Businesses are learning to love the cloud, but this evolution can still be disruptive. They must first prepare well and then decide if this is really the right answer to 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”, connecting data from 124 factories. SKF, a Swedish ball bearing company, uses a cloud connection to determine when lubricants should be added to its products.
It’s easy to see the attraction. The cloud offers easily accessible data storage and computing power that can be quickly scaled up or down. This offers potential cost savings and improved productivity.
However, the transition can be difficult, raising a whole new set of concerns for managers about cost, safety and efficiency.
Many companies are still forced to run their services through on-premises data centers or rent servers in a managed data center. While cloud adoption is accelerating, more than half of IT workloads are expected to remain on-premises by 2022, according to a survey by the Uptime Institute.
Several factors should be considered before moving to the cloud. To get started, companies need to determine the optimal time to move services from on-premises servers to the cloud.
Ilja Summala, chief technology officer (CTO) at cloud service provider Nordcloud, says that once software becomes an essential part of a company’s business strategy, “that’s when they should consider move to the cloud if they haven’t already.” At this point, the company will need to be able to instantly scale their software capabilities and digital solutions, which they can do with a cloud provider. This helps reduce the cost of developing software in the cloud, although Summala notes that this “doesn’t always mean the software is cheaper to run in the cloud, but it is certainly cheaper to develop.”
Carla Arend, senior software program manager at research firm IDC, says the flexibility of the cloud is ideal for companies looking to accelerate their innovation and new product development. “If you want to build a prototype, test it, and get users to interact with it, the cloud can provide the computing resources to do that almost instantly, and then you can shut down those resources once you’re done with your testing,” said- she declared. said. “You have a lot more flexibility and a much lower cost profile in this experimentation phase, so it’s great for rapid innovation cycles.
However, some companies have struggled to make a successful move to the cloud. If they fail to create a cohesive strategy, they may struggle to get value for money from the move.
“Wasteful cloud spending remains a major problem for many businesses,” said Rob Robinson, head of Telstra Purple EMEA, which provides technology services to businesses. “To mitigate the cost spiral, companies need to recognize that reducing cloud costs is not a one-off, tick-off task. This requires continuous assessment to identify precisely where exceedances are occurring.
While the speed, scale, innovation, and productivity benefits of the cloud drive business opportunities, tunnel vision can prevent companies from getting the best value. “CIOs and CTOs need to have a consistent and sustainable roadmap that captures the continued value of their multi-cloud investment. Without it, companies will be continually disappointed with their cloud bottom line,” says Robinson.
To mitigate the cost spiral, companies need to recognize that reducing cloud costs is not a one-time, tick-off task.
Once a company decides to create a cloud strategy, it should first migrate the applications that require the least effort: the “low hanging fruit,” says Sascha Giese, technical product marketing manager at Solar Winds.
“The mail server is probably the most obvious. These days, there’s no reason to keep an on-premises mail server,” says Giese. “Databases are next because it’s relatively easy to migrate data from an on-premises database to a cloud-hosted or even cloud-managed database.”
He adds that human resources, customer relationship management and data warehousing are all easy wins when it comes to moving functions to the cloud.
Persuading supply chain-based industries such as manufacturing, distribution, and building materials to move to the cloud has been a work in progress since the middle of the last decade. There is considerable activity in this area. The Volkswagen Group announced last year that it was working with AWS to launch the industrial cloud, bringing together production data from 124 factories on a single digital platform. The goal is to use real-time data to improve productivity by 30%, for example by optimizing machine utilization and material flows.
A long-term goal is to use the cloud platform to create an open market for industrial applications. “On this type of platform, everyone involved could exchange, acquire and use each other’s applications. It would be a place open to all businesses in principle, from suppliers to technology partners to other automakers,” says Nihar Patel, Volkswagen AG Executive Vice President for New Business Development.
However, some of the most important processes in manufacturing systems are “literally rooted in the factory,” says Summala. Manufacturing execution systems (MES), which control production processes, are unlikely to make the leap to the cloud, he says. “I suspect it’s these MES systems that will sit inside factories for a long time, because if there was a network outage, it could mean you couldn’t manufacture anything.” It’s not a risk worth taking, even though the cloud is cheaper and better.
One of the benefits of moving manufacturing processes to the cloud is predictive machine maintenance, says Tobi Knaup, managing director of D2iQ, which advises companies on their journey to the cloud. For example, a paper mill will have huge paper machines costing millions of dollars that need to run continuously. If they break down at some point and parts need to be replaced, it creates a loss of revenue.
A D2iQ customer is currently deploying 80,000 sensors in their factories to ingest sensor data in real time. The data is stored in the cloud and runs through machine learning software to analyze unusual vibrations. The system can then predict which parts should be replaced during the next maintenance cycle. This minimizes disruptive failures.
“The traditional way to avoid unscheduled maintenance is to have experts physically listen for unusual vibrations in machinery that suggest something might break,” Knaup says. “The new, much more efficient method is to place cloud-based sensors all over the machines.”
Some believe that a cloud-first strategy – in which cloud solutions are considered first when reviewing new or existing processes – is not always the best way forward. Many large companies are content to run certain applications in their data centers, as they have developed stable applications over time and adapted to their needs. They know the workload so they can easily procure and provision the right hardware and infrastructure.
CIOs and CTOs must have a consistent and sustainable roadmap that captures the continued value of their multi-cloud investment
“In these cases, companies might find it attractive to do it themselves via a capital expenditure model, where they can buy the hardware and amortize it over three or five years. This financial model makes sense in certain situations” , says Arend.
Raj Sukumar is Head of Europe at Persistent Systems, an Indian technology services company. He says there’s “a common misunderstanding that moving to the cloud means every organization is moving all of their data to the cloud.” Depending on the needs of each business, this is not always necessary.
This view is shared by Álvaro Verdeja, COO of Making Science, who says moving away from legacy systems shouldn’t be a single step, but managed in stages. “Companies need to adapt their cloud implementation and consider the most effective strategy, whether it’s a combination of cloud and on-premises, cloud as a single solution, or multi-cloud usage. – to obtain optimized results.”
A carefully thought out cloud strategy can therefore potentially deliver huge benefits. But companies need to have a clear idea of the most appropriate services to migrate and keep a watchful eye on costs.
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