We're in the midst of our predictions season, including our 2014 Worldwide Manufacturing predictions and our "Emerging Agenda" predictions for manufacturers on what 2014 will bring for the technologies and topics that are changing the way manufacturers buy and use IT. We're taking a more optimistic look at the opportunities in 2014, with some recent indices giving us good reason to think we're being realistic. We're also encouraged by increasing investments that build upon 4 pillar technologies to serve the lines of business (supply chain, the plant floor, and product and services organizations).
To make substantial progress in 2014 and the coming years, we think there will be real change in how the IT organization works, not just because of new technology investments and possibilities, but also because its relationship with the rest of the business is changing.
Good Signs for the Coming Year
In the United States, the Purchasing Managers' Index compiled by the Institute of Supply Management has stayed above 50 for some time now and increased each month since June. (Anything above 45 indicates growth). In fact on Dec 2nd, they announced the November PMI reached the highest PMI in 2013: 57.3. Consumer confidence measures are also rebounding after a few months of pessimism surrounding the US government sequestration, with University of Michigan's preliminary consumer sentiment index for December rising to 82.5, the strongest since July, and up from 75.1 in November. We've also looked at our Global Performance Index, a measure of 800+ publicly reporting manufacturing companies, and revenues appear to be growing globally and margins are holding up well. Of course, this doesn't mean 2014 will be an easy road, and we still think manufacturers will continue their focus on productivity. In fact, our 2013 IDC Global Technology and Industry Research Organization IT Survey confirms that productivity is still at the top of manufacturers' business priorities, as we found in 2012.
Focusing Productivity Investments on the 3D Value Chain Platform and the 4 Pillars
To keep their productivity momentum going, we believe manufacturers are going to continue investments started this year with initiatives that deliver a platform for productivity. We're calling these platforms "3D Value Chain" platforms, with 3D's referring to demand-oriented, data-driven, and digitally executed. Needless to say, these 3D initiatives will build upon combinations of the 4 pillar technologies (big data and analytics, cloud, mobile, and social and collaboration) to provide manufacturers with critical capabilities that support the line-of-business requirements. For example, initiatives that focus on optimizing the customer experience will combine existing applications in the enterprise possibly with new applications but more importantly with mobile, big data/analytics, and social/collaboration investments.
From Consumerization of IT to a Changing Definition of Enterprise Technology
Let's come back to the changing IT organization, and mobile is a good place to start. We use a very broad definition of mobile - including M2M (machine to machine) and mobile devices (smartphones, tablets, and other customized options, too) with the expectation that devices and sensors are generating a substantial amount of valuable data for manufacturers. As a result, mobile is essentially enabling many 3D initiatives, including the customer experience example as well as others such as field service excellence, collaborative commerce networks, and the future factory.
Mobile is changing the way that we expect to use technology, including mobile devices, in the workplace. I'm sure you've heard the term "the consumerization of IT" because of mobile devices - smartphones and tablets, and other mobile facets including wireless networks and (often) plentiful bandwidth. Essentially, as mobile has made its way into the enterprise, we now find a combination of technologies in the enterprise -
- Information Technology - Enterprise Tech - the traditional business systems that support administrative processes and transactional integrity, largely financial, human resources, and baseline order management.
- Operational Technology - More line of business specific, not just in the factory but also in the supply chain, product management, and other business domains.
- Consumer Technology - The devices consumers can purchase and bring into the workplace, influencing our attitudes about how we work and also what devices we use to work.
The Impact on the IT Organization
This is bringing a change in how we use technology in the business, and that's going to change the IT organization, too. We already know that the line of business is an increasingly important influencer and decision maker in IT spend. IDC estimates that business funds (all or some of) 61% of technology projects. So, if IT spending is changing and what we call enterprise technology is changing, doesn't that mean the IT organization must change as well? We've laid out a vision for that change, shifting IT into 3 organizations, one that works closely with the COO for the line of business, a 2nd group that stays focused on the core ERP platforms and reports into the CFO, and a 3rd group that owns the enterprise architecture.