Japanese companies set to lift IT spend


Hitachi plans to increase spending on supply-chain management systems

TOKYO, Japan -- Half of Japanese companies plan to increase information-technology spending this year, despite a fall in overall capital spending, a survey by the Nihon Keizai Shimbun shows.

Of the 144 companies that responded to Nikkei's survey, 50 percent said they would increase capital spending on IT-related projects in 2002, while only 27.8 percent said they would reduce spending on IT projects.

Around one third of the respondents told the Nikkei that they plan to spend at least 10 percent on IT investment, while 16.7 percent plan to increase it by less than that. Of those replying, 18.1 percent say spending will be almost unchanged this year.

Many companies that are increasing spending cited efficiency and improving competitiveness as reasons for raising the IT budget, while the effect of Japan's decision to make the disclosure of quarterly financial reports mandatory may also have contributed to the increase.

Financial institutions expected to cut spending

The heavy spending on IT appears to be from manufacturers and retailers, while financial institutions and banks are expected to cut spending heavily.

Part of the reason for the large drop in bank spending is that heavy investment during a spate of consolidation and mergers in the industry has run its course.

But IT investment from nonfinancial companies makes up for the decline, according to 53 such companies polled. They expect an increase of 4.6 percent due to concern they are behind overseas counterparts in using computer systems to increase efficiency.

German enterprise resource planning (ERP) systems firm SAP AG claims that more than 60 percent of U.S. and European firms use its software, compared with only 20 percent of Japanese firms.

Improving efficiency was cited by 77.8 percent of respondents as a reason for increased IT spending, while 75 percent wanted to boost marketing capability and 73.6 percent want to improve productivity.

Supply-chain system catching on

Another reason is the impending deadline for companies to disclose quarterly earnings in the 2003 fiscal year.

More and more Japanese companies are planning to set up computer systems that can calculate sales and profits on a daily or weekly basis.

Companies are also interested in investing in supply-chain management systems, which help manufacturers cut costs and inventories by centralizing data on materials, inventory, and sales.

Hitachi, Sumitomo Metal Industries and Dai Nippon Printing said they will increase investment on those systems by more than 10 percent.

Companies are also more likely to use customer relationship management systems, which helps companies like Omron, an industrial company specializing in fuzzy logic products, strengthen marketing activities through customer databases.

Nikkei contacted 225 major companies for the survey, which took place in early August.