idc manufacturing research: call to action for high tech and electronics manufacturers

Accelerating Business Change Through Next-Generation ERP — Call to Action for the High Tech Sector

© IDC Manufacturing Insights

Our Worldwide Study of the High Tech Manufacturing Sector

� The research objective: – Understand the IT role — ERP in

particular — in respect to the dramatic increase in complexity in the industry.

� Global survey across multiple regions and countries:– Automotive, aerospace, industrial

machinery, and high tech

– Western Europe, the U.S., BRICs, Australia, Japan, and the Middle East

– Company size ranging from 100 to 5,000+


Industry Performance

Source: IDC Manufacturing Insights, GPI index, 2012

-2

-1

0

1

2

3

4

5

6

7

80

90

100

110

120

130

140

1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11

(%)

Index (1Q02 = 100)

High Tech GPI Index, 1Q02–3Q11

Revenue Net profits


Source: IDC Manufacturing Insights, 2012, n = 378

Most Critical Areas of Business Focus

2

3

4

Total IndustrialMachinery &Equipment

High Tech Aerospace Automotive

Q. What is your most critical area of business focus today?

Sustain growth Control cost


1.4%

49.3%

40.6%

8.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q. How do you expect the level of complexity in operations to be in 3 years

from now?

Significantlymorecomplex

Morecomplex

About thesame

Lesscomplex


Complexity Keeps on Going

14.5%

20.3%

33.3%

44.9%

46.4%

60.9%

79.7%

0% 20% 40% 60% 80%

Business processcomplexity

Organizational complexity

Product complexity

Supply chain complexity

IT complexity

Operational complexity

Market complexity

Q. What area of your business do you feel will grow in complexity?


5.8%

5.8%

13.0%

13.0%

36.2%

40.6%

43.5%

43.5%

49.3%

49.3%

0% 10% 20% 30% 40% 50%

Improve bid and project profitability

Increase the ability to comply with newC

Streamline new product design andC

Reduce company environmental footprint

Improve manufacturing productivity

Implement lean/six sigma or other continuousC

Improve demand planning and forecasting

Improve customer fullfillment

Increase sourcing from lower cost countries

Better align IT with the business

Q. What are the business initiatives your company will undertake over the next three years?

Leading Business Initiatives



� Manufacturers can beat complexity only if they are able to:

– Streamline business processes and rapidly adapt them to business changes

– Break organizational silos, fostering more collaboration

– Speed up their decision-making capability

52.2%

55.1%

58.0%

63.8%

63.8%

0% 20% 40% 60% 80%

No data visibility andintelligence tools available in

the market

No or inadequate integrationto partners

Our current ERP and BI are transactional systems that

don’t allow real time visibility and intelligence

Information is stored in too many different IT systems

that aren’t properly integrated

Organizational andinformation silos exists that

hamper data sharing

Lack or inaccurate data

Q. What are the main barriers to creating an effective real-time decision-making environment?

Speed Up Decision Making



9.4%

21.9%

32.8%

32.8%

46.9%

46.9%

48.4%

60.9%

0% 10% 20% 30% 40% 50% 60% 70%

Does not include industryspecific capabilities availableC

Too complicated and expensiveto upgrade

The system is transactional and doesn’t offer event-driven, C

It's primarily a financial ERP andits operational capabilities areC

Too complex to customize to fitour specific needs

Too complex to integrateseamlessly with other existingC

Doesn't offer collaborative orsocial networking-styleC

Doesn't support fast decisionmaking capabilities

Q. What do you think are the major limitations or weaknesses of your current ERP system?

Traditional ERP Limitations



The ERP System of the Future Defined

17.2%

42.2%

43.8%

46.9%

71.9%

78.1%

0% 20% 40% 60% 80%

Get new products to market faster

Improve collaboration

Keep costs under control

Provide more detailed insightsinto my business

Streamline process and achieveoperational excellence

React faster to the changes thebusiness needs

Q. Over the next three years, what do you need your ERP system to enable you to achieve?



Business

Alignment

IT Efficiency

Legacy Systems

Best-of-Breed Applications

Financial ERP

Operational ERP

Operational ERP


Companies are moving to single ERPs

21.9% 20.6%

9.4% 7.0%

57.8% 63.0%

10.9% 9.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Today 3 years from now

Q. What is your current and future approach to ERP?

Two-tier ERPapproach

Best-of-breedfederation

Single ERP

Multiple-tier ERP

Bespoke system



Technology: Defining the WayWe Work in the Future

5.8%

52.2%

42.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q. Do you think modern technology —e.g. mobility, social networking or cloud

computing — is going to change the way you work in the near future?

Will completelychange the waybusiness ismanaged

Will partiallychange the waywe work

Not at all



Essential Guidance

� Modernize traditional IT and take advantage of the "four IT forces"

� Create an integrated decision-making environment

� Combine the rigor of current ERP with the flexibility offered by social technologies and mobility

� Undertake an operational ERP strategy


Pierfrancesco ManentiHead of IDC Manufacturing Insights,

EMEA

[email protected]

Thank You! Questions?