The
economic downturn will be a different experience for IT in
manufacturing and engineering companies compared with the last
recession in 2001 to 2003. That is the view of Tom Bausemer,
managing director of IT services marketplace OrderWork.
"Eight years ago, IT was a 'nice to have'," he says. "As a
result, certain technologies and certain IT staff could be easily
cut from the budget. Since then, CEOs have come to depend on CIOs
to enable critical business initiatives, such as product lifecycle
management, business process management, and supply chain
management. IT has become ubiquitous in manufacturing and
engineering businesses, and without IT, they will not survive
now."
Business-critical
The importance of IT to manufacturing and engineering companies
is confirmed by figures released by IT market research specialists
Info-Tech in August 2008. Info-Tech found that while nine out of
ten companies are affected to some degree by the economic slowdown,
only two thirds reported that IT spend was affected. In fact, a
third reported that their IT budget had increased in 2008, a third
were spending the same as in 2007 and just a third had seen budgets
cut, typically by 5% or more.
The question is: how should manufacturing and engineering
companies spend that budget? Bausemer thinks they should
concentrate on skilling up in-house with core strategic
technologies such as supply chain management, business process
management and product lifecyle management, and look to external
suppliers for skills in generic cost-saving systems.
"Get these core strategic technologies implemented, and look to
delay or outsource the non-strategic work such as virtualisation,
desktop and server upgrades or new storage projects," he says.
Richard Earle, a director of IT services company Cirquent, which
has manufacturers such as BMW and Lafarge Cement among its
customers, thinks manufacturing and engineering companies should
also be looking beyond the skills needed for the traditional set of
applications that enhance core manufacturing processes.
Customer-facing
In addition, he suggests, they should be acquiring staff with
experience of customer-facing systems and asking themselves, "Am I
talking to customers effectively and efficiently? Have I got the
right process and technology in place to deliver enhanced customer
satisfaction?"
Alongside technical skills in these specific applications, Earle
says, manufacturing companies should be looking for people who have
good stakeholder management skills and who will be able to help the
rest of the business make the transition to new ways of
working.
Historically, the sector has found it harder to recruit
professional IT skills than other industries. SEMTA, the sector
skills council for the Science, Engineering and Manufacturing
industries, reported just last month that 14% of companies are
experiencing a shortfall.
However, Andy Dunn, a senior consultant in the manufacturing and
engineering team at CBSbutler, feels that, despite a natural urge
to cut back in times of recession, now is actually a good time for
forward-thinking manufacturing companies to get hold of IT skills
that were previously out of their reach.
"We are seeing a huge influx of contract staff who want to go
permanent because they are nervous about the contracting market,
and that is pushing salaries down for a lot of permanent roles,"
Dunn says. He cites the example of a candidate who was made
redundant from a role paying £40,000 a year who has had to accept a
new position paying just £25,000.
More selective
Clearly, this is not good news for candidates. Dunn admits that
employers have also used the glut of candidates to become more
selective about who they take on, demanding top-notch academic
qualifications and certifications as well as experience, for
instance.
One bright spot seems to be for IT professionals with Oracle
Manufacturing skills, especially in the contract market, where
rates are booming according to IT Jobs Watch. The market for SAP
skills, by contrast, appears to be stagnating at present.
However, Bausemer says the slowdown should be shorter and less
severe in employment terms than last time around.
"In the lead up to the last recession, IT budgets in the sector
were growing in double digits," he says. "This time around,
manufacturing firm's budgets have increased in single digits in
2006 and 2007. CIOs have been much more prudent and have already
cut most of the fat out of their budgets." So manufacturing
companies are less likely to shed large numbers of permanent staff
this time.
IT staff and employers should also be aware that not all parts
of the manufacturing and engineering sector have been affected
equally. While companies supplying the construction and automotive
industries have been hit hard, government spending on defence and
homeland security is holding up well. Going forward, signs are that
government agencies will increase rather than decrease their spend
in an effort to mitigate the effects of the slowdown, with Dunn
predicting that Java and J2EE skills will be particularly in
demand.
The danger for manufacturing and engineering companies hoping to
exploit these opportunities is that they may find themselves
constrained by a lack of skilled employees who have the necessary
security clearance.
"It can take three months to get someone through the 'security
check' level of clearance, and even longer for the kind of
'developed vetting' that is likely to be needed to work on
solutions for projects such as the
National ID card scheme," Dunn says.
Employers should, therefore, be thinking ahead and putting
current employees and new hires through clearance if they do not
want to end up paying a premium for vetted staff once they win a
contract.