The metals industry currently is experiencing a wave of significant technology investment as companies of all types and sizes look to new digital applications and systems to help them meet competitive pressures and respond to customers’ rising expectations.
As the leaders of metals companies develop and implement their digital technology strategies, they can gain insights into the state of the industry and their own IT capabilities by considering these four critical questions.
What’s driving metals companies to invest in technology?
The specific motivating factors behind the current wave of technology investment vary widely. The priorities of large and small companies differ considerably, of course. In addition, mills, service centers, manufacturers, recyclers and other specialty companies all have their own individual concerns and objectives.
Despite the differences, however, four common concerns appear to be driving many companies’ technology investments these days:
- Customer expectations. As real-time order tracking, online order management and other capabilities become increasingly important to their customers, metals companies often find that upgrading their current systems to meet these demands is impractical or impossible.
- Aging legacy systems. Not only are old technology systems unable to meet current customer needs, they also are more expensive to maintain, vulnerable to security risks and often incompatible with new product lines or production techniques such as additive manufacturing.
- Workforce expectations. As aging workers retire, their younger replacements expect to work with up-to-date systems and platforms that will enable them to keep up with their peers as they launch or advance their careers.
- New capabilities. Many of the features and functions of today’s technology platforms are particularly attractive to metals companies. For example, in addition to lowering costs and upgrading security, cloud hosting of essential business applications also can enable manufacturers to turn their attention back to improving their core business processes.
What are metals companies trying to achieve with technology?
In addition to responding to immediate and specific pressures, metals companies also are looking to new technology to help them advance certain critical long-term strategic objectives. In the most recent annual survey of metals industry executives conducted by Crowe, almost two-thirds of the participants said new technology is very important to their three- to five-year business strategies. Only 10 percent determined it was “not important.”
Foremost among many metals companies’ strategic objectives is the goal of differentiating themselves from competitors by offering faster, more responsive service and stronger customer relationships. Competitive companies also recognize that new technology tools can help them more proactively anticipate opportunities.
Another strategic objective is greater operational efficiency. Applications such as robotic process automation can relieve managers from many routine clerical and data entry chores, allowing them to devote more time and resources to higher-value functions.
What types of technology are companies adopting?
Of the many new types of technology that currently are available to metals companies, new or upgraded enterprise resource planning systems are by far the most widely pursued. When participants in the 2019 Crowe metals industry survey were asked what types of IT projects they had in process or planned, more than half said they either were implementing a new ERP system or were upgrading an existing one.
A significant number also named big data or business intelligence projects as priorities, with cloud migration projects and customer relationship management system upgrades garnering frequent mentions as well.
When the same survey respondents were asked which advanced digital applications they either had in place or planned to implement in the next three to five years, more than half cited Internet of Things technology, which can provide manufacturers with real-time production data and controls, live monitoring of transportation equipment and other machinery, and direct customer interaction capabilities. While far fewer participants said they currently had artificial intelligence or machine learning technology in place, sizable numbers also said they envisioned implementing such technology within 3-5 years.
What’s the next step?
Whether they already are embracing advanced digital technology or are just beginning to respond to today’s new capabilities, metals company executives would be wise to consider how they will proceed from here. In many cases, the logical first step will be a reassessment of the company’s current capabilities in light of the new digital applications and platforms now available. Most companies will find technology has advanced significantly since they last performed such an assessment, even if that took place only a year or two ago.
Once they have an up-to-date picture of what’s possible, the next step for most companies is to identify some “quick wins” – that is, readily accessible improvements that can generate a positive return on their technology investment in a relatively short time. Migrating certain on-premise applications to the cloud often provides such an opportunity.
Such an approach can build momentum and pave the way for the next step: developing a comprehensive road map of more complex projects – with potentially greater rewards – that can be planned for more long-term implementation. By asking the right questions and being open to new possibilities, metals companies can develop technology strategies that are ambitious and responsive – but also achievable and responsible in how company resources are allocated.Senior Manager Tony Barnes and Principal Andrew O. Callaghan represent Crowe, a public accounting, consulting, and technology firm that combines industry and specialized expertise with innovation.