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Policy

Spending Inches up in IT for Chemicals

by RICK MULLIN, C&EN NORTHEAST NEWS BUREAU
September 6, 2004 | A version of this story appeared in Volume 82, Issue 36

Information Technology (IT) spending in the process manufacturing industry will remain flat this year at 2% of overall revenues, according to an annual survey by AMR Research.

Revenues in the industry are increasing, however, and real spending for chemical manufacturers in 2005 will rise by almost 9%, according to the survey. AMR finds that 46% of respondents plan to increase spending on IT next year while 11% will decrease spending. Last year, only 14% of survey respondents told AMR they planned to increase spending.

Information on chemicals is based on responses from chief information officers and IT managers at 28 chemical companies. They were participating in a process industry survey that included a total of 87 respondents.

Product innovation and logistics initiatives are top priorities in the chemical sector, according to AMR. Customer management tools, such as customer relationship management software, are a key investment focus. “A product-centric culture still permeates the process industry,” the survey finds, “but the need to differentiate commodity products with service is gaining momentum.” Managing customers and channels of distribution was identified as the most important business initiative in IT, cited by 17% of total process industry respondents.

The survey indicates that process manufacturers are satisfied with the experience they’ve had outsourcing IT, with a 9.4% increase in outsourcing predicted for 2005. At least 45% of respondents say they are outsourcing data center operations, hardware support, applications development, and website hosting.

Although respondents say they are impressed with software performance, AMR’s survey indicates that they are less pleased about pricing. Using a satisfaction index that divides the percentage ranked excellent by the percentage ranked either fair or poor, product functionality and product range both score close to 2, while total cost of ownership scores 0.7. Maintenance policies score 0.8.

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