IT gaining traction

MUMBAI:

Not finding a suitable software is an important barrier for adoption of information technology (IT) for a number of large companies and Small and Medium Enterprises (SMEs) in the logistics space

Lack of commitment and involvement and employees fear of change are serious impediments in the way of IT adoption for them

Lack of expertise in IT and untrained manpower are the major perceived barriers in adopting technology for a sizable number of logistics companies

These are some of the interesting findings that the second edition of a survey by leading software developer Softlink Logistic Systems has revealed.

Taking stock of the various aspects of IT readiness of a cross section of logistics service providers (LSPs), including international logistics players in the country, the survey, 'Adoption of Information Technology in Logistics, India - 2010' has touched upon important aspects such as the motivational factors for them to invest in technology, their plans to invest in technology solutions, their perceptions about benefits in adopting IT and the barriers they face while going for it.

The survey, which has covered over 500 companies as respondents, also dismantles a few myths that many marketers hold dear to their hearts. For example, the survey shows that return on investment is not an important factor for adopting IT as it was popularly believed. An overwhelming 43% of respondents have said that improving operational efficiency is the key motivating factor as against a meager 4% of the respondents who cited return on investment as the factor. Improving customer service came a close second as a motivating factor.

The survey says that most of the logistics companies responded have planned an increase in their investments on IT for 2011. There is an increase of 12% in IT investment outlay for 2011 in the range of Rs 10 lakh to Rs 25 lakh as against 2010. The majority of the respondents from large and SME have indicated that they will either increase their budget outlay for 2011 or continue with the budget outlay of 2010.

The survey also revealed that there is an increase of 41% in investment of more than Rs 1 crore in IT compared to 2010. 16% of the respondents have said that they are still undecided on their investment plan for 2011.

While large companies have shown a marked increase of 75% from last year in investment of more than Rs 1 crore on IT, there is a drop in the percentage of SME from the previous year by 56%.

The number of large companies planning to invest around Rs 50 lakh to Rs 1 crore bracket has remained the same as 2010 whereas there has been a drop of 56% among the SME from the figure of 2010. Incidentally there is an increase of 3% from the figures of 2010 in large companies, it said.

"There is an increase in certain categories and decrease in some. For example, in Rs 10-25 lakh investment group, of 8.61% companies that expressed their desire to invest in IT during the last survey only 5.3% have actually gone for it. In less than Rs 10 lakh category, though 50% companies who had planned to make the investment over 58.8% did investments,' said Amit Maheshwari, CEO and co-founder of Softlink Logistic Systems, comparing the two surveys.

More than ever the companies are certain now that any new or continued investment spending is certain to yield greater benefits both the short term and the longer term but some are still not sure about the amount of spend on IT.

When respondents were asked to rank the motivating factor for adopting IT in their organizations, 43% of them said that improving operational efficiency as the top most factor in motivating IT adoption, while 25% said that improving customer service as the most important factor and 11% considers improving data quality the most important. Reducing labour cost and making shipment secure were cited as motivating factors by 7% and 6% respectively. The other factors were return on investment and direct customer request.

Lack of expertise in IT is perceived as biggest barrier in adopting IT by majority 46% of the respondents. The second is untrained manpower which is perceived as a barrier by 44%. Employee fear of change ranked third and is cited by 33% of the respondents as a barrier.

The top three perceived barriers for SME companies are lack of expertise in IT (48%), untrained manpower (42%) and employee's fear of change (31%) in that order. For large companies the top three barriers are untrained manpower (50%), lack of expertise in IT (39%) and employees' fear of change (39%), respectively.

Only 13% of large ones said that insufficient financial support is a barrier in adopting IT while 20% of SMEs have said so. Get a Quote

Courtesy: Economic Times