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Blog · 12 Apr 2021

Does coronavirus mean manufacturers will neglect the required investments in core IT?

Business continuity and cost optimisation were the main focus in the early phases of the pandemic.

Lorenzo Veronesi
Research manager, IDC manufacturing insights EMEA

The past 12 months have provided some key insights for manufacturers.

Among the most important of these was the understanding that without a solid technology foundation in place, companies cannot cope with the degree of business complexity they have to face. The pandemic has forced many organisations to adopt digital technologies and change their approaches as they seek to maintain business continuity. Some companies have reportedly crammed two years of digital transformation into two months (for example, to guarantee working from home).

IDC research highlights that because of coronavirus, the IT organisation is now under pressure to become, by and large, the main voice at the executive level.

While IT investments have not stopped, it's fair to say that these investments during the early phases of the pandemic have focused mostly on business continuity and immediate cost optimisation. Initiatives of this kind entail, for example, decentralising work by enabling unified communications and collaboration, assessing the risk of strategic suppliers and investing in extra resources to model the cashflow impact of the crisis.

Following this initial shock, some organisations — the bold ones — doubled down on technology despite the recession to obtain a competitive advantage during the next normal. IDC research shows that 46% of manufacturing companies plan to be leaders and early adopters of new technology or to even aggressively seek out emerging technology to create advantage even if it means some products may sometimes not work. A slightly lower number of companies (38%) will be more pragmatic and look for proven, but not necessarily innovative solutions. Only a fraction of companies will refrain from new investments and will avoid new technologies. So, at this stage we can say the market is polarised between "progressive" and "conservative" approaches.

Investments have been pushed by the need to address new operational requirements or capture market share through business model innovation. However, manufacturing organisations should not be trapped by a short-term attitude and should not neglect the investments in core IT and technology expenditures needed to run the business cost-effectively in the long term. Initiatives geared towards solving business needs could pile up into a series of silos that eventually constrain the IT journey and limit the interoperability with other initiatives. Companies need to think about a connected hub of innovations rather than simply point projects.

Therefore, core technology expenditures needed to run the business, such as IT infrastructure and networks, are more important than ever to create an organic flow of data throughout the business functions and to enable the use cases that are needed for the company to thrive.

To find out more about digital manufacturing, please get in touch with your BT account manager.

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