A Publication of WTVP

Last spring, our firm completed its third annual Manufacturing and Wholesale Distribution National Survey. Nearly 1,000 industry executives participated, providing their perspectives on the current state of their companies and the strategies they would be using to maintain profitability. Of course, a lot has happened since then, particularly as it relates to the economy.

That being said, many of the findings, especially around the topic of information technology (IT) investment, still appear to be valid. IT continues to increase in importance to business operations and is an area of great concern to executives in the manufacturing and wholesale distribution industries. While 77 percent of respondents said that IT is increasingly critical to their business, only 55 percent said their technology strategies are linked to their overall business plan. The changing nature of technology and business makes it imperative that companies develop a strategic IT plan that is tied to current business objectives as well as where the companies want to be in three to five years.

While many said that enhancing existing systems and further training will be priorities in the coming year, executives felt that key areas such as IT risk management and disaster recovery systems may suffer as companies cut spending. It is concerning that companies feel spending will be cut in these areas. Clearly, the growing concern of technological risk and security threats, both internal and external, make the quality and security of IT systems more important than ever. Only 47 percent of respondents said they had an effective disaster recovery system, and only 44 percent test their network security annually. A direct correlation is shown between the number of breaches a company has suffered and the amount of their security investments. Companies may want to consider investing in prevention to avoid the risk of an incident that could damage company operations and reputation.

Given the significance of IT systems, growth in capabilities and functionality is always a key issue. There are two ways to effectively upgrade a company’s IT framework: the company can install new systems or expand current systems. Both options saw a rise in this year’s survey, as 72 percent reported they were upgrading their current systems, compared to 58 percent in 2007. In addition, 53 percent plan on implementing new technologies, as opposed to 44 percent in 2007.

While many executives reported they will be replacing or upgrading their current systems, companies of all sizes are reducing their technology spending for the coming year. One strategy that is being considered to enhance the effectiveness of current IT systems—and to save money—is greater education. Fifty-two percent of respondents indicated that more training is needed to fully realize the capabilities of their technology framework. Investing in training and education enhances the investment that companies have already made in their current systems.

With the turn our economy has taken in recent months, it is certain that companies will be taking an even closer look at their technology investments than was indicated in this survey. To help ensure they are making wise technology investments and cuts, companies should consider conducting a technology assessment to help identify priority technology spends, and make sure their technology decisions are linked to a strategic plan and the company’s business objectives. iBi