Many multinationals (MNCs) have lined up hefty proposals in the Indian manufacturing sector. Arcelor Mittal, DailmerChrysler, and Honda Siel Cars India, to name a handful, have pledged or planned millions of dollars in investments in the country. Other MNCs like Clariant, GM and Unilever have started to source components and hardware from India.
With a strong growth of 12.3 percent in FY07, and with predictions that Indian manufacturing would even start to threaten China’s position as the world’s factory in the next three to five years, CIOs in this sector are facing the big challenge of aligning their IT infrastructure with the rapidly evolving business environment and opportunities.
A majority of responses to our survey came from IT heads in the manufacturing sector. While this indicates the level of interest in IT adoption in this sector, it should not come as a surprise to anyone since this is also the sector that accounts for the largest number of corporations with revenues of over Rs 500 crore in our survey.
IT budgets are set to keep step with all the indicators of high growth and positive sentiment about Indian manufacturing. Some 16 percent of the respondents said they were hiking their 2008 IT budgets by more than 40 percent over that of 2007. Overall, 79 percent of respondents said they were hiking budgets by at least 20 percent over 2007 figures.

Restructuring IT
As per our survey, aligning IT with business requirements was a major challenge for the IT departments.
“CIOs need to keep the future technology trends in mind before selecting a new technology and understand how the business processes could get aligned with it,” says V V Rao, group head, IT, Suzlon Energy.
Also, CIOs are increasingly becoming conscious of the difficulties involved in selecting and adopting a range of new technologies which has emerged as the other crucial challenge for them. As they have moved to do so—without much benefit of IT strategic thinking—they are also becoming more conscious of the complexity of managing their IT environments and rapidly evolving requirements. About 20 percent of our respondents have said their greatest challenges come from the need to adopt new technologies while keeping control of their IT environments.
That these issues—coupled with the high-pitched marketing from IT vendors of a number of new buzzwords —have created confusion over what IT heads regard as the technologies that would have the most significant impact in 2008.
Consider the situation of last year. Our survey then indicated that over two-thirds of IT heads thought that Service-Oriented Architecture (SOA) was the biggest thing, and that they would all deploy SOA in 2007. In our survey for 2008, that number has fallen to 19 percent. Some of the fall could be accounted for by the fact that many of those enterprises did go ahead and deploy SOA in 2007.
Yet the top buzzwords this time are Unified Communications (UC) and virtualization. Indeed, UC is the new, new, in-thing. Out of the blue, 24 percent of our respondents in the manufacturing sector named it as the technology that they thought would have the most impact on IT environments in 2008. Virtualization too has risen in estimation, with 22 percent of respondents saying that this was the big thing.
Perhaps the choice of the top two technologies is surprising. UC’s new status reflects the increasing need for real-time collaboration between geographically-dispersed teams as manufacturers face shorter time-to-market and product cycles. Further, real-time communications between centers and mobile workers is required to boost speed, efficiency and productivity even as they globalize operations and market presence.
Surprisingly, however, spending priorities do not always reflect these concerns. The top items on which IT heads said they would be spending more money in 2008 remain more basic business concerns—as they should be—rather than technology concerns. Disaster recovery / business continuity / enterprise risk management, back-up solutions and information & data security will take up the monies of a majority of IT heads—some 55 percent of our respondents—in the manufacturing sector. Nevertheless, that number is significantly down from the 89 percent of respondents who said in our last year’s survey that their spending priority in 2007 would be disaster recovery and back-up solutions.
“Ensuring new technology is utilized—particularly when it comes to security—is fundamental. Ideally, CIOs should leverage technology and integrate it with the company’s strategic business goals. With the constant barrage of new and more complex threats, identifying risk in the first place is an ongoing and often ambiguous task,” says Manikkam V S, head, information technology, Henkel CAC.
About 18 percent of our respondents said their spending priority was ERP systems; another 10 percent said it would be data warehousing and business intelligence; 14 percent said they would invest significantly in WAN infrastructure.
Both the splintered spending priorities as well as the fact that there are many IT heads talking about implementing basic business IT systems such as ERP, BI and WAN infrastructure indicate that there are a lot more SMB players who are now seriously adopting IT and are coming into the crosshairs of our survey.
At the other end of the spectrum, the large manufacturing players are thinking about spending more on customer relationship management, RFID and mobility technologies. A third of our respondents identified at least one of these as their spending priority.

My Agenda :