Manufacturing: Companies Thrive As Productivity Gains Boost Bottom Lines

InformationWeek 500 manufacturing companies spend less of their revenue on IT than their counterparts in other industries. But they're investing in technologies that will bolster their productivity and help them work smarter.
Despite the rising cost of the fuel and precious metals they need for production, manufacturers have much to smile about. The past year has been one of the best the sector has seen in a long while, as orders and exports rose, labor costs declined, and productivity increased.

Overall, InformationWeek 500 manufacturing companies spend only about 2% of their revenue on IT--well below the 3.2% average for all 500 companies surveyed. But they're investing in the technologies they need to bolster productivity and work smarter.

During the past decade, they've deployed global ERP systems to tackle human resources, inventory management, finance, supply chain, and order tracking. "They've also implemented transaction systems that gather data about their operations within centralized databases," says Jim Shepherd, a VP with AMR Research. Some 67% of respondents to the InformationWeek 500 survey expect their IT spending to rise this year.

One of the fastest growing areas of software investment for manufacturers is product life-cycle management. It's a $14 billion market, growing about 15% annually, Gartner estimates. Another big area is business intelligence, which has been widely deployed by 72% of respondents to the InformationWeek survey. Other areas include wireless technologies and sensors that connect factory floors to back-office systems and report the status of production in near real time.

Motorola, at No. 12, is the highest-ranking manufacturer on this year's InformationWeek 500 list.

Budget Breakdown

Tech Innovation

Inside Manufacturing
2% of Industry's Annual Revenue Devoted to IT
38% of IT Budget Devoted to New Projects
67% of Companies Expecting 2006 IT Spending to Exceed 2005

Business Change
42% Creating New Products/Services for Customers in 2006
77% with Global Supply Chain
33% Deploying Business Intelligence Tools to Raise Productivity

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