers are demographically younger, and many have never entered a retail betting shop (Hargrave 2004). They often participate in a variety of online games in addition to traditional odds betting. They are likely to hop from site to site, and show little loyalty to any one gaming organisation (Thomas 2004). Online gambling firms must therefore work harder to differentiate their site from the many others available. As over time a natural consolidation of the market is likely to occur, those organisations that can reinforce their market positioning are more likely to succeed (Thomas 2004). William Hill has this positioning as a sector leader with multiple gambling vehicles. This positioning will be enhanced by the EPOS system, a way to link traditional shops with their credibility and market presence, to the firm’s online offerings.
The convenience of EPOS and the organisation’s electronic voucher system could encourage online gamblers to consolidate their gaming activity with William Hill. The EPOS support William Hill’s integration of their online business and local shops, with online customers now able to deposit money into or draw from accounts at any William Hill shop. The voucher system allows customers to deposit money or withdraw winning from any William Hill shop. This was originally handled over the counter; however, the new EPOS system now allows the entire system to be handled by machine (Anon 2003).
This has the potential to increase both shop-based and online business. For example, a thirty-something career woman might be hesitant to frequent one of William Hill’s betting shops, perceiving them to be historically male-dominated, older, and perhaps even working-class. However, she is on her way to do some shopping, and decides to quickly draw off her recent online winnings. She stops in a betting shop, and has a positive experience. It is clean, well run, with professional, courteous staff. She can draw on her winnings easily using the EPOS terminal. Because the woman has a favourable experience with the product and people in her transaction, she is significantly more likely to use the EPOS terminal again, and to stop in the betting shop. William Hill has possibly converted an online customer to an online and shop customer.
Similarly, some shop regulars may eschew credit cards. Online gaming is therefore unavailable to them. EPOS in combination with William Hill’s combined online and shop accounts allow these customers to deposit cash at their local betting shop, and use those funds for online bets. This has the potential to further increase the firm’s online customer base. Internet customers may be further intrigued by gaming options offered online that go beyond their options via shops or the phone. Using the Internet to place traditional bets, for example, increases the chance these customers will try arcade or casino games available online, thereby increasing the types of product purchased (Anon 2003). This expands the purchase mix for William Hill, and increases the likelihood of larger total purchases per customer.
A concern for management should be the potential of one gaming vehicle such as the Internet to draw customers away from the firm’s other vehicles, in effect cannibalising its own operations one for the other. William Hill’s most recent Annual Report acknowledges this issue (2004). The company has analysed profit and other financial data, and is confident that no cannibalising is taking place. All three gaming vehicles in operation for the year have shown modest to impressive growth, with no indication of one taking customers at the detriment to the others (WH Annual Report 2004).
Phone betting, including mobile betting via WAP technology, is seen by many as the gaming vehicle of the future (Hargrave 2004). The EPOS system could contribute to the expansion of phone betting by making it easier to draw on winnings and deposit funds for future bets. The Off Track Betting organisation in New York City, USA, found lines and customer wait time reduced by up to forty percent at some outlets with the implementation of various betting and point of sale machines (OTB 2003).
The system can similarly support William Hill’s newest venture, interactive television. There are questions whether the firm’s brand is strong enough to support a television channel, although the potentials for increased revenue are significant (Hargrave 2004). The organisation does not intend to broadcast many sporting or other bet-producing events, given the prohibitive cost of doing so. Rather, the television channel will offer number generated betting options, as well as gambling games similar to those offered by the firm on its website (Hargrave 2004). This allows the non-computer literate to participate in betting outside of traditional shops. Their anonymity and access to gambling increase, both of which have been linked to increased consumer spend (Anon 2003). Non-computer literate gamblers are no longer bound by the restricted hours of the betting shop, and can play a variety of gambling games through their televisions (Hargrave 2004). The EPOS s ystem supports this gaming vehicle in that these customers must have some way to deposit money for their gambling activities and withdraw any winnings they may have. The EPOS system allows them to do this conveniently and with the same discretion afforded to them by interactive television or the Internet gambling vehicles.
One potentially negative effect of the EPOS system is reduction of customer loyalty. Loyalty occurs when a consumer experiences good product at a reasonable price and convenience, with acceptable service. If these expectations are met, the customer is likely to repeat the shopping experience. Over time, the customer forms a habit of this shopping experience, which then develops into an attitude of loyalty (Duffy 1998). One component of loyalty development is staff, and in particular customers’ interaction with staff. The people representing an organisation and the service they provide can make or break a customer’s purchasing experience (Garavan 1997). The EPOS system will replace some functions currently performed by people, which may have a negative impact on both customers and remaining staff.
