Manufacturing IT suppliers must provide solutions satisfying to both industry managers and the industry network they work in, argues Cambashi partner Peter Thorne.

Thorne told Cambashi's 12th annual seminar that industry believed IT solutions deliver benefits. But line-of-business managers increasingly buy their own IT - to increase revenues, reduce costs or achieve specific goals. Agile businesses concentrate on core competence and outsource everything else. Agility, flexibility and speed of response imply smaller business units, which partition tasks down to their core competence.

"The difference between the cost of transactions and the cost of ownership determines the size of an organisation," says Thorne. "As technology reduces transactions cost, it allows industry to restructure itself into ever smaller units, both as independent enterprises and in decision making units within enterprises."

But this increases the number of interactions needed to deliver goods and services. Outsourcing and task fragmentation create many-to-many exchanges of bills of materials, process plans, routings, production plans, change requests and change orders between partner organisations. Line-of-business managers need local 'efficiency backbone' IT which fits into a corporate system to give a global view of any chosen business process. "They don't want to lose local control and visibility," says Thorne, "and they also need visibility into outsourced and other partner processes."

The complication is that local managers have their own local and departmental concerns. IT suppliers must find solutions that are good for the individual they're selling to, for the companies these customers work in, and for the value network they are in.

Also read what Cambashi had to say about the IT industry at the Cambashi Seminar 2002