Manufacturing Strategies that Win: Executive View of the Cloud

Manufacturers have been slow to embrace the cloud. But the proven success of cloud-based solutions, along with the promise of a less expensive and more responsive business solution infrastructure, is prompting many manufacturers to take a closer look. This report explores how manufacturers can use cloud-based solutions to transform how they manage their supply chain and internally improve operations, leveraging the cloud to gain real-time visibility into all information across their company.

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Executive Summary

To date, manufacturers have been slow to embrace cloud computing. But the proven success of cloud-based solutions, coupled with the promise of a less expensive and more responsive business solution infrastructure, is prompting many manufacturers to give the cloud a closer look. This executive brief explores how those manufacturers can use cloud-based solutions to transform the way they manage their supply chain and internally improve operations, leveraging the cloud to gain the needed real-time visibility into all information across their company.

Also in this report:

  • how cloud solutions address manufacturers’ key business concerns
  • how cloud solutions can steamline operations by connecting manufacturers with partners and suppliers
  • how cloud solutions can help manufacturers respond quickly to variable economic conditions
  • considerations for evaluating cloud service providers

Changing Software Requirements

It’s often said that manufacturers have been slow to embrace cloud-based enterprise software—but that doesn’t tell the whole story. While large manufacturers that have already made significant investments in legacy IT systems might shy away from the cloud, small and mid-sized manufacturers are embracing it.

There are a few reasons for this: concerns about the cloud model have been mitigated to an extent by conceptual maturity generally, as well as by the market entry of solidly branded cloud service providers. Indeed, the cloud computing model has evolved well past the proof-of-concept stage for enterprise software vendors and clients alike. According to TEC’s data on user demand, interest in software-as-a-service (SaaS) enterprise applications has risen from less than 13 percent in 2008 to approximately 16 percent in 2010, indicating that cloud computing is an increasingly serious consideration for enterprise software buyers.

Worries about integration requirements and transaction processing capabilities have been allayed by fuller feature sets, more flexible customization options, and Web service–based application programming interfaces (APIs) that enable fuller integration with workflow requirements.

As for such concerns as service level issues (including data security) and regulatory compliance, increased awareness of just how emptors should caveat means buyers are more careful when negotiating servicelevel agreements (SLAs) (see also Checklist—Nine Considerations for Evaluating Cloud Service Providers, later in this report). And the notion that cloud computing makes compliance more difficult is a misconception: it is relatively straightforward to configure, test, and implement cloud applications. If compliance requirements change, new information can be incorporated and deployed to system users without delay. Naturally, cloud adopters need to configure their business processes to ensure that the new functionality adheres to regulatory and compliance requirements.

Another reason for increased cloud adoption among manufacturers is an emerging manufacturing model that relies on outsourcing to keep operations streamlined and keep costs down. It’s a model that helps small and mid-sized manufacturers stay competitive, but it also demands that they start lean and stay lean. Having seen the way that companies in other sectors have used cloud solutions to reduce spending and streamline operations, these manufacturers see cloud solutions as a perfect fit for their business.

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