Repeat customers make up a significant portion of retail bets in the gaming sector, and many have established some form of relationship with retail staff. These relationships contribute to the loyalty or habits of customers, causing them to frequent one gaming retailer, and thereby increasing the customer spend at that shop (Anon 2003). This customer segment may feel overlooked with the replacement of some staff functions by machines. For example, a man regularly frequents his local William Hill betting shop, gambling regularly as a hobby, but not to the gambling addiction level of play. His visits to William Hill may be for him the same as another person’s frequenting a neighbourhood pub; in this case he has the opportunity to interact with others who share his interest. The common denominator in such social interaction will often be the shopkeeper or retail staff (Gamble and Gamble 2005). If this social interaction is lost, the customer may switch to a similar s hop operated by another organisation where such interaction is supported. Fortunately for William Hill, the other major bookmakers with whom it competes have already implemented EPOS systems, making this customer loss less likely to occur (Hargrave 2004).
The EPOS removes the feeling of being disloyal to shop staff by betting online instead of at their establishment, which could also potentially contribute to lost customers. Customers who shop at one establishment for a long period of time may feel guilty or embarrassed when changing to another store. They may try to avoid contact with staff from their previous shopping preference if they have been trying out other stores for a period of time (Gamble and Gamble 2005). With the reduction in interaction between William Hill staff and customers caused by the EPOS system, the customers may no longer have social need to continue to bet exclusively or predominantly with William Hill.
Another possible loss is to the William Hill culture, particularly that of local shops. Steve Smethurst quotes David Russell, William Hill’s group HR director, as acknowledging, “Once we have that in place [the EPOS system], the requirements on shop managers to settle bets will be gone: that challenges the very core of what people have been doing for years” (2004, 36). For one thing, the introduction of the machines reduces the number of staff required at each shop. The company has no stated plans for layoffs, but also has not addressed the impact EPOS will have on staff (WH Annual Report 2004). This may be in part to the traditionally high turnover in some segments of the gaming business, although more prevalent in the telephonist position that in retail shop staff (Smethurst 2004).
Management of gaming organisations need to examine the importance of people in their product differentiation. Consideration is called for in examining the fact that all the major betting shops now utilise electronic point of sale technology, and much of this is produced by the same company, Alphameric Red Onion (William Hill PLC 2004). If one can access the same machines at any shop, and each has similar betting options, what would cause the customer to frequent one shop over another? While some online gaming organisations seek to an image of glamour and escape to paradise after a long day at work, this type of positioning is more effective for the casino venturing into online gaming than the traditional betting shop down the street (Thomas 2004). Re-branding a company as old and established as William Hill would be difficult, expensive, and unlikely to be effective.
Nor is it possible for any one gaming establishment to differential its product on price in the long-term. The EPOS system will produce cost savings compared to the former manual bet-taking and management information systems (WH Annual Report 2004). This cost savings occurs from reduction in staff needed to operate a betting shop, more rapid processing of bets, and standardisation of bet settlement by removing the local human component. The EPOS system also replaces manual input into management information systems, allowing increased communication between shops and the corporate offices, and increasing the company’s ability to respond to betting fluctuations (William Hill PLC 2004). The firm did incur additional capital investment expense during 2004 due to the purchase of the EPOS system, but the Annual Report indicates this is a negligible amount and will be easily amortised.
Cost benefits, resulting in increased profits and more competitive price structures, in combination with lack of product differentiation in the gaming sector, can be expected to result in increased market share for William Hill. This increase should occur across all four of its gaming platforms, although primarily in Internet, mobile and television sales, as lack of differentiation causes sector-wide consolidation and the elimination or absorption of smaller firms by industry leaders (Thomas 2004).
Some market advantage certainly goes to the organisations with the most (and most convenient) locations. William Hill CEO David Harding stresses the importance of place in the firm’s differentiation efforts, contending branding and convenience are the most important factors in gaming choice. “People always underestimate the guiding principle of betting, and that’s to make it convenient,” he states, “branding will always remain dominant, and as long as you make it easy to gamble, people will do so” (Hargrave 2004, P20). Along this line of thinking, over time the sector power of larger organisations with their established shop sites will cause market consolidation, squeezing out smaller firms (Thomas 2004). This then further enhances the convenience of the shops of large-sector players. Organisations that can integrate their various services, as described above in the interaction between internet gamblers, William Hill
rquote s voucher system, and EPOS machines in the local retail shops, also have an advantage in the convenience department.
