Manufacturing a Successful Cloud Strategy

February 8, 2012 - 2 Comments

I just finished an interview on the topic of “Cloud in Manufacturing” with a German machine-building and factory automation magazine. The interview ran an hour longer than scheduled—an indication of the publication’s interest, as well as its lingering doubts about whether cloud services truly can benefit “real manufacturing.”

We discussed an abundance of cloud-related ideas – most pertaining to obvious areas such as web presence in marketing, after-sales application hosting to make field engineers more productive, and collaboration as a service to enable partners and suppliers to work together more effectively on large projects.

The uncharted cloud territory, however, is the area that manufacturers see their “core”: the physical making of things. Can cloud play a role in supply chain management (yes, it can)? Will there be a cloud service for motion control (due to latency and determinism considerations, not yet) and for asset management and MIS applications (yes)?

Despite all this interest, there are still concerns about having “somebody else” run such vital parts of one’s manufacturing operation. Not surprisingly, security comes up as a salient point, as do legal requirements pertaining to data privacy and the physical location of data. Other issues are the structure and design of service-level agreements (especially how to define the “performance” of a cloud service), and resolving who is liable should the requirements not be met or something really important goes down (such as a production line because some excavator has ruptured a telecom company’s cable, preventing the cloud service provider from delivering its service).

Last but not least is the industry’s readiness (and the associated costs) to migrate true and tested legacy applications into a cloud environment. I personally think that these challenges are well understood and, while not fully resolved, are about to be addressed by IT and service provider companies.

However, the industry may be underestimating the process and organizational challenges facing manufacturing companies intending to adopt cloud services. To succeed with cloud, these companies must have a strategy that defines which IT capabilities are “core” (i.e., provide competitive differentiation) and which are “context.” They also require a comprehensive roadmap for holistic implementation across IT since cloud services have inter-dependencies with legacy services.

In addition, success in cloud demands rethinking of governance and control. Personal and departmental agendas that in the past might have been geared to maintaining control over IT and processes now must adopt a new approach—namely, moving from a mind-set of acquiring products and managing IT budgets to one of buying utility services. What’s more, departments contemplating using cloud services must determine where there are interfaces into other departments and how many compromises they would be willing to make to gain a more high-performance, scalable, and cost-effective set of services.

All of these internal factors are as important for cloud success as the external ones. While the external factors will be addressed by the IT industry, the internal challenges will need to be solved by manufacturing companies themselves.

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  1. You brought up some great points. Even if we have a solid game plan, we have to work within a budget and sometimes that is easier said than done to get quality work done. We can set a baseline but really have to look at each individual clients needs and set budgets accordingly. Thanks again for the great article and discussion.

    • Definitely appreciate your input – and your points regarding budget as well as individual clients having specific needs are very important ones. The ‘art’ of putting together a cloud-offering to the internal stakeholders is trying to find something that suits most and is competitive from a performance and cost point. In my experience this requires quite a bit of communication and convincing – less on the technology aspects, but on the ‘what’s in for me’. Not always easy…