Cloud computing is transforming virtually every facet of modern manufacturing, whether it is how it operates, integrates into supply chains, designs and make products, or how customers use the products. CTS looks at the best strategies for manufacturers to adopt

Looking back, 2014 was the year where cloud finally came of age. Around 78 per cent of UK organisations formally deployed at least one cloud-based service, and saturation levels increased by almost two-thirds since 2010.

The reduction in the cost of cloud computing made it increasingly difficult for companies to ignore, especially when an IDC study showed that cloud solutions offer an average payback period of seven months, and a five year ROI of 626 per cent; a level that few other investments can match. At the same time, the industry has made concerted efforts to address the security concerns expressed in earlier debates. One study found that 94 per cent of SMEs have actually experienced increased security benefits since moving to the cloud.

“We have now shifted to a second wave of cloud as the flexibility and scalability provided by these solutions are compelling manufacturers to place greater emphasis on innovation,” Phil Lewis, vice-president, solution consulting, EMEA, Infor, says. “Early on, the term cloud was used to describe, almost exclusively, the public cloud. Today cloud computing encompasses a range of hybrid offerings.

“Enterprises now have an expanded set of options. Rather than switching everything wholesale to the cloud, they can choose to manage their cloud infrastructure in-house, or opt for a managed cloud whereby their provider is responsible for the day to day management of systems. Modern infrastructures typically span a mixture of public cloud and private cloud, on-premise systems, as well as cloud-esque hardware such as bare metal servers which offer flexible server capacity.

“Through taking selective, incremental steps, manufacturers get to maintain control over their systems, and pay only for what they actually use. Put simply, the cloud of the past was very much a one-size-fits-all concept. Today it is about designing an infrastructure which reflects specific needs and preferences.”

But while this flexibility offers a multitude of benefits, it does throw a number of integration challenges into the mix. Cloud applications often require integration back to core systems such as financials, CRM, order management, inventory, HR, manufacturing and supply chain. This means that the cloud benefits of reduced maintenance and lower costs might be heavily impacted by high consultancy and integration costs.

The best brains in the industry have already responded to these challenges by offering cloud solutions which encompass lightweight middleware, based on a loosely coupled architecture, to ensure straightforward and low-cost integration with other systems. “This new breed of cloud applications also contains social collaboration to facilitate greater sharing of information, and engage millennials into the workforce; analytical capabilities which contextualise data and transform insight into foresight; and crucially, deep, end-to-end micro industry-specific functionality to eliminate the gaps associated with one-size-fits-all systems,” Lewis, adds. “To compound security and manage risk profiles, the market leaders are also opting to partner, rather than own, the most secure cloud environments.

“When pitched against costly datacentres; cumbersome agility-stifling systems, sluggish disaster recovery plans, and increasing pressure to minimise environmental footprints, it is clear that resisting the change to cloud has become the greater risk.”

Best practices for a cloud strategy
“We see many manufacturers making a decision to start using cloud, it is critical that this work starts by looking at the applications first to see which are appropriate,” Ian Henderson, chief technologist, manufacturing industry, Hewlett Packard Enterprise (HPE), says. “Moving your current workload may not bring benefit, it may even increase your costs. Focus on the impact of cloud on digital transformation, where is cloud going to enable that?

“Remember that cloud is an operating model not a technology target, this model can be run on or off premises, it should abstract you from technology services so that you can select the most appropriate landing point based on functional and non-functional requirements. Manufacturing can be very asset intensive and the culture can be tied to the physical world, it can be hard to abstract themselves. The benefits can be the ability to liberate yourselves from physical limitations and can enable you to work faster.”

Henderson believes that to succeed manufacturers need to focus on people, process and policy, applying current process to a cloud; for example a weekly change board is not going to be able to support a more agile cloud operating model. “It is often the people and process that are holding back innovation,” he says. “Do not just assume you can move everything to cloud, plan what you will do and understand the most appropriate applications or you just risk adding more cost.”

The sustainable cloud
“The manufacturing industry is embracing the cloud to innovate and collaborate more, faster and everywhere,” John Kitchingman, managing director, EuroNorth, Dassault Systèmes, says. “Manufacturers use it to improve the traceability of the parts they receive from third parties, to be more transparent with their suppliers and clients, and to be more productive. Using the cloud, they can find where processes are working or where they can be improved and can act on it much faster.

“Cloud-based platforms are also used to make processes more sustainable: manufacturers can assess the carbon emissions of each travel route, the composition of the material they use, and the productivity of their supply chains. Today’s consumer is sustainability-minded; the industry needs the right tools to help it show it is supporting this shift.”

As the world’s largest information hub, the cloud speeds up product development, improves collaboration across teams and reduces the need for multiple prototypes. “With visualisation software, companies no longer need to create physical copies of their products; instead, they can design digital versions and test them in the virtual world, saving time and money in the process,” Kitchingman adds. “Virtual prototypes also foster a more sustainable manufacturing process, reducing material waste. We are in the Industry Renaissance era, where the physical and virtual worlds merge. The cloud is only the first step in that direction, leading the manufacturing industry towards full-fledged digital factories.”

