When people hear “the cloud”, they think about accessing a program or some data from their home computers or mobile phones over an internet connection. When it comes to a business, they think of something far more complex. Software-as-as-Service, or SaaS, is where a business has critical business applications that they access over the internet. Usually, these applications are stored on servers off-site that are not owned by the company accessing them. This means they are not maintaining the physical hardware (servers) in order to keep the network operational.
Why The Cloud?
The main attraction of the cloud for businesses is to have a clear communication platform accessible from anywhere. Many companies will outsource this hosting to service providers, which is becoming quite a profitable business. The market for cloud computing generated $100 billion in 2012.
Other versions of the cloud exist, such as the hybrid cloud. Hybrid cloud is a cloud computing environment that uses a mix of on-premises, private cloud and third-party, public cloud services with orchestration between the two platforms. “In a hybrid cloud, companies can use the public cloud-based platform for development and other related tasks, while stores collected data on a private cloud or their own data center.”
The cloud used to be a way for a company to revamp their IT department. Today, the cloud has become a way for businesses to completely run and manage their internal processes, as well as how a customer experiences their brand and services. In fact, a recent study from IDG communications reveals that 95% of start-ups established within the past 10-years have business plans revolving around digital (cloud) technologies. A reason this could be is that these start-ups don’t have “legacy baggage”, or are not tied-down or burdened with existing systems that they feel they need to squeeze every cent out of (given the initial high investment cost).
Manufacturing In The Cloud
So where do manufacturers rank when it comes to the use of the cloud? A recent report discussing manufacturing software trends has shown that manufacturers are less likely to use cloud software than other industries. 51% surveyed said they did not use or plan to use cloud-based manufacturing software. Manufacturers were also found to be 5% less likely than other industries to even consider looking at cloud-based systems. Why could this be?
Reasons For Distrust
Among all industries, plenty of research has been that shows security remains a concern when it comes to cloud adoption. In as recent as 2016, 23% of organizations completely trusted public clouds to keep their data secure. However, this number did sit at only 13% the year prior, which shows opinion may be shifting.
How does this relate to the manufacturing industry? Is security still the top deterrent? Maybe not. Manufacturing processes can become very completed. If your company is running a lot of “older” machinery (before the cloud) It may be difficult to control certain legacy equipment with cloud software. MES Systems are becoming smarter, but overall they may be better positioned for on-premise servers. A lot of manufacturing systems don’t have the ability to shut down for even a few minutes, as production will completely come to a grinding halt. Vendors of cloud manufacturing software have had to focus on other benefits.
Dave Lechleitner, Director of Solutions and Product Marketing for KeyedIn Manufacturing, said: “For most manufacturers, once they understand the unique value of a cloud solution – access anywhere, no overhead or equipment costs, and no messy upgrades – they embrace the concept quickly; but clearly more advocacy is needed.”
It would appear that public opinion is shifting, although at a slower rate in the manufacturing industry. The same report that found manufacturers were less likely to use cloud software when compared to other industries, also found that when companies are in the market for software, their willingness to review cloud options was rising, as much as 5% from 2015 to 2017.
In a report by LNS research, their opinion was that manufacturing was very “stuck” in their older processes and deeply rooted in tradition (and therefore resistant to change). While this is a broad argument to make, when compared to other industries, data does seem to back up this hesitancy, even with the success and popularity of many cloud-based ERP systems.
Benefits Of Cloud Manufacturing
So why should manufacturers consider a change to the cloud, given all the reasons against it?
When using cloud software, you are paying for the ability to access the solution on the developer’s (or 3rd party’s) servers. Part of what you are paying for is the cost of the solution itself, but also for things like support, as well as hosting fees.
Consider a hosting fee to be similar to paying rent on an apartment. You’re paying to have access to a unit in an apartment building, which is ultimately owned by someone else. While you don’t have the luxury of owning your living space, your rent will cover things such as unexpected maintenance, grass cutting or snow shoveling fees, and other amenities. These are also fewer things you need to worry about, as what you’re paying for is to have someone else worry about those upkeep issues, while you can focus on the main priority, the software itself (or the apartment in my example).
Not only do you save money on unexpected issues that could come up, but your initial cost of investment will be low too. When purchasing an on-premise software, you’re paying upfront for a software as well as the price for any vendor to implement the software for you and provide any needed training. Almost all cloud software vendors will charge you on a subscription-based pricing model, meaning you’re paying a much smaller amount at the initial point of entry, which is far easier for small organizations to budget for.
Mobility refers to the use of mobile applications as well as the ability to access a solution from just about anywhere. A software may be as easily accessible as logging into a portal with a web-browser. That means wherever you have access to a web browser (at home, at a coffee shop, etc.) means you’ll have access to your solution. The prevalence of mobile phones and tablets have allowed businesses to capitalize by allowing software access. Rather than having to check in at a centralized station or radio something in back to the office, shop floor managers can on the fly look at stock inventory, check ongoing production for specific orders, and submit maintenance request on failing machinery.
As small companies turn into mid-size manufacturers, one of their biggest desires is to have technology that can scale with them. Scalability is a huge benefit as it lets a business become very flexible with their software.
Ensuring that you are using a flexible cloud software from the beginning is critical, because as your business grows, so will your need for additional pieces of functionality. Rather than having to buy a new software everytime new need sprout up, you’ll want to ensure you can add layers of functionality to your existing system and save the headache of migrating.
The future of the industry is changing, just at a slower pace than expected. Hopefully, Manufacturers are able to see that while their concerns are justified, they should instead focus on the positives of how the software can help grow their business. Clinging to past mistakes only makes one stubborn, and won’t help a business grow as intended.