IT spend is matching that of plant and equipment in the UK manufacturing industry for the first time and is expected to outstrip it next year, a survey published this week revealed.
The new economy is now the major driver for manufacturing companies that are seeking competitive advantage, according to the annual Bourton Group survey of the manufacturing industry. The survey questioned 300 managing directors of manufacturing companies.
Reducing product costs, increasing employees' skill sets and improving customer service are the main reasons for IT investments. Millennium bug spending being replaced by rampant investment in Internet technologies is another factor cited as causing the upsurge in IT buying.
Bourton director Stuart Smith said, "Historically businesses have used IT to take out cost. E-business and the Web are allowing people to streamline processes up and down the supply chain. We are seeing more Web-based solutions as opposed to enterprise-level solutions being used, from e-trading down to diary management.
"The bulk of the spend is on the 'servicing' of manufacturing-type industry - scheduling, managing processes, sales and project management, not the physical processes of manufacturing."
The survey also found that manufacturers are struggling to justify their IT spending. George Illingworth, survey manager for Bourton, said this was because proving return on investment is more difficult for IT than in traditional manufacturing machinery.