Sean Riley, global industry director at Software AG explains that manufacturers are seeking to flexibly match needs directly to usage and cost with not only traditional applications but also with new technologies like IoT. “The new expectation is that changes in usage directly impact costs and that capital outlays are avoided whenever possible and operating expenditures are preferred,” he says. “This means that IT is moving to cloud based applications as quickly as possible.

“Additionally, project delivery continues to be a major focus for IT and, while DevOps has been in use, the addition and popularity of microservices continues to increase. Delivery speed has moved to the forefront for CIOs and microservices, APIs and a cloud-first mantra are outcomes of this focus. By optimising the benefits of the cloud and combining digital technology solutions with industrial IoT, we can help manufacturers become more responsive to their customers by turning real-time insights from sensors and devices into actionable intelligence.”

Counting the cost
Rachel McElroy, a director of cloud and technology managed service provider Solutionize Global, believes that manufacturers should not expect cloud to save money straightaway as it is unlikely to do so in the short-term – unless you are a young organisation that has been able to adopt a cloud-first strategy and has had no legacy IT to deal with. “It is about having a patient approach as migration streamlines processes, future-proofs infrastructure and achieves greater visibility, all of which will ultimately provide a better overall customer experience throughout growth, she says. “A successful migration comes down to effective planning.

“Implementing an audit in the first instance – to understand where you are and where you want to get to – is vital. In addition, working with a partner who has completed numerous migrations before, understands potential pain points, has knowledge of different vendors and can take an end-to-end holistic approach of what could work for your organisation, can also prove to be pivotal.

“An essential aspect of your strategy needs to be future-proofing what is already implemented. You’ll need to carry out an investigation which interprets the ease of bringing in additional services and applications as you grow and utilise new technologies – such as Artificial Intelligence, Robotic Process Automation and Internet of Things. Organisations can then understand how their existing infrastructure can support that.

“Ultimately, the right solution will help fuel a company’s growth – so do keep up with the high expectations and demands of your digitally savvy customer. That way you can transform your proposition to the point where you’re modern-facing, technologically-driven and ground-breaking.”

Challenges and benefits of cloud
The benefit of cloud to manufacturers is that it enables faster digitisation across the manufacturers’ value chain from supply chain management to production processes and presents new possibilities that improve business operations.

“When the business case justifies it, consuming cloud infrastructure, software and platforms as a service focuses the manufacturer on developing business applications on the top of the cloud infrastructure and platforms, and lowers the manufacturer upfront capital cost,” Nabil Bitar, CTO for Nokia’s webscale and extra-large enterprise business, says. “In addition, manufacturers could take advantage of the echo system that is evolving around cloud, whether in technology or skillset that could augment and bootstrap the manufacturer’s IT capabilities.”

According to Bitar, manufacturers face two key challenges in developing their cloud strategy. The first challenge that some manufacturers are faced with is justifying the need for adopting new technologies, such as cloud and complementary technologies, based on use cases that have positive business outcomes. The second challenge that the manufacturers have is dealing with brown field running environments and determining where and how to make investments. For instance, machines may not be equipped with sensors that produce sufficient data related to machine operations to be leveraged by cloud applications for predictive maintenance, or the sensor data may not be extractable for use by new cloud applications, necessitating the need to add machine external capabilities and new communication infrastructure to leverage cloud applications.

“One of the main challenges in adopting new technologies in the manufacturing environment, especially when it touches production, is ensuring that the performance and security of existing well-developed and functioning production processes are not negatively impacted,” he adds. “Having more critical processes handled by the cloud necessitates the need for increased cloud and cloud reach reliability, performance and security, including data security.

“The flexibility in leveraging cloud in different deployment models will help address some of these challenges. Last but not least, leveraging cloud necessitates the development of new skillsets within the manufacturer’s organisation and that often requires retraining of the workforce, acquisition of new talent and the development of new partnerships that also require investment.”

Five steps to cloud success

Nabil Bitar, CTO for Nokia’s webscale and extra-large enterprise business highlights five do’s and don’ts for executive when considering cloud implementation

1. Executives need to consider their cloud strategy as part of the overall manufacturing process digitisation and automation and as part of their business strategy to improve production efficiency and agility in meeting market demands. Thus, it is important for executives to understand and appreciate the value of funding the development and implementation of a cloud strategy from overall business viewpoint, including the competitive landscape.
2. Executives should push on breaking the OT /IT barrier while providing for needed security and reliability. This challenge should be put to the OT and IT workforce from a business viewpoint.
3. Executives should be cognisant of the holistic business needs in adopting a cloud strategy and be able to drive strategic cloud partnerships that provide for the capabilities to address these needs.
4. Executives should encourage their workforce to adopt new technologies that bring value and enable the workforce, both IT and OT, to develop the skillset needed to best utilise these new technologies.
5. It is understood that technologies will evolve over time, and thus it is tempting sometimes to wait for a new anticipated technology that could promise more than what is available, albeit the latter satisfies needs and creates lasting business value. Executives should consider breaking the waiting game and capitalise on today’s available technology when it produces business value as it might also deliver competitive advantage in technology and cost maturity.