However, loss of personal touch is something William Hill should be seriously considering. Atomisation historically causes loss of jobs, and “William Hill employs more than 10,000 people: 8,500 in shops, 1,000 in call centres, and 1,000 in support” (Smethurst 2004, 36). People, particularly retail staff, play a major role in product and organisation differentiation within a service-based firm such as William Hill. This is particularly relevant as the company prides itself for its rigorous hiring practices and top-notch staff. William Hill undertook a complicated pre-hiring screening process to help the company ensure it was bringing in workers with the best possible job fit (Smethurst 2004). For example, the human resources department at William Hill “identified the motivational factors that make someone good at a job,” then formulated a profile of the ideal front-line staff person (Smethurst 2004, 36). This profile was used to c reate an automated telephone screening process that was used with all initial applicants to the retail shops. The company then sends potential recruits through interviews and role-play exercises before making a job offer (Smethurst 2004). All these evaluate the attitude as well as the skills of potential employees. Smethurst quotes Russell as saying, “you can add skills to people, but if they had the wrong attitude in the first place then it’s not going to work” (2004, 36). Hopefully William Hill management has considered the possible impact on staff and their attitudes in their implementation of EPOS machines.
Human Resources Consultant Richard Samson of the EraNova Institute recently presented his theory of out-peopling (Frauenheim 2001). Just as jobs can be off-shored from one country to another, so jobs can be out-peopled, going from work performed by people to work performed by machines. While this can offer short-term advantage, Samson argues that similar potential losses are likely in the long-term. “Most of the work tasks done now by people will be done by smart technology within twenty to thirty years” (Frauenheim 2001). Job loss causes anger and resentment amongst those put out of an organisation, and often-sympathetic bad attitudes with workers who remain. This should be of particular relevance for a firm so concerned about worker attitude that they developed a complex and expensive screening process to ensure proper attitude amongst new hires. Remaining employees also become even more key to the generation and maintenance of customer loyalty, as the fewer employees with whom an individual customer interacts, the more important the quality of interaction with the employee becomes (Garavan 1997).
Reduction in employees in proportion to machines can also influence the public’s perceptions of the organisation. William Hill is a company that promotes service as part of its corporate image. This service infers a level of caring amongst those at the company for their customer (Company Website 2005). If the customer begins to view William Hill shops as simply a place lined with electronic kiosks, much like the gambling version of the local Laundromat, this image of caring service is no longer projected. This can contribute to customer loyalty and repeat purchase over the long-term. Management must find a way to maintain its positive corporate image, therefore, while going forward with its atomisation and cost-saving plans.
Loss of jobs also creates macroeconomic impacts for both the sector and the country. This has historically been evidenced across many sectors. In agriculture, for instance, small farms that once required an entire family to run have been swallowed up and consolidated with large commercial ventures that employ many machines and few people (Gottheil 1999). Economic impacts of rapid changes in job availability and employment can destabilise an entire economy. If unemployment soars and discretionary income plummets, William Hill and other gaming organisations will likely see a sharp drop in profits, as they are a discretionary spend for most consumers (Gottheil 1999).
More machines also lead to the increased likelihood of gambling abuse. The University of Sydney, Australia, undertook a significant study of the effect of gambling machines, ATM machines, and EPOS systems on gambling abuse and addiction (Blaszczynski, Sharpe and Walker 2001). They found customers were more likely to abuse gambling or display addictive behaviour when gaming places were primarily machine-serviced. The more people involved in gaming transactions, the less likely addictive behaviour was evidenced, unless such behaviour was encouraged by the staff involved (Blaszczynski, Sharpe and Walker 2001). They additionally found limiting the combination of machines, such as removing ATM machines from shops where EPOS and similar were available reduced addictive behaviours.
Also, while gambling addicts are often profitable in the short-term to gaming establishments, too many people suffering from this malady has traditionally led to public outcry, tightening of gaming regulation, and increased taxes on winnings (Blaszczynski, Sharpe and Walker 2001). It is in the best interests of all involved, therefore, for gaming organisations to strive to increase customers’ gambling spending without crossing the line into gambling addiction. The University of Sydney study showed that slowing the timing on machines, for example, reduced the likelihood of display of addictive behaviour Blaszczynski, Sharpe and Walker 2001. Research and findings such as this should be strongly evaluated by William Hill management to ensure the optimum use of gaming machines in its shops.
Still, not withstanding possible detractions to the organisation, the EPOS system offers many potential benefits to the William Hill firm. Electronic point of sale technology will enable the bookmaker to take, settle and pay bets electronically, record information from such transactions in a central software system, display and distribute targeted betting opportunities and manage estate-wide risk (William Hill PLC 2004). Of these benefits, the two most intriguing from a corporate standpoint are the ability to gather data and profile customers, and the resulting use of such data in creating targeted and event-specific marketing.
