Interest in e-Enabling Supply Chain Still High

More companies planning implementations than have enabled supply chain processes, aerospace and defense survey shows

More companies planning implementations than have enabled supply chain processes, aerospace and defense survey shows

El Segundo, CA  September 16, 2003  Interest among aerospace and defense (A&D) companies in implementing e-business solutions in supply chain processes remains high, as does interest in e-enabling back office and front office processes, while interest in customer relationship management is declining, according to a recent survey of industry executives.

The survey by Computer Sciences Corp. of some 200 CEOs at various A&D companies for its second annual aerospace and defense 2003 IT survey, entitled "A CEO Perspective on the Strategic Use of IT," found that for more companies (by about 10 percentage points) are currently planning implementations in supply chain, back office and front office processes than have already e-enabled these processes.

On the other hand, according to the survey, "interest for [customer relationship management (CRM) appears to be waning, with 36.5 percent having implemented and only 24.7 percent planning to implement."

Yesterday, reported results from the survey showing that only half of companies in the A&D industry believe they are getting the value they expected from their e-business investments and that enterprises in this sector are raising the bar on their expectations of tangible payback and returns for information technology (IT) spending. (See story.)

Elsewhere in the survey, results indicate that almost four in 10 companies in the aerospace and defense industry view their legacy systems as outdated and a barrier to progress. The percentage of executives who view their company's legacy systems as an obstacle rose from 22.8 percent last year to 38.8 percent in this year's poll.

Slightly over 20 percent of respondents said their legacy systems are already e-enabled, while about half of respondents said that they would either be e-enabling their legacy systems in the next 12 months or in the longer term, or would be using middleware (enterprise application integration) to e-enable multiple legacy systems. Only about 10 percent of those polled said their companies had no plans to e-enable their back office systems.

The CSC survey revealed that about 18 percent of companies in the A&D sector view themselves as leaders in the adoption of new technology, while another 35 percent view themselves as "quick adopters." Companies on either extreme of the revenue spectrum were particularly open to new technology: "The largest and smallest companies tend of think of themselves as either leaders or quick adopters," CSC reported, "while companies in the middle tend to view themselves as late or non-adopters."

Overall, about 46 percent of top executives believe that e-business will dramatically transform their companies, according to the survey, while about a quarter disagree with that proposition, the remainder being neutral on that subject. Meanwhile, about 28 percent of the survey's respondents said that e-business had already transformed their business, while about 38 percent disagreed and the rest were neutral.

Not surprisingly, those companies that viewed themselves as "leaders" or "quick adopters" were more inclined to believe that e-business had already transformed their enterprises.

Only about 10 percent of the survey respondents thought that, among various industry trends, the use of e-business exchanges would have the most significant impact on their own organizations in the next 12 to 24 months. Small enterprises in particular felt that the exchanges would have little or no impact on their business, contrary to CSC's prior thinking that small companies would view the exchanges as a way to gain market access.

On the subject of e-business' role in their companies' lifecycle management business strategies, 54 percent of respondents said that e-business had a role to play here, while 46 percent saw no such role for e-business.

The study's authors reported that they found companies fairly evenly split among a variety of different lifecycle management initiatives, including deploying an enterprise resource planning (ERP) or other system to manage the aftermarket business, product data management, customer self-service, supply chain management and inventory management initiatives.

"We conclude that companies don't see one clear advantage to the use of e-business in [lifecycle management] capabilities and therefore have not adopted e-business for [lifecycle management] as quickly as they have for other functions such as back-office transaction processing," the authors write.

In other survey results:

  • Some 60 percent of respondents in this year's survey said their companies view information technology as an investment, versus 40 percent that view IT as a cost. That compares with the 70 percent in last year's survey that saw IT as an investment.

  • In response to a follow-up question, 10.7 percent of respondents reported that their companies view IT as a source of revenue, and 31.0 percent said that IT represented a source of strategic differentiation. While another 35.7 percent said that IT was a cost control mechanism, fully 22.6 percent saw IT as none of these, "leaving unanswered questions as to how these companies classify their IT investments," as CSC wrote in its report.

  • Companies in general feel pretty good about how well their IT strategy is aligning with their overall business strategy. Fully 80 percent of respondents said that their two were either very well or fairly well aligned. Just 2.4 percent of respondents said that they weren't sure what their company's business strategy was in the first place.

  • Cost cutting remained the top criterion for evaluating the value of IT investments, with about 40 percent of the survey respondents ranging "cuts operating expenses" as the key benchmark, followed distantly by "enhance operating revenue," "remain competitive" and "reduces lead time," each with less than 20 percent. "Reach new customers" and "investment meets financial metrics" were the least-cited criteria.