Manufacturing and cloud strategy

Jun 30, 2020

Manufacturing | 4 min READ

This article was originally published in CIOReview India - Source link

The manufacturing industry is experiencing a paradigm shift with changing customer expectations, rising production costs, intense competition, and volatile markets. They are looking for ways to drive customer satisfaction, boost efficiency and expense factor reduction, and build a sustainable competitive edge.

Madan Mohan Mewari

Former SVP, Global Head-Delivery and Operations

(Manufacturing and Services Verticals)

Birlasoft

To their advantage, the proliferation of next-generation intelligent technologies such as industrial internet of things (IIoT), digital twin, artificial intelligence, machine learning, and advanced analytics is presenting opportunities to streamline the entire manufacturing value chain and accelerate significant business outcomes. But, are manufacturers and their suppliers equipped to quickly and effectively integrate transformational technologies with their existing enterprise systems? The answer lies in their propensity to embrace cloud solutions.

According to BCG, by this year, more than 70% of corporate workloads are expected to be running on public-, hybrid-, or private-cloud. And manufacturers must follow suit. Primarily because the cloud can deliver exceptional benefits in terms of IT cost reduction, business agility, and application performance. Some estimates suggest companies can save anywhere between 15-40 percent in IT operating costs with cloud adoption. Moreover, with advancements being made across commercially available PaaS and IaaS solutions, migrating to the cloud is becoming considerably less daunting. Manufacturing CIOs and Chief Digital Officers looking to drive large scale digital transformation initiatives will significantly benefit from the scalability and flexibility of the cloud. With faster provisioning of compute and storage and no CAPEX requirement, manufacturers can accelerate innovation since the time to production is reduced drastically. Furthermore, the cost savings from cloud deployment can be diverted towards building new solutions and applications.

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What’s in their way?

There are some challenges that CIOs and Chief Digital Officers may face while adopting cloud solutions. The top ones being data security, interoperability, and vendor lock-in. These concerns are compounded when you consider the length and breadth of the manufacturing value chain and the number of stakeholders within the ecosystem – all using disparate applications and data formats. Also, the terabytes of transactional and operational data generated daily require tamper-proof storage and must be easily retrievable. CIOs and Chief Digital Officers may worry about the latency while processing high-volume transactions and mining data in the cloud. This concern is especially genuine because manufacturers have relied on on-premise infrastructure and highly-customized monolithic ERP applications for decades, and there might be significant organizational inertia while making a move to the cloud. There is also the hesitation of being dependent on a single cloud provider for resource provisioning and technology enhancements.

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Most of those concerns can be alleviated by recognizing the advancement in cloud technology. While the first phase of cloudification may involve the migration of non-critical workloads to the cloud, the real benefits can only be experienced by going cloud-native. That means that companies need to build and run applications on the cloud and adopt DevOps and cloud-native architectures to drive continuous improvements and enhance application performance. Further, CIOs and Chief Digital Officers can also optimize their cloud costs and reduce vendor lock-in by using cloud solutions from multiple providers and picking the best that each vendor has to offer. And based on their risk appetite and specific business requirements, they may choose the most appropriate cloud deployment model – public, private, or hybrid – each providing different levels of flexibility, customizability, and control. Adopting cloud solutions and unlocking their real value would necessitate manufacturing CIOs and Chief Digital Officers to focus on building a robust API strategy. The execution of this strategy would promote interoperability, deploy proven integration middleware for operating a multi-cloud environment, and bolstering data security processes and governance processes.

How is cloud helping realize Manufacturing 4.0?

Early adopters and innovators in the manufacturing space are beginning to witness the transformational benefits of the cloud. The most significant way in which cloud impacts manufacturers is by enabling innovation and promoting the adoption of the fourth industrial revolution (4IR) technologies. Cloud allows IT teams to quickly provision infrastructure, build proofs of concept, showcase the business value of novel solutions, and move those to production seamlessly leveraging the superior scalability of the cloud.

With on-premise infrastructure, gaining access to resources would be a time-consuming, costly, and often bureaucratic process. Long story short, adoption of the cloud strategy is democratizing innovation. Moreover, in a highly globalized business environment, the cloud provides the necessary tools for collaboration, allowing developers from any geography to participate in digitalization projects.

As more and more companies embrace cloud technology, legacy on-shore applications will be replaced with cloud-native applications tightly integrated with rapidly evolving technologies – such as machine learning, the Internet of Things, artificial intelligence, and data analytics. That will pave the way for ERPs to transform from ‘tools for efficiency’ to ‘tools for strategic decision making.’

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