Recovery offers new challenges

Figures released by the CBI and the Office of National Statistics last week revealed that the manufacturing sector is in...

Figures released by the CBI and the Office of National Statistics last week revealed that the manufacturing sector is in recovery, with increased output and healthier order books.

As we report this week, this recovery is reinforced by initial findings of the Computer Weekly IT Expenditure Report, which show that growth in manufacturers' IT spend is set to rise from 2.3% in 2003 to 5.1% in 2004.

Although this news is welcome, it poses a challenge for IT directors, not just in manufacturing but in any organisation where budgets are growing. As the economic cycle turns, so IT directors are lifting their eyes from the budget spreadsheet and beginning to look further into the distance, to evaluate how today's and tomorrow's technology can make a positive impact on the business.

Few would dispute that the IT department is in the best position to make that contribution. For example, a survey of IT leaders conducted by Forrester rates "driving innovative new market offerings or business practices" as a top-five strategic issue.

If IT directors can demonstrate the return on investment that new projects would deliver, they are more likely now than they have been for several years to find the board giving them the nod.

Ideas such as those promoted by Susan Unger, CIO at DaimlerChrysler, should give food for thought. She not only takes responsibility for innovation within the IT department, but also for how IT can be used to improve the company's products. For inspiration, she sits on the board of a venture capital firm, giving her access to commercial but cutting-edge technology ideas. This holistic approach to technology can help raise the profile of IT within organisations.

IT directors can also take the lead in identifying efficiency improvements within the business. Web services, for example, is one area with implications for the way organisations conduct their operations and where IT is the natural thought leader. There are many other technologies to be evaluated - including RFID, smarter supply chain management and telematics - that give IT departments the opportunity to display the value they can deliver.

This shift in priorities may come as a surprise to IT directors still feeling the pressure to cut costs and improve efficiency. That may be today's agenda, but taking a strategic approach requires planning for what will be happening in the medium term. It is clear that with IT spend increasing, IT directors need to plan their priorities now to ensure they know where the greatest returns for the business as a whole can be achieved.

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