The manufacturing segment accounts for nearly 25% of the total IT spending in the country, which makes it the largest segment. According to an IDC study, the manufacturing IT spending in the Asia/ Pacific (excluding Japan) or APEJ region, will reach US$22 billion in 2010. The APEJ region will continue to be a fast-growing regional economic block, powered by the emerging economic engines of China and India. The number of organizations that have reported a close alignment of business goals with IT is increasing. 44% of the organizations in manufacturing and engineering/ auto segment have aligned their business goals very closely with IT.
The process manufacturing sector traditionally spends more on IT because of the larger population of companies engaged in this activity as well as their scale of operations. In general, the business and IT priorities of both process and discrete manufacturing are the same—controlling inventory, production costs, marketing costs, and improving supplier and delivery channel relationships on the business front; and improving IT infrastructure, automating internal and external processes, and better decision-making using IT. At the same time there are differences in the emphases that are given to the various aspects of IT usage. In this analysis, we take the segments together when discussing areas where they exhibit similarity and separately when we discuss areas that distinguish them from each other.
IT investments by large manufacturing organizations were on the decline last year, with many industries like automobiles, steel, cement and others facing a downturn in their business. Overall, any of the smaller manufacturing organizations, which have been traditionally poor in IT usage rturned towards IT. Traditional large buyers like Bajaj Auto, Ashok Leyland, and TISCO, to name a few did not have any major IT project underway. Public sector steel companies slowed down the IT investments, whereas their counterparts in the private sector spent on ERP and plant automation. In the pharmaceuticals industry, the WTO agreement on patents has forced companies to get patents on
their formulations. Clinical trials, a very data-intensive area, are fast emerging as an application in the pharmaceutical industry.
The major investment heads for manufacturing companies are:
- Infrastructure (systems, network components, messaging systems and so on)
- Software design and application development
- Software packages (word processors, spreadsheets, databases and so on)
- Enterprise resource planning (ERP) packages
- Packaged application implementation services
- Consulting services
- External connectivity i.e. connecting to dealers and suppliers (supply chain)
- Data warehousing
- E-commerce
Many manufacturing organizations, especially in the private sector have messaging and groupware in place for intra-organizational communication. Network-centric applications continue to be developed. Maruti Udyog is moving from its e-mail based messaging with dealers to an Internet-based one. A Kolkotta based manufacturing organization is setting up a sophisticated intranet with countrywide fax routing capabilities. Companies like IBM and Digital, which have a portfolio of solutions for the manufacturing industry through years of global experience, are bringing out newer application areas like e-commerce for Indian manufacturing organizations.