For many years, it has been a key enabler of expanding distributed computing power, expanding software and technological advancements, and driving technological innovation. It has played an important role in helping to expand the possibilities of the Internet of Things and is closely related to the Industry 4.0 movement. But cloud computing is more than just a technology or IT tool. It has become a business enabler that is changing the way businesses operate, how customers interact with brands, and how manufacturers operate. Cloud computing is driving business value by breaking down barriers, improving collaboration, and opening up new business possibilities.
The research agency expects that in 2023, the trend of cloud adoption will only increase, driving a revolution in smarter decision support for manufacturers. Here are a few ways that adopting cloud computing technology will drive business value by changing the way complex, discrete manufacturers run their businesses, and how it will help drive new efficiencies, performance, and customer value in the years to come.
1. Use the data as an asset
Much has been written about the growing value of data, one of the largest unused assets in manufacturing. Why? Ironically, because there are so many. IBM estimates that the average plant generates 1 terabyte of data per day.
To turn all data into business value, manufacturers must be able to collect, distribute, store, and analyze data across the enterprise to create a single source of truth. This can be done locally over a private network, but comes at a significant cost in terms of funding, maintenance, and lack of agility. Alternatively, cloud computing can greatly simplify the process. Data from remote plants and locations can be pre-processed at edge locations, then securely uploaded, processed, and then used to generate decision support intelligence that can then be shared and used anywhere. Cloud computing drives business value by providing a common location to store data or clean it before integrating it with enterprise systems. If an enterprise's operating system is also running on the cloud, this intelligence can be easily embedded in those systems, providing real-time analysis and direction that can respond very quickly to unexpected changes.
2. Improve operational resilience
The pandemic has shown how quickly everything can change – in just three months, the equivalent of a decade of e-commerce growth has taken shape. Are companies prepared for market conditions that could change overnight without warning?
Real-time monitoring and reporting based on cloud computing technology enables decision-makers to respond to day-to-day business challenges across the enterprise and value chain in a timely manner and extend them around the world. When problems arise, manufacturers can now act quickly based on real-time data to implement changes with greater precision and efficiency. This can be done wherever the decision maker is or where the computing platform and software applications are installed. Cloud computing breaks down barriers for small businesses by making it possible to implement flexible, global systems with far fewer dedicated resources, time, and cost, allowing them to consider more robust operating models than they did two years ago.
3. Improve collaboration between teams
In any business, it is common for teams working on the same project to encounter communication challenges between them. This may be because in different parts of the world, their information systems are siloed, or there are too many touchpoints to manage with traditional processes. Whatever the reason, cloud computing can improve the situation.
First, it can bring various departments into the same virtual space, break down barriers and enhance communication between different regions. Take the common problem of signs, for example, which can be a problem in complex manufacturing. Many manufacturers still use paper or email chains. Either way, it will take a few days to get the right signature. But with collaboration software running on the cloud, everyone can review projects and add their signatures. This is just a small example, in this industry, almost everything requires collaboration.
4. Expand contacts with customers and partners
Over the past few years, almost every industry has been affected by supplier issues. This devastation is not expected to end anytime soon. More than ever, organizations need to have more control over their supply chains and establish backup schedules that can be executed in real time when conditions change.
By extending business infrastructure, systems, and applications, cloud connectivity can help simplify this process. In this way, you can connect and communicate with partners and suppliers at the same level through a common "foundation", just as you would in your own organization. Many see significant advances in this area, and the cloud is a key enabler in providing an industry-focused marketplace for exchange. This shift is emerging, with businesses becoming more flexible rather than fixed when it comes to data and systems, using this global digital ecosystem to find expertise and assemble teams as needed, both inside and outside the actual enterprise.
5. Drive innovation and create new revenue streams
Product innovation is at the heart of profit and growth. A McKinsey survey concluded that 25% of total revenue and profits across industries come from new product launches. Cloud-based systems can help drive a successful launch in several ways. The cloud enhances collaboration across all teams throughout the design and development process. It enables better capture of product lifecycle data from anywhere, which design and process engineers can use to continuously improve new products. And, when you extend your digital reach and integration to include customers, you'll gain valuable insights into customer needs, consumption patterns, and new market trends.
With the global real-time reach of cloud computing, manufacturers can even create entirely new revenue streams. In automotive manufacturing, for example, cloud computing has become a new channel for selling more products to customers, driving revenue growth in ways hitherto impossible. Ford's recent partnership with Google Cloud Services is a good example.
Cloud computing is worth the investment
Moving to the cloud is not without its challenges. A McKinsey report states that this requires software engineering, operational process improvement, and business innovation. Along with this shift, rigorous data governance and security measures are required across the enterprise – today more than ever.
However, the business value gained by using the cloud is well worth it. McKinsey & Company estimates that the cloud computing business could unlock more than $1 trillion in shareholder value for industrial companies, half from revenue growth and half from profit growth.
Like all things related to digital transformation, moving to the cloud is a process, not a destination. It's about optimizing how your organization runs and how it interacts with the rest of the world. This applies to how manufacturing operations are planned and executed. Today, consumers with smartphones and other smart devices are fully connected to cloud computing platforms, whether they know it or not. In the next few years, manufacturers will have no choice but to do so.
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