Manufacturers are constantly under pressure to improve their operations while keeping costs in check. One strategic way they can fulfill these needs is by embracing digital transformation and moving towards cloud software and technology.
Cloud technologies have permeated many aspects of our lives over almost two decades – shopping, banking, paying bills, storing photographs – and the question has shifted from “Are you moving to the cloud?” to “Why aren’t you on cloud?” Despite the trend towards cloud, manufacturers have been wary of the move and haven’t made a complete transition for various reasons. A 2018 Gallup poll found that many small business owners are still reluctant to embrace the cloud completely and 16% expressed that the move is hurting their business.
Let’s look at some reasons why manufacturers are hesitant to adopt the cloud:
- They are not ready to forego their legacy applications and believe they are functioning optimally and don’t see a reason to make any changes. They have made large investments in their IT infrastructure, on-premises ERP, and other software which are not easy to discard.
- They are not convinced that the cloud is secure. The idea of putting their applications and data on a computer which is not on their own premises is a scary proposition.
- Many manufacturing companies have a difficult time entrusting their sensitive financial, commercial and competitive information to third party providers with employees that are unknown to them.
- Many of them cater to niche markets and have unique, complex manufacturing processes and are unsure of the ability of a cloud offering to cater to their needs.
Despite all the reasons for not making the move, it is important for manufacturers to keep up with the times and competition, ensure they are not falling behind, and increase their awareness of the benefits of adopting cloud.
A report by Technology Business Research (TBR) explains how recent advancements in the capabilities of cloud technology – namely security, disaster recovery, integration and business performance continuity – have started to erode some of the caution manufacturers have practiced. The Gallup poll referenced above, also found that about 50% of the business owners that were surveyed believed that digital technology and platforms were an overall advantage for their businesses.
No Reason To Hesitate Any Longer
Cloud-based ERP solutions are a suite of ERP applications that are delivered over the internet and are typically accessed via a browser. The software usually does not need to be installed on client computers and is hosted on the vendor’s servers, which are maintained and secured by third party experts. Access to the applications and services is typically offered on a per-user, per-month basis.
Cloud solutions offer some obvious benefits which we are all acquainted with which include decreasing operating costs, promoting visibility, improving collaboration and ERP performance, offering automation and much more.
Now, let us address some issues were raised at the beginning of this blog and look at the benefits that cloud-based ERP solutions offer that can mitigate the hesitance or nervousness that manufacturers have regarding moving from legacy systems, security, scalability and the ability to fit their unique needs.
Your Legacy Systems Can Be Replaced
It is understandable that manufacturers are concerned about foregoing legacy systems, but they are not considering the disadvantages of continuing to use them. These applications are built around proprietary, single-vendor tools that include everything from a unique programming language to methodologies and management tools, and that “all maybe well” as long as everything is functioning appropriately.
Also, since legacy systems are home-grown and used over many years (due to large investments), oftentimes they have no documentation and the original developers and support staff may have retired or left the company. So, the knowledge to trouble shoot and fix even minor glitches has to be sought from external sources, which is expensive. And since these are older applications, they will require older technical environments including legacy operating systems, databases, libraries, or even specific hardware. Just as applications grow more expensive to maintain as they age, so does the underlying infrastructure.
Additionally, legacy applications are difficult to mobilize and in today’s technologically advanced environment, this is a big disadvantage. Having access to work (not just emails) has become a necessity for most businesses. Although there are “quick and dirty” means to getting these applications onto mobile devices, they come with their share of problems. For example, technologies like virtual desktop infrastructure (VDI) can quickly provide access to legacy applications on mobile, but they can be expensive, server-side problems can affect multiple users, and if the application was not built for mobile, the screens will not render properly on smaller devices.
As is evident, continuing to work on your legacy systems is disadvantageous in the long run and making the move to modern, cloud applications is the way to go. Cloud/modern applications are developed using common tools and programming languages, which allows your IT staff to help with custom settings and personalization. These technologies have standardized APIs which makes it much easier to integrate with smaller applications, so organizations can purchase just what they need and rapidly integrate it, instead of purchasing a massive application that covers every eventuality.
Another big advantage is that cloud-based systems are hosted and maintained by the vendor, so your system never gets old – you get the latest and greatest features as and when they are released. Additionally, they offer scalability and grow with your business. manufacturers gain added agility by being better able to scale up or down their software systems as demand and market opportunity necessitate. For example, when your manufacturing operations grow and you hire new employees you don’t need to acquire new hardware, buy additional software licenses, have IT professionals install and set up the new systems. You can simply increase your user count with the cloud ERP vendor. And since the applications (and work) are available from anywhere, it makes it easy to expand business internationally and hire employees around the globe.
Your System Can Be Secured
Technology Evaluation Center’s survey results show that the biggest concerns with cloud-based ERP software is security; the biggest security concern being loss of data. Historically, the biggest causes of data loss are hardware failure and human error, which have greater possibilities in on-premise deployments than in the cloud.
Cloud-based ERP solutions are built with security in mind. Most Cloud-based ERP solution providers prioritize securing their systems and provide strong, industry standard data security certifications. Their data centers are highly secure and have 24-hour monitoring, fingerprint locks, and armed guards, along with features like encrypted communication and strong password practices and thus, provide end-to-end protection. Cloud providers also have built-in redundancy to avoid hardware failure and accidental deletion of data and have continuous backup and rapid recovery for any issues.
All in all, cloud providers offer more security than any on-site data centers and since security is constantly improving, breaches are rarer than you might think.
Many ERP users feel it is too risky to run their operations over the internet and are concerned about connectivity causing production shutdowns. But with the evolution of better high-speed Internet technology like fiber optic cable and redundant connections, the risk of losing Internet connectivity has been reduced dramatically in recent years. And whereas there is high risk of losing connectivity through a power failure at your own premises, cloud providers have back-up power and multiple-site redundancy built in to ensure uninterrupted access to your systems.
Your Unique Requirements Can Be Supported
It is true that some manufacturers have niche products and unique processes which require highly customized applications. In the past, most ERP products catered to broad horizontal market segments and would need to be highly customized to fit the needs of unique manufacturers. But presently, most cloud ERP providers have products that cater to specific verticals and it easy to find specialized products that fit a certain industry – automotive, food, chemical, paint, etc. Some ERP providers even go a step further and focus on micro-verticals. These are applications that cater to a specific category within an industry. For example, a manufacturer of fruit juices and a processed meat company will have different ERP requirements even though they both belong to the food and beverage industry.
Now is the right time to move your ERP system to the cloud and rethink the way your company does business. The benefits of cloud computing in manufacturing are endless – from lowering the cost of production to encouraging innovation – and manufacturers are catching on to the many advantages of cloud technology.
So, are you ready to champion the advantages of cloud? If you are ready, do you know what to do next? Contact us to ask questions and to understand the next steps you need to take for your move to the cloud.