Australian manufacturing IT spend to hit $3.7 billion by 2019

Australian manufacturing IT spend to hit $3.7 billion by 2019

Software spend represents the largest IT investment category in the manufacturing sector for 2016

Production efficiency enhancements and the development of highly-tailored products are set to help IT spend in Australia’s manufacturing sector hit $3.7 billion by 2019, according to new research by IDC.

The market research and analysis firm suggests that IT spending in the local manufacturing sector is on its way up, with IT investment across the sector set to reach a 1.6 per cent five-year compound annual growth rate to 2019.

While Australian manufacturing IT spend is expected to hit $3.5 billion in 2016, IDC forecasts predict that IT investment in the sector will hit new heights by 2019, with software set to represent the largest spending category in 2016.

Software spend alone in the manufacturing sector is expected to grow at an annual compound rate of 6.4 per cent until 2019, while investments in hardware and telecommunications expected to remain flat, with “negligible” growth rates.

However, IDC notes that local manufacturers are experimenting and working to create capabilities that enable sensors, machines, production equipment, and technology systems to be connected throughout their value chain, which could lead to more investment in telecommunications and hardware further down the track.

IDC’s latest report comes at a time when local IT channel players are beginning to see emerging opportunities within industry verticals, such as manufacturing and mining, that have not traditionally been seen as heavily IT-focused sectors.

So-called Industry 4.0, also known as the fourth industrial revolution, is seeing technology play a greater role in manufacturing, along with a raft of other verticals, as connected devices, he Internet of Things (IoT), and automation proliferate.

According to IDC, transformational efforts focused on frameworks such as Industry 4.0 offer the potential to create rapid interconnectedness of resources, equipment, people, processes, and products with IT systems.

Real-time interactions across such systems, using standard communication protocols, will create an environment ripe for new technologies to no longer function in isolation. Instead, they will work to create end-to-end, integrated, automated, and highly-optimised production flows delivering improved efficiencies, the research firm suggests.

“Transitioning to a full-fledged Industry 4.0 player calls for profound clarity of the operational objectives that companies are seeking which, in turn, drive an understanding of how to embed IoT [Internet of Things] and analytics into individual production processes,” said IDC industry analyst, Jaideep Thyagarajan.

“The vendor community is rich with innovative solutions to help enable manufacturers build a product-centric connected ecosystem,” he said.

IDC’s findings come as business consulting and IT infrastructure company, Cognizant, releases research suggesting that the impact of digital transformation in the manufacturing sector, along with retail, banking, insurance, healthcare, and life sciences industries - which today generate over $US60 trillion in revenue or 40 per cent of world’s GDP - could deliver a rise of $US20 trillion, between 2015 and 2018.

The study found that, in the Asia Pacific region, respondents expect digital transformations to deliver $US142 billion in net revenue per year by 2018, a total economic impact of $US425 billion across all companies studied in the region.

“The impact of new technologies on all aspects of business – what we’re now calling “digital” – is so large that there is no way for any of us to escape its gravitational pull.” Said Manish Bahl, senior director of Cognizant’s Centre for the Future of Work.

“No company will be able to escape from the impact of new technologies on work and business. The impact will change not only business, but also education and government, and it will also redefine what it means to be a healthy society”, he said.

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Tags softwarehardwareIDCTelecommunicationsManufacturingIndustry 4.0Gognizant


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