Intersection of business and technology
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IT can be an essential tool in achieving the competitive advantage in the aftermarket’s key success factors: right part, right place, right time. AASA launched a new initiative in 2012 for the AASA Technology Council (ATC) to understand how information technology (IT) and business initiatives intersect.
Part of this initiative was the survey conducted in August, “Aftermarket Supplier IT Spend & Trends,” which focused on suppliers’ IT budgeting and future developments in aftermarket technology. The findings, which were presented at the recent ATC Fall Conference, not only have implications for technology professionals, but also identify potential opportunities for competitive advantages in the global aftermarket.
IT Spend: Budget
According to “IT Spend & Trends” survey respondents, IT budgets as a percent of revenue typically range between 0 percent and 3 percent, with almost half falling in the 1 percent to 2 percent range.
When compared with the findings from the Ernst & Young study, “Enterprise IT Investment Trends in 2012,” the aftermarket IT investment is greater than in other industries, which only average between 0 percent and 1 percent.
These figures demonstrate how IT-driven the aftermarket is and the industry’s key success factors. Aftermarket suppliers’ business is as much about fulfilling orders, meeting customer needs and assisting channel partners as it is about manufacturing processes, both of which are IT intensive.
Extending the comparison of the aftermarket to other industries, aftermarket suppliers’ IT spend is higher than those investments made in infrastructure and manufacturing. Not surprisingly, it is less than technology and financial services sectors. More surprising, aftermarket spending is as high as pharmaceuticals.
In the AASA IT survey, 64 percent of the respondents reported that IT budgets increased in 2012, also indicating an increase year over year. Only 16 percent of respondents indicated a decrease.
On average, aftermarket companies increased their budget – and by a larger amount – than other manufacturers in 2012. This clearly speaks to the importance of IT to the aftermarket business model.
Key takeaways
The key takeaways from the AASA “IT Spend & Trends” survey findings and the ATC discussions are:
IT matters: The growth of e-commerce and e-tailing are changing aftermarket IT.
IT drives competitive advantage: IT spending is increasing, despite challenging business and margin environment.
Aligning IT and business is a competitive advantage: The target is no longer about seeking best-in-class IT; it is about seeking advantage in the marketplace. IBM recently noted that by 2015, chief marketing officers will have larger IT budgets than chief operating officers.
The respondents said it well: Meeting customer needs and integrating with customers are the business imperatives driving IT. IT is our business. This is a whole new frontier – both for business managers and IT executives – with big potential pay-offs.
Finally, these results hark back to AASA’s “Aftermarket Outlook 2020” report, which stated that aftermarket suppliers’ future success depends upon differentiated capabilities.
In the aftermarket, where the success factors are right part, right place, right time, information technology is essential to achieve a competitive advantage in cost or service. The caveat is: “Invest wisely.”
For more information about AASA future trends surveys and analysis, contact Paul McCarthy at [email protected].
About the Author
AASA Overseas Automotive Council
Automotive Aftermarket Suppliers Association (AASA) and its Overseas Automotive Council (OAC)
AASA (www.aftermarketsuppliers.org) exclusively serves manufacturers of aftermarket components, tools and equipment, and related products. It is a recognized industry change agent – promoting a collaborative industry environment, providing a forum to address issues and serving as a valued resource for members. AASA’s Overseas Automotive Council (OAC) promotes the sale in foreign markets of automotive and heavy duty products manufactured in North America.
“AASA, The Voice for the Automotive Aftermarket Supplier Industry”