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9/8/2010
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InformationWeek 500: Manufacturers Look To Cut Costs, Not Service

Business intelligence tools and collaboration software are being used to improve productivity.

The IT spending outlook in the manufacturing sector is more pessimistic than the InformationWeek 500 overall. Only 48% of manufacturing CIOs say this year's spending will exceed last year's, compared with 57% for all industries, and fully 32% expect a decrease.

Technology initiatives that have improved performance for these CIOs include business intelligence tools for 50% of them and new types of collaboration software for 48%. These percentages are slightly lower than across all InformationWeek 500 industries. For 61% of manufacturing CIOs, future innovation plans focus on efficient business processes, ahead of the all-industry rate of 54%.

Efficiency is a big focus at Lockheed Martin. Four years ago it supported 40 systems, some more than 30 years old, just for procurement and payment. "We looked at the cost of a single solution, we looked at the cost of the over 40 legacy systems, and we looked at the cost of modernizing under each of the five business units," says Lockheed procure-to-pay VP Jon Crump. "... Ultimately, everyone agreed on a single system based on SAP."

Like Lockheed, many manufacturers have huge global supply chains. Given that, it's not surprising that 64% of industry CIOs do offshore IT outsourcing, 50% integrate IT work with global business operations, and 48% are expanding IT operations outside the United States, all of which exceed the all-industry percentages.

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Two-thirds of manufacturers are making global support and development part of most IT workers' jobs, compared with 49% across all industries. This reflects changing relationships with suppliers that aren't arm's length anymore. "Big firms are telling their outsourcers, 'You'll use my distribution or manufacturing system,' which gives them more control over compliance and quality," says Bob Haas, partner and global strategic IT practice leader at A.T. Kearney. "It makes it easier to pull up stakes and run that system at a factory somewhere else."


Industry Snapshot: Manufacturing

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