Although UK manufacturing will have spent 5.2% less on its IT hardware, software and services during 2000—2001, 2002 will see a return to growth at 2.5% and investment still well over £3 billion. But growth in serious e-business and the adoption of web exchanges will remain slow as users find fast ROI in doubt and on-going cost and culture barriers. These are chief among findings from market research specialist Benchmark’s latest substantial annual survey of computers in manufacturing (CIM) – its 18th since 1983 – among 1,000 UK IT managers. The research – all in-depth telephone interviews – was conducted between 21 August and 19 October this year. Benchmark managing director Guy Washer says the current decline in investment follows the misfortunes of the high tech and telecoms sectors. “Process spending has been more robust, but electronic and electrical, which had been driving growth in the discrete sector, has faltered,” he says. “Software spend is what’s really being hit,” he adds, “and ERP in particular. Hardware and services are more or less static as manufacturers continue to focus on upgrading their infrastructure and making incremental improvements.” ERP spend suffered most – a fall from £1,077 million to £930m this year, while Benchmark estimates that CAD fell from £365m to £313m. e-business investment, however, has nearly plateaued, moving up just £11m from £519m to £530m, while office software growth was robust, moving up from £458m to £485m. Says Washer: “Looking forward we believe spend will be more about point solutions where vendors can show rapid ROI (return on investment). Anecdotal evidence suggests that big, long term implementations are now a problem.” Moving on to e-business, Benchmark finds strategic views lacking, with just 19% of users claiming formal strategies. “The vast majority haven’t got one, linked to a business or IT strategy or not – which is worrying, because it means they are unlikely to get systems that meet their longer term needs.” And the firm notes that while adoption of straightforward website and email technologies is now high at 81% and 75% respectively, figures for the more advanced applications are certainly not. Remote on-line ERP access is still only 25%, e-procurement 24% and web catalogue adoption just 18%. The research also shows that this uptake is likely to remain fairly slow, with figures for uptake by 2003 remaining at 46%, 44% and 31% respectively. “By 2003 less than one third of manufacturers will have web catalogues, and remote access to ERP will still only be 46%. It’s a lot harder to implement than people at first realised,” says Washer. Most revealing is the ROI to date for e-business applications. Benchmark’s findings for the last 18 months show soft benefits like internal communications a clear success, with 33% noting improved performance, and 21% not. But across the rest of the claimed benefits, Benchmark finds UK manufacturing less than impressed: more respondents than not claim that collaborative customer commerce has delivered no ROI (27% versus 21%), while the jewel in the crown, supplier collaboration, is slated – 37% say no ROI against 14% in favour. Significantly though, the picture of expectation for the next 12—18 months is one of the triumph of hope over experience. Respondents across the board believe the benefits will come for everything from internal communications (up from 33% to 51%) even to supplier collaboration (from 14% to 35%). And on internal collaboration, Benchmark likewise noted an increasing belief (of 5 to 12 points) in the power of ‘e’ to transform communications in everything form factory to production planning, to production planning to procurement, and on out to design to production engineering and design to sales. But the picture of web hubs and exchanges shows UK manufacturing particularly slow to adopt. A sizeable majority indicated scepticism of the relevance of most e-marketplace functionality – from on-line auctions to collaborative inter-business working. Indeed, to date, just 10% of manufacturers say they are members of a live web trading community – and even that figure sounds high. Benchmark finds 2% more currently with a hub pilot scheme, 6% planning to join up, but most not involved and with no plans to do so. Says Washer: “The vast majority of SMEs are certainly not in there. There seem to be too many problems with vendors and other supply chain users.” And he notes that 77% of those currently taking part in a web exchange of some sort have seen no ROI to date. Nevertheless, Benchmark claims its research finds manufacturing industry healthy in terms of its understanding of the e-business issues, and notes that for the first time, cost is now being cited as the biggest barrier to ‘e’ involvement (up from 39% to 50%). Company culture problems are second, followed by lack of in-house resource and then security – closely followed by concerns over companies’ ability to judge ROI. Beyond these, it’s the usual concerns of different standards, suppliers’ reluctance to co-operate, ERP integration (now well down as a problem at 31% against last year’s 43%), education and lack of internal co-ordination. Moving on to the installed base of functionality, Benchmark’s survey shows financial and manufacturing planning software now well entrenched (98% and 86% respectively), at least in companies with more than 50 employees, and those with Internet and intranet infrastructures are also high at 86%. “But despite all the hype, mobile computing is still in its infancy,” says Washer. Benchmark’s figures show that for 64% of manufacturing industry less than 10% of their infrastructure is mobile. And on another note, Washer comments that despite the reduction in employment in manufacturing, “that hasn’t affected manufacturing’s GDP contribution. Automation, new technologies, IT and so on have all become more important factors, but GDP remains at around 18%, just as it was in the early ‘80s.” He also notes that since IT spend moved above the Government’s index of production in 1984, “there’s a good correlation with production improvements.” This year’s research was sponsored by the DTI as well as Ariba, First Index, Frontstep, Glovia, Izodia, K3, McGuffie Brunton, Microsoft, Oracle, PA consulting, Ramesys, Rockwell, Sage, SSI and UGS.