Manufacturing companiesdo not
consider IT as important to the business as other industry sectors,
seeing it more as a basic utility, according to Forrester
Research.
A Forrester study of businesses across Europe found that
manufacturers on average spend 3% of their revenue on IT, compared
with the average of 5% across all industries.
IT departments in manufacturing struggling to maintain their
share of the budget each year indicates that the sector generally
regards IT as a cost, rather than a critical part of its
competitive advantage, said Forrester. This is in contrast to
sectors such as financial services.
The study found that only 10% of manufacturing companies
expected their next IT budget to be greater than their actual spend
the previous year, and 15% expected it to be lower. Across other
types of business, an average of 30% expected an increase in IT
spend.
In 50% of manufacturing companies, selling the value of IT to
the business and improving the measurement of IT's impact on
business performance were second only to improving efficiency and
reducing costs as critical priorities.
Duncan Jones, senior analyst at Forrester Research, said one of
the main reasons for this situation was that manufacturing is
generally more cost-driven than other sectors.
"Also, IT in manufacturing has not yet proved its value in the
same way that it has in some other industries. While the most
successful manufacturing companies are using business technology to
drive innovation, this is the exception rather than the rule," he
said.
According to Jones, the solution is twofold. First, IT
departments in manufacturing need to have a clear understanding of
how they are helping the business so that they can start measuring
their impact on business performance. Second, they need to use that
data to market the IT department to the rest of the business.
"IT departments in manufacturing need to do a better job of
explaining to the rest of the business what they are doing and how
they can help, and only then can they begin to show that IT is a
business enabler, which is why business should spend more, not
less, on IT," said Jones.
John Hamman, industry business development manager for
manufacturing at SAP UK, said expressing IT spend as a percentage
of turnover clearly illustrated that although there were some
exceptions, the manufacturing industry generally spends less on IT
than other industries.
"Forrester's figure of 3% is an average across the manufacturing
industry, but some spend even less than that," he said.