Moving workloads to cloud data centers provides immense opportunity for emissions reductions.
Key takeaways
The shift to such platforms bodes well for manufacturers ready to capitalize on ESG benefits.
Companies need to understand the cost of legacy systems and keep scalability in mind.
Manufacturers need to keep sights on ESG goals
Advanced technologies such as artificial intelligence, autonomous robots and connected devices are proliferating in the middle market. Now, manufacturers must focus on how the adoption of new technologies can help them achieve their environmental and sustainability goals.
Many companies are already harnessing technology to source more sustainable materials and reduce the amount of waste they produce; now, outside stakeholders, including customers and investors, are watching their progress. Leadership teams must stay vigilant about big-picture environmental issues at play as factories become more technology-driven.
As manufacturers look at integrating all aspects of their operations with new technologies, nearly all of them will rely on cloud computing, and for good reason. Benefits of cloud-based platforms include sustainability, scalability and security.
Mitchell Gore, Industrials Senior Analyst, RSM US LLP
Cloud platforms and emission reduction
As manufacturers look at integrating all aspects of their manufacturing operations—including supply chains, inventory management, field service and production—with new technologies, nearly all of them will rely on cloud computing, and for good reason. Along with sustainability, benefits of cloud-based platforms include:
Pay as you go
No longer do you need to purchase hardware for your expected growth; rather, pay only for the storage you need now.
Scalability
Platforms and use cases evolve over time. The ability to instantly expand your environment provides tremendous value.
Rapid recovery
Backup and recovery services are typically built into the overall solution.
Security
While cloud providers are a larger target for bad actors, major players in the space have a tremendous number of resources to protect their platform and your data.
Most new software today is built with a cloud-first approach, and manufacturers have likely noticed that all their data storage options are likely cloud-based as well. In fact, worldwide public cloud services are forecast to reach $1.35 trillion by 2027, with a 19.9% five-year compound annual growth rate, according to International Data Corp.
CONSULTING INSIGHT: ESG
Environmental, social and governance—ESG—is now a key success measure for many companies. ESG initiatives can present businesses with challenges, risks and opportunities, but understanding where it aligns with critical business functions often remains a challenge. Learn the answers to many common ESG questions and how to establish effective processes.
The shift to cloud-based data storage and other platforms bodes well for manufacturers ready to capitalize on environmental benefits. There is room for improvement, considering nearly 23% of emissions come from the industrial sector, according to the Environmental Protection Agency. Data centers account for 2.5% to 3.7% of global greenhouse gas (GHG) emissions, according to the carbon offset company 8 Billion Trees.
Migrating workloads to cloud data centers provides immense opportunity for emissions reductions. Consider the effect of moving on-premises workloads to the Amazon Web Services cloud-based platform, which can yield a carbon footprint 88% lower than the server median at surveyed enterprises, according to a 451 Research report. Microsoft has conducted similar studies for their Azure Cloud. Microsoft’s carbon study results show their data centers are 72% to 98% more carbon-efficient than traditional on-premises enterprise data centers.
The three dominant public cloud providers all have significant environmental, social and governance (ESG) goals, including running 100% of their data centers on renewable energy by 2025; becoming water-positive—that is, replenishing more water than they use—by 2030; and producing zero waste by 2030. Additionally, each provider has its own tool sets to measure a manufacturer’s carbon emissions within its cloud and project total savings compared to existing platforms.
Sustainability: An increased focus
Investors, customers and regulatory bodies are asking more and more organizations to measure and report on their ESG goals. We anticipate scrutiny around these issues will only increase, considering that within the next decade the ability to significantly reduce our carbon footprint will play a pivotal role in overall climate change. Industrial activity accounts for nearly a quarter of all GHG emissions worldwide specifically around energy consumption.
Looking ahead, manufacturers should focus on managing their overall impact on the environment as it relates to technology:
Know your partners
When deploying new technology, ask vendors about their sustainability goals. What efficiencies will you gain by leveraging their technology?
Keep scalability in mind
Make sure new technology can scale with the business, not only when demand peaks, but also when things slow down. It’s important to have the ability to reduce consumption.
Understand the cost of legacy systems
Are you properly decommissioning your legacy systems? While migrating data from legacy systems can be expensive, the indirect costs also add up over time.
RSM contributors
Subscribe to Manufacturing Insights
Sign up to receive our monthly tax, accounting and operational information ranging from tips for addressing daily challenges to strategic and long-term planning initiatives.
