Although manufacturers and distributors face mounting cyber-security risks, some don’t do enough to protect intellectual property and sensitive data and information, according to a Sikich survey.

The survey of manufacturers and distributors for its 2016 Manufacturing Report found that only one-third of companies polled conduct penetration testing on an annual basis.

In addition to security, more than half (51 percent) of respondents identified improving customer service and response time as a top business driver that will impact their technology strategies in 2016.

"The most surprising—and concerning—finding from the report is the continued lack of security services being utilized by manufacturers," Brad Lutgen, partner in the Security and Compliance practice at Sikich, told eWEEK. "Compliance has always driven security, and manufacturers have very few security-related compliance mandates to meet. As a result, many manufacturers are behind the curve on security. But with intellectual property theft at an all-time high—the FBI estimates over $400 billion leaves the country each year because of cyber-attacks—it’s crucial that manufacturers recognize that they are a target and work to strengthen their security posture."

The report also found that more than half of manufacturers and distributors do not expect the industry to expand in the next 12 months.

At the same time, the findings suggest that many manufacturers and distributors are not doing enough to put themselves in a position to innovate and grow, with more than 80 percent investing less than 5 percent of sales in research and development.

"Investing in research and development is crucial if manufacturers hope to remain competitive in today’s economy," Jim Wagner, partner in charge of the Manufacturing and Distribution practice at Sikich, told eWEEK. "But there are risks with any investment, including R&D. During the recession, investing in R&D was daunting for many manufacturers, especially middle-market companies, and though we are years removed from the downturn, economic uncertainty remains."

According to the report, nearly half (47 percent) of the manufacturers and distributors surveyed said they expect material costs to increase up to 5 percent in the next year, and 85 percent said they expect labor costs to increase up to 4 percent.

"For companies that manufacture equipment with a long service life, there is a focus on complete-as-built and as maintained bills of material that instantly show the maintenance engineer what configuration is running at a specific customer, with all details, not just the serialized parts," Evert Bos, solution architect in the Technology practice at Sikich, told eWEEK.

Bos noted there also is a focus on Internet-machine interfaces for service and maintenance so the equipment itself can ask for parts replacement and maintenance. Also, he said, manufacturers using big machines are interested in business intelligence and statistics for each machine.