Accounting for close to 80 percent of overall industrial output,
the manufacturing industry is often used as a barometer for
measuring the growth of the Indian economy. In the aftermath of the
recession, this sector has reported extremely good numbers. The
latest IIP (Index of Industrial Production) data reveals that
India’s manufacturing sector grew by a robust 9.3
percent—clearly signaling that the worst may be over for the
Indian economy.
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ANALYST VIEW
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Aditya Rath – Principal
Consultant, PwC
As the manufacturing industry shows glimpses of good growth, we see
companies in this sector consolidating their IT infrastructure to
improve efficiencies. Consolidation will be primarily seen in the
case of servers and networks. While large companies who already
have basic enterprise applications in place will invest in
technologies such as BI, smaller companies will look at adopting
standard enterprise applications such as ERP systems.
We also see a huge focus by CIOs in this sector to measure and
quantify the value of IT investments. Under pressure from the
management to increase the utilization of their IT assets, CIOs
from this sector will increase their server consolidation
initiatives.
We also see a greater thrust on green IT and security-related
initiatives. To avoid CAPEX, Indian CIOs will also adopt SaaS-based
tools more aggressively. We will see a granular adoption of
SaaS-based services and solutions.
Like other sectors, the IT function in the manufacturing sector
will gradually have more domain experts rather than technologists.
We are already seeing a trend in some companies that confirms this
fact. With pressure on margins, we see Indian manufacturers
increasing their investments on forecasting technologies. These
technologies will give vital intelligence to their sales, marketing
and distribution teams.
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As the global economy gradually limps back to normalcy,
manufacturers across India from diverse sectors such as chemicals,
automotive components, textiles, chemicals, drugs and electrical
products, are more optimistic that demand will surface from global
and domestic companies. That said, analysts believe that
India’s manufacturing industry is still not globally
competitive enough and faces immense challenges due to inadequate
infrastructure and improper utilization of technology.
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Figure 1 : IT purchasing plans for 2010 in comparison
with 2009
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In such an industry, besides modernizing existing equipment,
manufacturers are making substantial investments in IT to improve
productivity. This is seen from the findings of the Infrastructure
Agenda 2010 survey, where a majority of CIOs from the manufacturing
sector, have voted in favor of increasing their IT spend. Around 13
percent of the CIO respondent base said they will spend 40 percent
or more on their IT budget in 2010, as compared to 2009. And 39
percent said that they will spend 20 percent or more on their
budget in 2010, as compared to the previous year. Some 43.5 percent
have stated that they will spend nearly the same amount in
2010.
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Figure 2 : IT budget outlook within specific
technology
categories in 2010
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Indian manufacturers face great competition from countries such as
China, and are naturally keen to improve their competitiveness
using IT. Most manufacturers have an extensive and complex network
of suppliers and customers. Hence, BI tools that provide these
companies with the required information to make timely and accurate
business decisions, is critical today. Information could be related
to customer buying patterns, monitoring inventory levels and
benchmarking distributors or regions.
The survey findings highlight that 98 percent of the CIO
respondent base expect to increase their budgets for BI in 2010.
Investment in virtualization technologies is second in the list
with 92 percent affirming their intention to invest in this
technology. The interest in Document Management Systems (DMS) is
also high, with 69 percent of respondents stating they will
increase investments in this technology. Web 2.0 tools, though
popular, have not made it to the ‘must do’ list, with
only 36 percent of respondents saying they will increase
investments in Web 2.0 tools in 2010.
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Figure 3: Areas in which organizations in this sector
use open source
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The usage of open source tools is also gradually picking up in
this sector, with over 41 percent of the respondents using open
source operating systems, 40 percent using open source office
productivity suites, and 11 percent using open source database and
messaging systems.
Speaking on challenges CIOs in this sector face, 59 percent of CIOs
cited integrating disparate applications and systems as their
topmost challenge.
To reduce overdependence on a single country such as China, many
countries are today actively looking at India as an alternative
manufacturing hub. To India’s benefit, it also has an
extremely successful software services industry that can lend the
right support to boost the competitiveness of Indian enterprises.
Many SMEs are looking at implementing ERP solutions. Large
enterprises too are looking at increasing their IT spends in
technologies such as BI to accurately identify customer trends. The
potential of Indian manufacturers to transform their global
competitiveness is indeed bright.
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Pertisth Mankotia
Head - IT, Sheela Foam
As a company, one key challenge is measuring and improving
delivery efficiency from distributors to retail outlets. The
delivery efficiency between our units and distributors are already
measured and are up to desired standards. However delivery
efficiency from the distributor to retail outlets is not measured,
which may result in loss of sales.
We will initiate steps to extend our in-house ERP to all our area
distributors. This ERP will also be extended to all our
joint-venture companies. This will help us in standardizing all
processes across various manufacturing locations in India. Other
important initiatives include improving logistics management and
reducing transportation costs between manufacturing locations and
distributors and retail outlets.
In 2010, we will also undertake initiatives to move towards desktop
virtualization, making use of Web 2.0 technologies to improve
productivity and setting up electronic surveillance systems at all
our manufacturing locations. We also want to consolidate our list
of network service providers. Today, we work with Bharti Airtel,
BSNL, TULIP, Tata, Reliance, Singapore Telecommunications, Telstra
and Optus. We desire to have maximum of two or three service
providers for better management.
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Umesh
Mehta
CIO, Asia Motor
Works
In 2010, we will establish a dealer management system for
connecting all our dealers across the country. We are also
conducting pilot deployments for evaluating unified communications
systems. Simultaneously, we will look at investing in technologies
such as CRM, PLM, BI, MES and Document Management Systems.
All these initiatives will help increase our revenues by improving
market share, improving our after sales service, increasing
customer satisfaction and reducing cost.
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Rajat
Sharma
Senior Manager - IT, Shree
Cement
Our key IT initiatives planned for the fiscal 2010 include the
deployment of a BI layer for strengthening our management decision
support system.
We are also progressing well in achieving completion of our
Green-certified near-site DR data center. This data center will be
fully operational in 2010.
Now that our core ERP function is stabilized, we are looking
forward to rolling out ERP-2 by deploying the SCM and CRM modules
to consolidate our business operations.
We will also be implementing our RFID-based vehicular access
control system at all our new manufacturing locations..
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Prasad
Parab
Chief - IT, Pidilite
Industries
In 2010, we will undertake initiatives such as virtualization
and server consolidation. We will also upgrade our old IP-based VPN
systems to MPLS based VPN systems across India. We will also focus
on consolidating our applications and making a roadmap for having a
standardized ERP across our different businesses.
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Hemant K
Singh
CIO, The Andhra Pradesh Paper
Mills
In the next year, we will implement BI solutions, monitor
business drivers through Strategic Enterprise Management and set up
a world-class IT infrastructure in line with ISO 27001 information
security standards. We will also strive to maintain business
continuity at the highest level by deploying state-of-the-art IT
infrastructure and systems and ensuring seamless integration of
information flow across all our units, offices, customers and
vendors—making them all a part of a giant supply chain. Our
efforts will also be geared towards linking IT concepts to Business
Process Re-engineering (BPR), integrating intra-unit information
through collaborative systems, adopting paperless concepts by
implementing workflow applications and empowering top management by
providing strategic tools.
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