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Study Says IT Spending in Manufacturing Declining
Apr 29, 2005
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Manufacturing is 50 percent more likely than other industries to decrease information technology (IT) spending in 2005, according to IT research firm Info-Tech Research Group.

The research firm reports that 21 percent of manufacturing companies plan to decrease IT spending this year, as compared to an average of 14 percent for other industries.

"It’s surprising that there is such a large gap between the cuts to IT planned by manufacturers and the cuts planned by other industries,” said Frank Koelsch, executive vice president at Info-Tech Research Group. "Manufacturing is already the third-lowest spender per employee of all the industries we surveyed."

The findings are part of Info-Tech Research Group’s Manufacturing Industry 2005 IT Budget & Staffing Report, released this week. Data is based on Info-Tech’s January 2005 survey of more than 1,400 IT decision makers at mid-sized enterprises in Canada, the U.S. and U.K.

"In conducting the study we found huge spending variances within the manufacturing industry,” Mr. Koelsch said. "Companies with less than 50 employees spend 20 times more per employee on IT than companies with over 500 employees. Clearly, there are efficiencies and economies of scale available to larger companies that cannot be leveraged by their smaller counterparts.”

Other important findings in the study include:

  • Spending varied among segments of the manufacturing market. For example, the Non-Perishable/Goods segment spends five times more per employee on IT than Steel/Metal.
  • Desktop Hardware/Software spending is flat, with over 60 percent of IT decision makers in manufacturing not planning any new desktop software purchases.
  • Storage is a major investment priority, especially in companies with more than 500 employees.
  • Voice over Internet Protocol (VoIP) is the number-one investment priority for manufacturing enterprises, followed closely by Supply Chain Management (SCM) and Customer Relationship Management (CRM).

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