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Prepare for growth -- Invest in IT, but wisely

Prepare for growth -- Invest in IT, but wisely

By Joseph Rebeiro | Mar 15, 2010

From time immemorial, IT has always been sought after to find solutions to problems, be it shortage of manpower, need for productivity increases, or a solution to integrate and streamline disparate systems. Satish Lele, Vice President at Frost & Sullivan echoes this fact, imploring companies to invest in IT – as that is the key differentiator that separates companies that are primed to succeed from those that struggle and fail.

Economic turbulence and recovery

The year 2009 was a challenging and turbulent year for manufacturers across Asia. Since the financial crisis began to show signs of waning, many of them have been bracing themselves, ready to recoil and spring forward the moment the economic winds change. To prepare themselves, these manufacturers have sunk investments in infrastructure, manpower, training, and the likes.

In 2010, with the upturn in the economy, the manufacturers who are best prepared have got themselves in a better position to ride the recovery curve. They will be able to take advantage of the increase in global consumer demand and shift to the production of higher-value goods.

Similarly, the manufacturing industry in Singapore has also posted positive growth - 14.4% year on year in December 2009. With increasing government support through funding, incentives and grants, manufacturers in Singapore can expect an optimistic outlook in the next few years.

Productivity never sleeps

We hear the mantra “more productivity” year after year. “The pressure for ever higher levels of productivity will never cease,” says Satish Lele, VP at Frost & Sullivan. Each time a benchmark has been surpassed a new target will be drawn up. The only way to gain the edge is to invest in better technology, so as to reap higher levels of productivity.

According to Frost and Sullivan, investments in IT have a direct relevance to increasing the business value of an organization. In the manufacturing sector, the greater the penetration of IT in data management, the faster the data processing and the lower the cost. With increasing IT penetration as manufacturers move up the value chain, they will enjoy faster time to market and experience higher levels of innovation.

Manufacturing companies are increasing their levels of productivity all the time. The EU and the US, who historically show consistently high levels of productivity, continue to pump significant amounts of investment in ICT. According to Frost & Sullivan, the GDP share of the ICT sector for the EU and the US is 5.8% and 6.3% respectively. Their ICT investment share is 18% and 29% respectively, while their ICT share in productivity growth is 42% and 80%.

This shows that the countries who spend more on technology are also the ones with higher levels of productivity. Clearly the greater the investments in technology, even greater are the productivity gains. This fact is not lost to SMB manufacturers in the emerging economies in the region. SMB manufacturers in Thailand, Taiwan, greater Hong Kong and mainland China have already increased their investments in technology.

A call to take the bull by the horns

It seems that SMBs in Singapore are unaware or worse lackadaisical about the changes that are taking place globally. Many companies here are slow to adopt the latest developments in ICT. However, Frost & Sullivan outlined several factors that are constraining enhanced ICT adoption in many companies here. They are a lack of money, skilled staff, and strategy, among others.

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