Spending freeze is not an option, say manufacturing IT leaders

Despite continued economic gloom in the UK's manufacturing sector, IT professionals in the industry have warned against dramatic...

Despite continued economic gloom in the UK's manufacturing sector, IT professionals in the industry have warned against dramatic cuts in IT budgets to reduce business overheads.

In the wake of last week's depressing survey results for the UK manufacturing sector from the CBI, IT directors told Computer Weekly that continued spending was vital to stop the business falling behind, despite the recessionary environment.

Analyst advice reflected a growing trend to "chunk" IT spend and to work with the business to ensure identifiable returns.

The CBI survey results indicated that 42,000 manufacturing jobs would be shed by April and reported falling orders for the eighth consecutive quarter.

However, some companies reported that the confidence to spend is there, though with far greater scrutiny than in the past.

Peter Mansbridge, IT director of Chloride Group, said, "Personally I think it is a time to spend. Marking time when the rest of the world is moving on is very dangerous. Networking [projects] and those supporting better business processes are prime candidates but basically spending more intelligently is the key."

Steve Walton, business systems manager at MG-Rover, said, "We operate a 'lean' model which means that if I put my hand up and ask for money from the finance director for a project, he will ask me to prove the expected saving." Should projected savings not be realised, that amount could be cut from future budgets, giving a harsh incentives for return on investment, he said.

"Because of this we have had to adapt to selling projects to the finance director far more effectively."

John Barton, vice-president for information systems at optical components manufacturer Bookham Technology, said, "Rather than build new systems it is often a case of leveraging what you have - not just in terms of systems but ensuring the data you use is in the right format and delivered to the right place.

"We work very closely with the chief financial officer to ensure payback terms, which overcomes a lot of issues. Where new investments are proposed we set up a steering forum with the business managers and the chief financial officer and chief information officer to ensure that there is commitment to the project from the start."

Simon Bragg, an analyst with ARC Consulting, recommended understanding the mind of the finance director. "Through understanding how the accountants do their sums and make their decisions as to whether something is a go/no-go, you are in a better position to discuss the issue with them.

"Most savvy IT managers have realised that the business unit managers hold the purse-strings and make the decisions. Translating features and functions into better business processes is a key skill. Chunking long-term projects, with defined objectives, each of which delivers a business benefit is a career-enhancing skill."

Nigel Montgomery, analyst with AMR Research, said, "The 'return rule' is guiding decisions. The rule states that any project must be implementable within 13 weeks and must return investment in six months. The key is that it instils a stage-gate process mentality into project definition, increasing the granularity of requests and weeding out unrealistic projects early.

"Anything requiring more than six months will face stringent qualification."

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