High-Performance IT in Industrial Products - Enabling a Radical Makeover

Manufacturing News, Source : The Manufacturer US
Published : 24 Jan 2007 14:09

A guest editorial from Paul Loftus, a managing partner of Accenture, Inc.

The classic “heavy metal” industry, industrial products remains dotted in the popular imagination with smokestacks and blast furnaces, providing the guts for the world’s manufacturing facilities. Yet this brutish image belies the complex technologies that support the industry’s diverse sub-sectors.

Now, as the industry finds itself in the midst of global growth and resurgent manufacturing activity, rapid infrastructure growth is presenting both huge opportunities and new pressures. As they expand in new markets, global conglomerates are searching to balance cost, quality and customer service. With supply chains stretched to encircle the globe, industrial products leaders are finding that IT is already a critical enabler today – and will be asked to do even more tomorrow.

Four IT pillars of high performance

High performance IT research conducted recently by Accenture found that industry leaders have achieved superior results by demonstrating mastery across four “pillars” of high performance: global flexibility, pricing power, excellent productivity and people power:

Global flexibility From flexible sourcing of raw materials and production to tightly connected distributors and dealers, common global processes and information systems support superior supply chain capabilities. In fact, more than three in four survey respondents reported seeing IT optimizing their supply chain, and nearly half reported making IT investments to enhance advanced engineering and collaborative product development.

Pricing power and innovation demand that a company understands customer needs and delivers products the market is seeking – a task easier said than done in a rapidly shifting commercial landscape. But high-performance industrial products leaders are using rigorous marketing analytics to boost product portfolio management and provide sophisticated service offerings and smart products.

High productivity depends on programs ranging from cost-cutting to strategic procurement, financial flexibility and post-merger integration.

People power, based on a continuous learning environment and ongoing retraining of workforces to align leadership and talent development with company values and strategies, underlies IE high performance.

Looming gaps in IT capabilities

Our research indicated that companies will ask even more of IT in the near future. Almost three-quarters (72 percent) of our respondents say that their IT units are not performing at a high level in all areas. What’s more, respondents reported seeing large gaps in capability opening up in the near future. And, nearly eight in 10 (77 percent) reported strong aspirations for a fully integrated business enterprise. Unfortunately, it appears that barely half of industrial products companies (49 percent) enjoy this level of integration today.

Service-oriented architecture (SOA) is already an important “to-do” for nearly three-quarters of companies, which presumably expect that it will prove valuable in integrating systems and solutions across different business units. Two-thirds of respondents (66 percent) seek advanced business intelligence, with fully integrated solutions for informed decision-making; slightly more than one-quarter (27 percent) report having this degree of insight today. Similarly, 62 percent of companies seek to have comprehensive online interactions with consumers across the entire enterprise, more than double the 25 percent that report having this capability today.

Building industrial-strength IT

Given this, companies aiming to accelerate their evolution should focus on five key IT activities:

• Industrialization – Leaders are more likely to utilize key performance metrics to align IT’s work with the performance of the broader business.

• Innovation – Leading IT organizations are more likely to be early adopters of leading-edge technologies, adopting them in a disciplined manner and focused on what creates real value.

• Information – Leaders manage and analyze information with strong analytic capabilities and a timeliness approaching real-time measurement.

• Infrastructure – High-performance IT organizations drive Web enablement and achieve significantly higher online utilization levels.

• Integration – High-performance IT operations champion enterprise integration and show strong interest in SOA’s future potential.

Clearly, business conditions in the sector – overcapacity, rising commodity and energy prices, exchange rate uncertainties and rising health care and pension costs – remain demanding. Add to this pricing pressures from emerging industrial giants like China and India, and high-performance industrial products companies face an array of challenges. The good news for those looking to the future is that IT continues to evolve from support function into business enabler.

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