Manufacturing Strategies that Win: IT’s New Role in the Cloud

With acceptance of cloud-based strategies growing among manufacturers of all types and sizes, it’s easier than ever to make the business case for transitioning to the cloud. But beyond the cost savings and responsiveness of cloud solutions, this transition also provides new opportunities for the IT department to grow into a key role as strategic business advisor. This report includes advice on how IT can help manufacturers realize the full benefits of cloud-based solutions.
Executive Summary

With acceptance of cloud-based strategies growing among manufacturers of all types and sizes, it’s easier than ever to make the business case for transitioning to the cloud. But beyond the cost savings and responsiveness of cloud solutions, this transition also provides new opportunities for the IT department to grow into a key role as strategic business advisor.

Also in this report:

  • why manufacturers are moving to the cloud
  • the advantages that cloud solutions offer manufacturers
  • the new opportunities that moving to the cloud opens up for IT
  • advice on how IT can help manufacturers realize the full benefits of cloud-based solutions.


New Opportunities for IT

Today more than ever, small and mid-sized manufacturers are adopting cloud-based enterprise software solutions. Driving this newfound interest is an emerging manufacturing model that relies heavily on outsourcing. This model allows companies to keep costs low and stay nimble in the face of stiff competition. It’s also well suited to take advantage of cloud-based enterprise software.


A New Manufacturing Model

Outsourced manufacturers, or “brand owners” as they’re often called, tend to be fast-growing, small to mid-sized multinational companies that take full advantage of the global information economy to bring products to market. Instead of investing in in-house manufacturing infrastructure, these companies focus on leveraging their intellectual property to design products that are then manufactured—and often warehoused, transported, and shipped—by international networks of partners.

By outsourcing resource-intensive processes to trusted partners, brand owners can keep start-up and operating costs low, react quickly to new opportunities and market shifts, and leverage their core strengths to compete effectively with larger players. But to make it work, they need to keep track of a huge number of moving parts. And that requires a solid IT infrastructure that provides always-on connectivity and unmatched visibility into operations like:

  • order and inventory management,
  • supply chain management,
  • spend consolidation,
  • demand/supply synchronization, and
  • regulatory compliance.

To get that operational visibility, brand owners need integrated core enterprise resource planning (ERP) solutions that they can deploy company-wide to achieve a so-called “single version of the truth.” But with flexibility and cost control chief among their concerns, brand owners tend to balk at the cost and resources required to deploy such a system on-premise.

Right for the Cloud

Instead, these manufacturers are looking to cloud-based enterprise software to deliver the functionality they need without the cost or commitments required for on-premise solutions. Cloud solutions offer brand owners a number of advantages, including:

  • Low barrier to entry: Cloud software requires no hardware beyond the machines used to access it. Vendors manage the physical infrastructure and are responsible for maintenance and system updates.
  • Fast deployment: Brand owners do not need to configure hardware, or install software company-wide. Configuring systems on the vendor side is mostly a data integration issue. Deployment can happen in weeks instead of months or years.
  • Predictable costs: Brand owners pay a single subscription fee, and can negotiate pricing for additional licenses, functionality, and capacity in advance, making it easy to predict what the system will cost if their configurations change.
  • No risk of buying shelfware: Brand owners can add and remove licenses, functionality, and capacity at will, ensuring that they pay only for the functionality they use.
  • More and newer functionality for the price: Cloud software vendors can take advantage of economies of scale to make tier-one functionality affordable for small and mid-sized brand owners. Brand owners also benefit from continuous improvement, since vendors can upgrade cloud solutions frequently and without on-site intervention.


IT Shift Focus

As brand owners move into the cloud, the role of the traditional IT department is changing. Just as the outsourced manufacturing model frees brand owners to focus on their core strengths, adopting cloud solutions frees IT to assume more of a strategic advisory role in the business. With little or no in-house hardware and software to maintain, IT professionals can focus on:

  • Helping brand owners choose the right cloud solution vendors: IT professionals are ideally suited to help define organizational requirements for functionality, capacity, and licenses; evaluate different solutions; and negotiate service-level agreements (SLAs) to ensure that brand owners’ requirements are met.
  • Acting as the bridge between brand owners and vendors: With an understanding of technology on the one hand, and in-depth knowledge of the brand owners’ business requirements on the other, IT professionals are well positioned to translate brand owners’ business requirements into vendor-friendly language.
  • Ensuring vendors meet their service level commitments: Starting with the initial deployment, IT professionals can monitor what vendors are delivering to make sure that they stick to the terms of the SLA. Should the brand owners change their software configuration (e.g., by adding licenses, bringing new modules online, etc), IT can monitor changes to make sure they happen quickly, and with minimal disruption.
  • Spearheading internal training: When cloud vendors upgrade their solutions—through major releases or incremental changes—new and updated functionality needs to be communicated to all users. As the bridge between brand owner and vendor, IT can stay on top of changes, communicate them across the company, and ensure that the vendor delivers any required training.

Featured Software Research:

ERP for Green Supply Chain Management in Manufacturing

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Manufacturers are under pressure to document their impact on the environment. This white paper addresses the various drivers for the green supply chain trend. It also shares considerations for satisfying a customer’s green supply chain initiative or initiating your own. Finally, it discusses the role of enterprise software like enterprise resource planning (ERP) in keeping pace with this industry trend. Read More

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