Manufacturing: Tighter Ties Link IT To Factory Biz

Hit hard by the economic downturn, manufacturers make sure IT supports business goals

September 17, 2004

During tough economic times, it's even more important for companies to make sure technology and business units are tightly aligned. To accomplish that, many manufacturers in the past year have established or revitalized business-technology steering committees.

Such IT governance initiatives tend to come and go at companies as the economy rises and falls, Unifi's Holder says. "People get busy during the good times, and these types of committees fade," he says.

Smurfit-Stone's Burdiss says his company has had an IT-governance initiative in place since 2002, but it's only been recently that the initiative has taken hold and begun to pay dividends. Each quarter an executive board, representing management from each of the company's operating divisions and several of its departments, meets to discuss business strategies and technology projects and to evaluate business-technology performance. Recently, groups representing Smurfit-Stone's data-resource management and E-business groups have been put in place. Together they have identified and prioritized more than 126 projects that could produce savings of more than $1.5 million.

It wasn't the economic downturn that sparked Smurfit-Stone to focus on more tightly integrating business needs with technology investment. "We saw a real need to develop a partnership between the business and IT," Burdiss says. "The golden nugget is working closer together and reducing costs."

It's that type of focus that builds rewards as the economy improves. Says Herman Miller's Kurburski, "Things are turning around, and we're happy with what we've been able to do."

INDUSTRY LEADERS
Company	Revenue in millions	Income (loss) in millions
General Electric Co.	$134,187	$15,002
Tyco International Ltd.	$36,801	$980
Lockheed Martin Corp.	$31,824	$1,053
Northrop Grumman Corp.	$26,206	$808
3M Co.	$18,232	$2,403
General Dynamics Corp.	$16,617	$1,004
Deere & Co.	$15,535	$643
Emerson	$13,958	$1,089
Textron Inc.	$9,859	$762
Eaton Corp.	$8,061	$386
Smurfit-Stone Container Corp.	$7,722	($208)
MeadWestvaco Corp.	$7,553	($6)
Parker Hannifin Corp.	$7,107	$345
Owens-Illinois Inc.	$6,111	($991)
SPX Corp.	$5,082	$236
Owens Corning	$4,996	$115
Leggett & Platt Inc.	$4,388	$206
Goodrich Corp.	$4,383	$100
Timken Co.	$3,788	$36
Lafarge North America Inc.	$3,319	$217
Armstrong World Industries Inc.	$3,259	($39)
Pactiv Corp.	$3,138	$183
Sonoco Products Co. Inc.	$2,758	$139
Fleetwood Enterprises Inc.	$2,607	($22)
Rockwell Collins Inc.	$2,542	$258
Flowserve Corp.	$2,404	$98
Snap-on Inc.	$2,233	$79
Harsco Corp.	$2,119	$92
Acuity Brands Inc.	$2,049	$48
National-Oilwell Inc.	$2,005	$77
Allegheny Technologies Inc.	$1,937	($316)
Tecumseh Products Co.	$1,819	--
HNI Corp.	$1,755	$98
Briggs & Stratton Corp.	$1,658	$81
Varco International Inc.	$1,450	$67
Herman Miller Inc.	$1,338	$42
CCL Industries Inc.	$1,173	$41
Kimball International Inc.	$1,140	$22
Ametek Inc.	$1,091	$88
Bacou-Dalloz	$1,000	$15
Standard Register	$916	($39)
Unifi Inc.	$849	($27)
APW Ltd.	--	--
Chamberlain Group	--	--
Southwire Co.	--	--
Financial data is from public sources and company supplied. Revenue is for latest fiscal year. Dashes indicate companies requesting financial information not be disclosed.

SNAPSHOT
INSIDE COMPANIES
Average portion of revenue spent on IT	2%
Companies using radio-frequency identification	18%
Companies globally sourcing products and supplies	67%
HOW COMPANIES DIVIDE THEIR I.T. BUDGETS
Hardware purchases	17%
IT Services or outsourcing	13%
Research and development	3%
Salaries and benefits	36%
Applications	18%
Everything else	13%
INDUSTRY FINANCIALS
Average year-over-year revenue change	8%
Average year-over-year net income change	358%
DATA: INFORMATIONWEEK RESEARCH See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.