Areas of business where strategic
IT investments are being made

Respondents were asked in which areas of
their business strategic IT investments are being made. Respondents were only prompted if
they could not provide any answers. The top four areas identified were mentioned in
similar proportions overall. Some large variances by country can be seen in Figure 3. The
suggestion is that strategic IT investments are being made in many key areas of the
business. Spain, the US and Germany appear to have more respondents making IT investments
in more areas of their business. Less investment appears to be occurring in France
overall. Not surprisingly there is a high proportion of large companies that are making
investments in all areas.

Fig.3 – Top four areas of business where
strategic IT investments are being made

Manufacturing is a key area of investment
for Germany, Spain, the UK and France. Over three-quarters of US companies are investing
in this area, though it is only the third highest area of investment. For Italy, however,
it is not key. Manufacturing however, is a crucial area of investment for over
three-quarters of wholesalers and 68% of large companies.

Another important area for the US is
Finance. Spain and Germany are also investing more than the market average. Over half of
primary producers and wholesalers are undertaking strategic IT investment in this area.
This is also another important area of investment for large companies (61%).

Logistics is another important area of
investment for Spain, the US and Germany. This affects producers (53%) and wholesalers
(50%) more than suppliers to major outlets (37%) and larger companies (63%).

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Management information is the crucial area
for the US and, to a lesser extent, Spain and Germany with more companies investing in
this area than the market average. Again, it is primary producers, wholesalers and large
companies who are more likely to be affected by this investment.

Another area, not shown on Figure 3, which
attracted a  reasonable number of mentions was sales and marketing. The areas of
least investment are human resources (28%) and scheduling and production (2%).

IT is a key driver in the development of
all aspects in the food industry. The results show that there is not a single business
activity where investment in IT is concentrated. On the contrary, the key areas of
manufacturing, finance, logistics and sales and marketing are all getting their fair

The food industry continues to rationalize
its activities throughout Europe and the US. Companies are developing ‘centers of
manufacturing excellence’ where they are concentrating their investment (both in
financial and skill terms). This requires leading-edge IT systems.

This results in a significantly revised
supply chain with fewer warehouses and more cross-border deliveries. This requires further
leading-edge IT systems to manage the complexities of multi-national operations and
finance such as enterprise orders and virtual warehousing.

The survey clearly shows just how
widespread and extensive this IT investment is.

Strategic importance of integration
between core IT systems

Fig.4 – The importance of integration between
core IT systems

Respondents were asked whether integration
between core IT systems in their business was of strategic importance. As illustrated in
Figure 4, the answer was a resounding ‘yes’. Integration is of slightly less
strategic importance to small companies (85% answered ‘yes’). There was no
variation across supplier sectors.

However, a lower percentage of respondents
in Germany considered integration between core IT systems to be strategically important.
This may be due to an underlying assumption in this market that all new IT systems are
compatible. It was also of slightly less importance to small companies.

As food companies become more global their
systems need to become more integrated. The survey clearly shows that the vast majority of
investment is directed towards achieving such integration.

The most important communications
technologies in achieving business strategies

Respondents were asked to rank how
important communications technologies were in achieving business strategies.

Fig. 5 – the most important communications
technologies in achieving business strategies

Overall, the most important communications
technologies were Electronic Data Interchange (EDI) and e-mail. The UK, US, France and
Spain ranked EDI as the most important technology in achieving business strategies. EDI is
also most important to suppliers to major outlets (46%) and large companies (40%).

E-mail was ranked as the most important by
Germany. It was ranked similarly across supplier sectors. However, its importance
increases relative to the size of the company. Groupware/Intranet is of lower importance
to France compared with other countries and attracts little variation in importance among
supplier sectors and company size.

Internet/World Wide Web is ranked lower in
importance than the market average in the US and the UK. It was not ranked the most
important communications technology at all by UK respondents. However, Italy and Germany
ranked this technology, along with Groupware/Intranet as important (for Italy the Internet
was the highest ranking technology). While small companies ranked the Internet/World Wide
Web highly (21%), it was of least importance to suppliers to major outlets (7%).

As supply chains become more integrated the
exchange of data becomes more critical. EDI is the commonly accepted format for doing this
in a structured and standardized way. EDI allows partners to exchange large amounts of
information with great speed and accuracy. It enables demand information to be
communicated up (and down) the supply chain for planning and replenishment purposes.

E-mail, Groupware and the Internet all play
an increasingly important role in information exchange. The survey shows just how
important companies see these developments. There is ongoing debate concerning the role of
the Internet in business activity. In the coming years it will be interesting to monitor
progress in this area.