21 Oct 2016
SYDNEY, Australia, October 31st, 2016 – Australian manufacturing IT spending is at the beginning of a slow rebound. The exit of automotive players from the sector is creating a vacuum. The industry is striving hard to fill that vacuum and create growth; momentum has begun but the environment is challenging. The sector’s contribution to the overall economy is at an all-time low. Low cost competition, poor demand, lack of adequately skilled labor, high input costs and a small national market are constraints for manufacturers delivering against the potential that exists. Transformational efforts focussed on frameworks like “Industry 4.0” offer the potential to create rapid interconnectedness of resources, equipment, people, processes and products with IT systems.
Australian manufacturing IT spending is gaining steady momentum. IT spending across the sector will reach a 1.6% five-year compound annual growth rate (CAGR) till 2019. IT investments will be aimed at enhancing production efficiencies and enabling development of customer-specific and highly personalized products. In 2016, Australian manufacturing IT spending is expected to touch A$3.5 billion and is forecasted to steadily reach A$3.7 billion by 2019. Software will represent the largest spending category in 2016 and is expected to grow at 6.4% CAGR till 2019. Investments in hardware and telecommunications are expected to be flat with negligible growth rates.
"Australian manufacturers understand and appreciate the need for consistent technology investments. There is an urgent need to change the fundamentals by creating transparency across operations, the supply chain and more broadly across the ecosystem that manufacturers operate within," says IDC Australia’s industry analyst Jaideep Thyagarajan. "Transitioning to a full-fledged Industry 4.0 player calls for profound clarity of the operational objectives that companies are seeking which will in turn drive an understanding of how to embed IOT and analytics into individual production processes. The vendor community is rich with innovative solutions to help enable manufacturers build a product-centric connected ecosystem” adds Jaideep.
Many manufacturers are experimenting and working to create capabilities that enable sensors, machines, production workpieces and technology systems to be connected throughout their value chain. Facilitating real-time interactions across this system using standard communication protocols will create a conducive environment where new technologies will no longer function in isolation. Rather, they will be working to create end-to-end, integrated, automated and highly optimised production flows delivering improved efficiency, transparency, operational control and the ability to deliver products that are more suited to the needs of markets and customers. Such targeted efforts will serve the need of the hour, which is to resurrect the Australian manufacturing sector.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com or www.anz.idc.asia. Follow IDC on Twitter @IDCAustralia
For further information, please contact
Market Analyst - IT Spending
+ 61 2 9925 2279
Events and Communications Coordinator
+61 2 9925 2258