RSM McGladrey: IT is critical to well being of U.S. manufacturing, distribution companies

RSM McGladrey just released a survey indicating that while industry executives of U.S. manufacturing and wholesale distribution companies believe information technology (IT) is of increasing importance to the security and health of their business operations, spending on risk management and disaster recovery systems may be cut due to the ailing economy.


As the economy slumps, IT spending is
That's according to RSM McGladrey’s Information Technology Report , based on results of the firm’s 2008 Manufacturing and Wholesale Distribution National Survey conducted earlier this year. Executives of U.S. manufacturing and wholesale distribution companies say—no surprise here—technology systems play a vital role in operational and production efficiencies and security of companies in all industries. Yet while 77 percent of respondents say IT is more critical to their businesses now, only 55 percent say their technology strategies are linked to their overall business plan, and only 46 percent say that their systems are serving their operational, reporting, and data analytics needs.
The survey polled execs on current business conditions, growth strategies, innovation, cost management, technology initiatives, operations, and globalization.
“When evaluating improvements that can be made to the performance of a company’s IT systems, it is important to consider their current objectives as well as where they want to be in three to five years,” says RSM McGladrey Managing Director Gordon Opland. “Many companies solely target their immediate needs as opposed to developing a strategic IT plan that is monitored. With the evolving nature of technology and business, this approach does not properly align IT initiatives with business needs.”
• IT security risk high
With the growing concern of technological risk and security threats, both internal and external, the quality and security of IT systems has never been more important. However, only 22 percent of executives say technology was a critical risk to manage, compared to financial (68 percent); operational (65 percent); legal and regulatory (48 percent); and supply chain (39 percent) risks.
Qualified IT professionals in demand Underscoring the critical nature of IT, there is high demand for qualified professionals in the U.S. Among 16 skills that were listed under “hiring needs” in the survey, technology personnel ranked sixth. Larger companies have a higher demand for IT labor, while 46 percent of companies with such a need have revenues of $500 million or more. Companies with $100-500 million in revenue ranked second, with 26 percent of companies expressing a need.
Executives of printing and publishing as well as medical device companies reported that IT carried a higher level of importance than the other eight industries identified in the survey. Not surprisingly, these are the two sub-verticals that report the strongest need for tech personnel.
Upgrading IT frameworks
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: installing new systems, or expanding the technology already in place. Both options saw a rise in this year’s survey as 72 percent of executives reported that 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.
Tech education on the rise While most executives say they will be replacing or upgrading their current systems, companies of all sizes are reducing their technology spending for the coming year. A 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 say more training is needed to fully realize the capabilities of their technology frameworks. Investing in training and education enhances the investment that companies have already made in their current systems.
“Developing a comprehensive training plan is one of the most important steps that a company can take when implementing or upgrading their IT systems,” commented Opland. “A successful training program can help ensure that you are getting full value and functionality from your systems, your personnel and your operations.”

When a recent RSM McGladrey survey asked which risks are most critical to manage, technology risks are overshadowed by threats to finance, operations, legal, and supply chain. Even though advances in system reliability are contributing to risk mitigation, the diminishing focus on technology risk management is surprising given the level of reliance on IT for continuing operations—especially in light of recent, well-publicized disruptions such as security breaches, a series of poundings delivered by Mother Nature and the ever-looming threat of terrorism.

WEBCAST Advisory
If optimizing the IT landscape is a goal for your company in 2009—whether it is to drive success in product development, to better manage security and risk, or to finally link IT to an overall business plan—you’ll want to listen in on the MBT Webcast, Optimizing Your IT Landscape for Product Development . You will learn how to overcome some of the most pressing IT challenges , and enjoy these benefits:
• Reduced time to bring products to market;
• Improved accessibility, quality, and collaboration of data for faster decision making;
• Scalable and optimized infrastructure to meet current and future demands of the application landscape while minimizing total cost of ownership; and
• Mitigation of risk and ability to rapidly adapt to change in today’s business environment.
Listen now.

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