Manufacturing companies risk IT disaster

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Nearly half of manufacturers feel that they have wasted money on IT investments by misunderstanding their own companys needs. The Sage Business Heartbeat Survey a new, ongoing study into the ups and downs of business life reveals that 43% believe they were to blame for buying the wrong products.

The survey shows that when updating new technology the biggest factors influencing manufacturers are the Internal IT departments requirements, Government initiatives and competitors adopting new technology while just under half of all manufacturing owners and managers surveyed would rely on their accountants recommendation to update their company technology (45%).

But while poor customer service from the supplier is a factor in why IT investments have been wasted a massive 98% of Sage software users in the manufacturing sector believe that the investments the company has made in IT in the last 5 years has made a valuable contribution to the company.

The survey also reveals that although turnover for manufacturers has increased in the last 12 months only 63% thought it had gone up compared to a national average of 68% for all companies. Only just over half (53%) felt that their company was more profitable over the same period.

And although the outlook is positive, with three quarters believe that turnover will increase over the next 12 months, making the right choices when buying IT could be crucial.

Paul Stobart, managing director, Sage UK says, "The Sage Heartbeat survey highlights a number of concerns for all IT companies. It highlights the need for the industry to deliver tangible benefits, focus on selling practical solutions not technology for technology's sake and most importantly to improve both pre and after sales customer service.

With manufacturers in mind, it is important to focus on integrating new technologies with existing systems and not automatically adopt the rip out and replace mindset.

Key findings:

  • When asked what technology they could not do without, 53% of manufacturing chiefs said that financial software was the software they could definitely not do without compared to a national average of 35%.
  • The survey identified the single biggest area of investment in manufacturing as marketing with 45% of manufacturing industries looking to invest more compared to a national average of 40%.

People working in the manufacturing industry are least likely to work at the weekends with a quarter (24%) never working weekends. The national figure is 11%.

Manufacturing businesses are twice as likely to be funded by a bank loan (42% vs national average of 24%)

Over a quarter (27%) of manufacturing companies said that last year was less profitable compared to 16% on average. However, the outlook looks brighter for the next twelve months with 77% of manufacturing companies expecting an increase in profits compared to 66% on average.

While prospects for the manufacturing sector are improving the survey shows that a large number of firms arent assessing their IT needs correctly which is a cause for concern.

Paul Stobart, managing director, Sage UK says, "The Sage Heartbeat survey highlights a number of concerns for all IT companies. It highlights the need for the industry to deliver tangible benefits, focus on selling practical solutions not technology for technology's sake and most importantly to improve pre and after sales customer service.

With manufacturers in mind, it is also important to focus on integrating new technologies with existing systems and not automatically adopt the rip out and replace mindset.

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