Cloud computing is a powerful transformational force that brings more to the table for manufacturers than just improved information technology. It offers an incredible opportunity for innovation, revenue growth, enriched products and services, and enhanced customer satisfaction. It can improve the whole gamut of the manufacturing lifecycle, from operations to delivery, sales and services.
According to the Cloud Manufacturing Market 2020 report, the global cloud manufacturing market is estimated to attain a market value of $111.90 billion by 2024. This forecast is not surprising given the massive potential of cloud technology for the manufacturing sector.
Cloud and IoT-enabled solutions will play an integral role in realizing the vision of a smart factory by synchronizing people, assets, and processes through a connected platform that can flex with the changing organizational needs and respond in real-time to volatile supply-demand drivers among manufacturing plants. By scaling smart factories across multiple plant locations, manufacturers can fine-tune their processes and product mixes, positively impacting margins and topline growth.
Why Reach for the Cloud?
Customers today base their buying decisions on technology sophistication, the novelty of features, speed and convenience. Cloud services are an innovation game-changer and deliver on all these fronts – whether it is through connected appliances, smart cars, or remote-controlled devices like camera-enabled doorbells and home security systems that homeowners can remotely control from anywhere in the world. Collaborating with cloud-service ‘hyperscalers’ gives manufacturers access to cutting-edge technology and AI-enabled platforms, IoT-connected future edge services, and machine learning enhanced sales tools.
The cloud can help slash procurement costs by 60% through improved identification of opportunities and supplier optimization and also help capture the impact of intelligent procurement tools that analyze spends or generate electronic quotes. Improved data computing and quality also lead to energy conservation and can cut indirect costs by as much as 15 to 20 percent in 12 to 18 months.
Volkswagen and Siemens recently announced the creation of Volkswagen’s Industrial Cloud, developed jointly with Amazon Web Services (AWS) using Siemens’ MindSphere IoT platform and involves the integration of Volkswagen’s global supply chain with more than 30,000 locations and 1,500 suppliers and partner companies. Volkswagen’s 5-year cloud strategy will play an important role in helping Volkswagen achieve a 30 percent reduction in factory costs by 2025.
Public or Private: Choosing the Right Model
Public clouds deliver cloud infrastructure as a service (IaaS) and yield massive economies of scale with unlimited on-demand cloud resources and are fully automated, beating on-premise data centers hands down on price or efficiency. They also help lower capital expenditure as the manufacturer does not need to purchase their own data center equipment and provides greater reliability. On the flip side, an IaaS model provides less control on data security and incurs higher operational expenditure as the cost-per-fee rises as performance spikes.
A private cloud is an exclusive cloud infrastructure that can be hosted by an enterprise’s own data center or off-premise, and managed directly by manufacturers or serviced by a third party. The obvious benefits of using this model are enhanced data security, customization, lower operating costs over time, and the flexibility to move non-sensitive data to a public cloud when the need arises.
On the other hand, besides reduced flexibility, a private cloud model will result in increased set-up costs and bring on the added burden of being responsible for your own data center, hardware, and enterprise software, along with the full accountability of security and compliance.
Salesforce, a global leader in CRM, recently announced Salesforce Hyperforce, a reimagination of the company’s platform architecture built to securely and reliably deliver the Salesforce Customer 360, including Sales Cloud, Service Cloud, Marketing Cloud, Commerce Cloud, Industries and more, on major public clouds.
So, which model is right for you and do you really have to choose?
A Hybrid Model May Be the Answer
A hybrid model blends the best of both the private and public cloud models to create a solution that ties together on-premise data centers with private and public cloud resources under standardized propriety technology that allows data and application portability while remaining distinct. This enables the separation of mission-critical workloads from less-sensitive ones, optimized usage of big data analytics, and the flexibility to move to a public cloud incrementally, at your own pace.
A hybrid model also protects the manufacturer’s intellectual property and avoids having to develop each application individually. In the hybrid cloud model, manufacturers have to make a key decision about which applications and data are to remain within the close control of the company and which can be made available to the public.
It Is a Marathon and Not a Sprint
A cloud transformation journey is a continuous process and there is no one-size-fits-all approach. Digital maturity is an evolving target that should involve progressive but significant small wins to keep the momentum. Manufacturers looking to kick start their cloud journey should start with a comprehensive cloud strategy and define a roadmap to develop a strong foundational private cloud model while driving towards the hybrid environment. A successful cloud program should be value-led, technology-enabled, and customer-centric to enable enterprises to maximize value and sharpen their competitive advantage.
Steve Seo
Partner, Infosys Consulting
Steve joined our manufacturing practice 14 years ago and has led many of our high-tech clients, combining strategic advisory services with large-scale business transformations. Steve’s focus is on developing go-to-market strategies and implementing new business models for our clients across this space. His signature work is with one of the world’s largest tech brands, having grown our capabilities multi-fold for this client over the last years. Steve is passionate about building high-performing teams that deliver outcomes that exceed client expectations while mentoring individuals and nurturing our firm’s talent. He also spearheads client outreach and engagement programs for our San Francisco office and leads our campus recruiting activities at the University of California – Berkeley, where he also received his undergraduate degree in economics.
