Discrete manufacturers spending big on cloud technology

In a few weeks, Greg Lafferty is going to have another chance to share his knowledge about The Cloud when he presents “Mysteries of the Cloud: Solved” during the Plug & Cutting Conference. While I was updating the slide deck last week, it got me thinking about The Cloud and how well it’s catching on in the manufacturing industry.

The answer is not only “yes,” but also “big-time.”

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Discrete manufacturers are expected to spend the most on cloud technology in 2018.

According to International Data Corporation, the premier global provider of market intelligence for IT, telecommunications and consumer technology markets, worldwide spending on public cloud services is forecasted to reach $160 billion during 2018. Unsurprisingly, discrete manufacturing is outpacing the field.

“The industries that are spending the most – discrete manufacturing, professional services, and banking – are the ones that have come to recognize the tremendous benefits that can be gained from public cloud services. Organizations within these industries are leveraging public cloud services to quickly develop and launch 3rd Platform solutions, such as big data and analytics and the Internet of Things (IoT), that will enhance and optimize the customer’s journey and lower operational costs,” said Eileen Smith, program director, Customer Insights & Analysis.

I say it’s not surprising since we live in the discrete manufacturing world. On a day-to-day basis, we deal mostly with IT personnel, and we see how our customers strive to stay on the forefront of technology.

We’re also not surprised by another statistic in the IDC survey: Software as a Service will be the largest cloud computing category, capturing nearly two-thirds of all public cloud spending this year. According to the survey, the most money will be spent on enterprise resource management applications and CRM applications during this year.

This is one of the reasons we first put together this presentation last year for Cultivate’17. More and more we hear from customers and prospects, “What about that-there cloud?” (as Greg likes to say). As with any new or developing technology, it’s important to truly understand what you’re getting into.

Education is the most important part of new technology

Waaaaaaaaay back in the day, when I first started this blog, I wrote a post about making sure you know what you’re getting into when you’re scoping out new technology. The post was framed about how we like walking trade show floors — like at Sage Summit — with our customers to help them distinguish the flash from the function.

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There are many things to consider when considering cloud technology, such as access to high-speed internet or LTE.

But as the numbers from the IDC survey suggest, people in discrete manufacturing are champing at the bit to invest in cloud technology. There are many factors to consider before moving an entire business’ software to a different platform.

For instance, many of our greenhouse growers — that manufacture live plants similarly to the way discrete manufacturers make widgets — have multi-million dollar operations in rural areas. Even in 2018, many rural areas are not served by the fastest broadband internet access. Also, by their very nature, there is a ton of interference in greenhouses, even ones in metro areas. Neither is a conducive situation to operate in a cloud environment.

Then there’s the financial investment in switching to a cloud environment — especially if a company is going to invest in their own cloud infrastructure. Just look at the $160 billion price tag businesses are projected to spend this year. Granted, that’s spread over thousands of companies in various industries, but that’s still a huge amount of money being spent.

These are a couple of big-picture items when it comes to investing in The Cloud. But it’s not all doom and gloom for discrete manufacturers looking to move there, either.

Weighing the benefits of cloud technology for discrete manufacutrers

As was mentioned before, implementing an enterprise resource management solution is a high priority for discrete manufacturers. Many of our longtime customers — and newest ones — are making the plunge and switching to Sage Enterprise Management (formerly known as Sage X3).

While not all are investing in the cloud version quite yet, the option is there for them. Many see the writing on the wall: Whether we like it our not, the business world is moving to The Cloud. Except for limited companies who are required by law not to be in The Cloud, many companies are preparing for what many see as an eventuality: only being able to purchase software as a service.

Some of the technical and financial concerns aside, being in a cloud environment does makes sense in discrete manufacturing. Having storage in multiple locations across a public cloud environment can help prevent losing years of data in case of a disaster. Public clouds can also help run a leaner environment and allow for a more mobile workforce.

When we did the research for the presentation, we found many solid benefits — and yes, even concerns — in moving to The Cloud. But all the pros and cons in the world mean nothing if you don’t compare them to your business’ own situation.

We’re always here to answer these types of questions, and are happy to do so. If you have any questions about how your discrete manufacturing company would run in a cloud environment, contact us at info@practicalsoftwaresolutions.com.

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