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21 Oct 2016

Australian manufacturing IT spending to reach A$3.7 billion by 2019. A slow resurrection“Risk of inaction outweighs risk of action”

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.





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For further information, please contact



Jaideep Thyagarajan

Market Analyst - IT Spending

IDC Australia

jthyagarajan@idc.com

+ 61 2 9925 2279



Karina Alexeeva

Events and Communications Coordinator

IDC Australia

kalexeeva@idc.com

+61 2 9925 2258

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Contact
For more information, contact:

Jaideep Thyagarajan
jthyagarajan@idc.com
061299252279