Businesses are learning to love the cloud, but the move can still be disruptive. They have to be fully prepared before deciding if this is really the right answer for their needs.
There are many recent examples of manufacturers and distribution companies discovering the benefits of the public cloud. Volkswagen has launched an “industrial cloud” that connects data from 124 factories. Swedish ball bearing company SKF uses cloud connectivity to determine when lubricants should be added to its products.
Easy to see sights. The cloud provides easily accessible data storage and computing power that can be scaled up or down quickly. This provides potential cost savings and increased productivity.
However, the transition can be challenging, raising new concerns for managers about cost, safety and efficiency.
Many businesses are still keen to run their services from on-premises data centers, or rent servers in colocation data centers. Cloud adoption is definitely accelerating, but more than half of IT workloads are expected to remain on-premises through 2022, according to a survey by the Uptime Institute.
There are several factors to consider before migrating to the cloud. First, companies need to determine the best time to move services from on-premises servers to the cloud.
Ilja Summala, chief technology officer (CTO) of cloud service provider Nordcloud, said that once software becomes an important part of a company’s business strategy, “if they haven’t already done so, now is the time when they should consider moving to the cloud.” , businesses will need to be able to instantly upgrade their software capabilities and digital solutions, which can be achieved through cloud providers. This helps reduce the cost of developing software in the cloud, although Summala points out that “it doesn’t always mean that software is cheaper to run in the cloud, but it is certainly cheaper to develop”.
Carla Arend, senior program director for software at research firm IDC, said the flexibility of the cloud is ideal for businesses looking to accelerate innovation and new product development. “If you want to create a prototype, test it, and have users interact with it, the cloud can provide IT resources that do that almost immediately, and then you can shut down those resources when you’re done testing,” she said. “In this experimental phase, you have more flexibility and lower costs. So it’s ideal for rapid innovation cycles.”
However, some companies have been struggling to prepare for the move to the cloud. If they fail to develop a consistent strategy, they may struggle to get value for money from the move.
“Wasted cloud spending continues to be a major concern for many businesses,” said Rob Robinson, head of Telstra Purple EMEA, which provides technology services to businesses. “To mitigate escalating costs, organizations must recognize that reducing cloud costs is not a one-time, tick-box task. It requires continuous assessment to identify exactly where overruns are occurring.”
While the speed, scale, innovation and productivity advantages of the cloud increase business opportunities, narrow vision can prevent companies from realizing optimal value. “CIOs and CTOs need to develop a coherent and sustainable roadmap to derive ongoing value from their multicloud investments. Without this, businesses will continue to be disappointed with their cloud results,” Robinson said.
To mitigate rising costs, organizations must recognize that reducing cloud costs is not a one-time, tick-the-box task
Sascha Giese, director of technical product marketing at Solar Winds, said that once a business decides to create a cloud strategy, it should start by migrating the most labor-saving applications: “low-hanging fruit.”
“The most obvious is probably the mail server — there’s very little reason to keep a mail server on-premises these days,” Giese said. “Databases are next because it’s relatively easy to move data from on-premises databases to cloud-hosted, maybe even cloud-managed databases.”
Human resources, customer relationship management and data warehousing are all easy winners when it comes to moving functions to the cloud, he added.
Convincing supply chain-based industries such as manufacturing, distribution and construction supply to switch to cloud computing has been a work in progress since the mid-last decade. There is considerable activity in this area. Volkswagen Group last year announced a partnership with AWS to launch the Industrial Cloud, which brings together production data from 124 factories on a digital platform. The goal is to use data in real time to increase productivity by 30 percent, for example by optimizing the use of machinery and the flow of materials.
A long-term goal is to create an open marketplace for industrial applications using cloud platforms. “On that platform, everyone involved can exchange, acquire and use each other’s applications. In principle, this will be a place open to all companies, from suppliers to technology partners to other car manufacturers business,” said Nihar Patel, executive vice president for new business development at Volkswagen.
However, some of the most important processes in a manufacturing system “are actually fixed on the factory floor,” Summala said. Manufacturing execution systems (MES), which control the production process, are unlikely to make the leap to the cloud, he said. “I doubt those MES systems will be in the factory for a long time, because if there is a network failure, it could mean you can’t make anything. Even if cloud computing is cheaper and better, it’s not worth the risk.”
One of the benefits of migrating manufacturing processes to the cloud lies in the predictive maintenance of machines, said Tobi Knaup, CEO of D2iQ, which advises businesses on their journey to the cloud. For example, a paper mill will have large multi-million dollar paper machines that need to run continuously. If at any point they fail and parts need to be replaced, there is a loss of revenue.
D2iQ customers are currently deploying 80,000 sensors in their factories to acquire sensor data in real time. The data is stored in the cloud and run through machine learning software to analyze abnormal vibrations. The system can then predict which parts will need to be replaced during the next maintenance cycle. This minimizes disruptive failures.
“The old-fashioned way to avoid unscheduled maintenance was to have an expert personally listen to abnormal vibrations in the machine, which would indicate possible damage,” Knaup said. “The new, more efficient approach is to place cloud-based sensors anywhere in the machine.”
Some argue that a cloud-first strategy—considering cloud solutions first when considering new or existing processes—is not always the best way forward. Many large companies are happy to run a few applications in their data centers because over time they have developed stable applications tailored to their needs. They understand the workload so they can easily source and configure the right hardware and infrastructure.
CIOs and CTOs need to develop a coherent and sustainable roadmap to capture ongoing value from their multicloud investments
“In these cases, businesses may find it attractive to do this themselves through a capex model, where they can buy the hardware and write it down over three to five years. This financial model in some cases is meaningful,” Arend said.
Raj Sukumar is the European Head of Persistent Systems, an Indian technology services company. He said there is a “common misconception that moving to the cloud means that every organization moves all data to the cloud”. Depending on individual business needs, this is not always required.
This view is echoed by Álvaro Verdeja, Chief Operating Officer of Making Science, who said that getting rid of legacy systems should not be a step, but should be managed in stages. “Enterprises should adjust their cloud implementations and consider the most effective strategies, whether it’s a combination of cloud and on-premises, cloud as the only solution, or multi-cloud use — to deliver optimized results.”
Therefore, a well-thought-out cloud strategy can have huge benefits. But businesses must have a clear idea of which services are best for migration and keep a close eye on costs.