The EPOS system also allows for extensive capture of customer information. Data generated from customer input can include the number and frequency of bets, the type of events bet upon, the average amount of each bet, and much more. This allows the firm’s management to create customer profiles, representing current and target consumer groups. (Woodruff and Gardial 1996). For example, a middle-aged customer bets on dog races every other Friday. He typically bets on the favourites, in the total spend range of pounds forty to sixty, with a typical mix of eight to twelve bets of three to five pounds each. Since he frequents William Hill, the company can assume some level of retail brand or local shop loyalty. The firm would like to see the customer bet more often, and in greater amount. Because they have collected this data on the customer through the EPOS system, they can send him direct, targeted advertisements for dog races, and betting within his favoured range. If they can entice him to place a bet outside his pattern, they have potentially increased his regular spend in addition to this one betting event (Smethurst 2004).
Data gathered from the EPOS system can also be used to create customer profiles, which can then be targeted for marketing and event-specific advertising. William Hill noticed from similar data gathered on its website that many were registering but not betting. They hired a private firm to assist them in converting this web traffic into betting (Lee 2004). The firm divided website registrants into four random groups. One group was sent nothing, one was sent a service-led follow up email, one was sent an offer-let follow up email, and one received a reminder email that they had yet to place a bet. The company was able to demonstrate that service- and offer-led email follow up increased the number of registrants who became bettors by more than five percent (Lee 2004). If an experiment such as this can have such positive results with random groups, imagine the impact of targeted emails and advertising on William Hill’s customer base.
Another benefit to the company is that electronic point-of-sale technology will increase the efficiency of William Hill’s betting operations. Prior to the EPOS system, all bets were placed and recorded manually in betting shops. In an oversimplified explanation of the manual process, a customer would place a bet by giving a written ticket to a retail shop staff member, who would give them a receipt in return. The customer’s bet would be recorded in the shop, and if they were entitled to winnings, these would be settled by the shop manager or designated staff person. The organisation had various management information systems into which data from individual shops was recorded, and this was forwarded to the central offices on a regular basis (Caldecote 2004).
Issues for management with the manual system included both the accuracy and detail of reporting. For example, under scrutiny regarding the annual amount of unclaimed returns at William Hill, David Hood claimed the company was unable to quantify annual unclaimed returns because the pre-EPOS reporting system did not record or allow for such (Caldecote 2004). This type of information is vital to management’s analysis of the overall health of the organisation, in addition to profit and loss calculations. The detail of information provided by the EPOS system will easily rectify these reporting difficulties. The electronic system will also save time, allowing data from each shop to be captured almost instantly (William Hill PLC 2004). This enables the company to calculate statistics and perform analysis on events as they occur, for example. In a time-sensitive business such as gambling, this can be of great advantage.
Another benefit is that the EPOS system potentially allows William Hill to expand business hours at reduced cost. As it reduces the need for staff, betting shops can remain open longer for the same staff costs. Longer hours give customers more opportunity to bet, increasing the likelihood of more customers betting because of the enhancement in convenience, and increasing the amount customers are likely to bet, as they are in the betting shop for a longer period of time. More customers and more spend mean more profit, and potentially more market share, all of which are naturally favourable to management (Woodruff and Gardial 1996).
Increased efficiency typically leads to increased competitiveness, provided the firm is being efficient about the right activities. William Hill was a bit behind its competitors, being the last major UK bookmaker to implement an EPOS system. It faces one primary competitor in the broader sector, Ladbrokes, and a slew of smaller competitors, primarily in the online market (Thomas 2004). While many of these smaller competitors are striving for differentiation along a variety of lines, William Hill holds to its position that its company branding and status will carry it through against such firms. It has the advantage over Ladbrokes of being in the online gambling arena longer, and has stepped ahead of them in its entry into television. Ladbrokes has a larger number of traditional shops, however, which must be factored in given William Hill’s emphasis on the importance of convenience and place in its loyalty strategies (Thomas 2004, Hargrave 2004). Ladbrok es also has employed EPOS for a longer time, and has therefore increased the integration of the machines and the data they generate into its overall business and marketing strategies (Hargrave 2004). The two have similar brand recognition, and are viewed as prime competitors. Given Ladbrokes already uses an EPOS system, it is more likely that increased market share for William Hill will come from the elimination or absorption of smaller competitors, rather than significant customer win from Ladbrokes.
Findings of the analysis of available literature concerning William Hill, EPOS systems, and potential benefits and losses are generally favourable for the EPOS system. The potential drawbacks of the EPOS system include lessened customer loyalty and damage to the corporate image of a service-oriented firm. Staff attitude and feeling of value also have the potential to suffer from automation. The system fits in broad corporate culture of a firm innovative in its use of technology, but may have a negative impact on employees and could potentially change local shop culture. This is particularly important if jobs will be lost or phased out due to the introduction of the EPOS machines, although the company has not i
Cite This Work
To export a reference to this article please select a referencing stye below: