IT in Manufacturing Hit Hardest by Recession, Report Says

A survey of cost-conscious business owners suggests the sluggish economic recovery is negatively impacting IT projects across several vertical markets.

An ongoing survey of IT effectiveness for midmarket businesses has released preliminary analysis of how the recession has impacted IT projects in various industries. Survey results indicate the manufacturing industry has been hit hardest, with 66 percent of respondents delaying, halting or canceling IT projects, and a like number reducing capital expenses during the past year. The IT Effectiveness Index, comprised of partners such as Microsoft, HostSearch and the research firm Yankee Group, is a benchmarking tool that measures the technology effectiveness of small to medium-sized businesses (SMBs) throughout the world.

The manufacturing industry is followed by communications at 55 percent, wholesale at 52 percent and service providers at 48 percent. The computer industry appears to be least affected among survey respondents, with only 33 percent indicating IT projects have been delayed or halted due to the recession. According to the survey, 50 percent of manufacturing industry respondents indicated they are understaffed or critically understaffed in their IT operations. In contrast, 33 percent of service providers said they were understaffed in IT, with only 24 percent of respondents in the computer industry.

"For SMBs, technology provides a key differentiator to support business growth," said Steve Kahan, vice president of marketing and product management with The Planet, one of the consortium sponsors. "The results of the survey seem to indicate that capital expense budgets have been hit hard and adequate staffing of IT is a struggle in many industries."

The IT Effectiveness Index (IETI) published a mid-year report this past summer based on surveying hundreds of small businesses that indicates these companies are falling behind in IT effectiveness as economic pressures have forced nearly half of the respondents to reduce, delay or cancel critical IT investments. In January 2010, the ITEI Partners will publish the SMB IT Effectiveness Index Annual Report.

This current survey follows a report from the National Federation of Independent Business (NFIB), which found small business owners face continued challenges in the economy. In terms of employment, eight percent of businesses surveyed reported unfilled job openings, unchanged from August and September. Over the next three months, 16 percent said they plan to reduce employment, and nine percent plan to create new jobs. In the last three months, eight percent of the owners increased employment, but 19 percent reduced employment (seasonally adjusted). While the NFIB noted both statistics are better than September readings, the job-generating machine is still in reverse for many small business owners.