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Five good reasons to consider cloud computing tools

MANUFACTURING INSIGHTS  | 

While manufacturing isn't necessarily regarded as cutting-edge when it comes to IT innovations, industry leaders are becoming increasingly sold on the benefits of cloud computing tools.

In a 2011 report produced by IDC Manufacturing Insights, nearly 23 percent of manufacturing leaders said their firms were already using some form of cloud computing, an approach that can reduce the need for onsite IT infrastructure and staffing costs. Additionally, IDC found that another 44 percent of firms were currently implementing cloud computing tools or planning to do so.

In essence, cloud computing is an array of IT tools or services available online and hosted by a variety of third-party resources. Generally, those resources are segmented between public, cloud-based IT services (such as Salesforce.com) accessible on the Internet, or private cloud resources (hosted by McGladrey or other providers), which are offered to clients as part of a service agreement.

Some of the key benefits of cloud computing to manufacturers include:

Scalability. If a company doesn't want the licensing expense and maintenance associated with maintaining Microsoft Office on every computer, it may be beneficial to head for the cloud and tap Microsoft Office 365, which also provides collaboration, word processing and spreadsheet tools. That relatively minor starting point can lead to much more sophisticated applications. In fact, a 2012 Gartner report notes that system infrastructure services such as server/computing, operating systems, storage and networking are rapidly evolving on cloud-based platforms. The report predicts that a wide variety of additional cloud applications, including business process automation, plant and product maintenance and digital marketing tools, will find mainstream acceptance among manufacturers within the next five years.

Flexibility. Typically, IT is not considered a core competency within a manufacturing operation. So, when an in-house enterprise resource planning (ERP) tool requires regular database maintenance, system patches and modifications, those tasks distract from the company's main business objectives. On the other hand, Microsoft Dynamics AX ERP system hosted by a private cloud provider can offer cost-effective, professionally-managed solution to those problems – freeing up valuable time and resources to focus on new growth opportunities.

Visibility. When manufacturers have dispersed production sites, or a sales force that is constantly on the road, a traditional computing system can make it hard for those partners to have a clear, real-time view of critical corporate data. Alternatively, cloud applications such as NetSuite are specifically designed to solve the problem, because users can share information anywhere there is an Internet or mobile device connection.

Agility. For manufacturers that are rapidly expanding, well-chosen cloud applications can deliver big advantages. For example, cloud-based infrastructure services don't require significant investment in big-ticket items such as servers, data warehousing or added IT staff. And, since cloud applications are built to support thousands of customers, the cost of system resources is widely shared by users. This means lower overall computing expense over a comparable in-house solution.

Security. In general terms, a single manufacturing company's IT security will not match that of a cloud computing provider, which relies on teams of top security staff to anticipate and harden cloud services against prospective cyber attacks. Nonetheless, when reviewing cloud-based software, platform or infrastructure service providers, it's wise to ask if the firm has had an SSAE 16 audit, a painstaking review that verifies the effectiveness of a company's security controls and procedures. In addition, it's also a good idea to negotiate regular disaster recovery drills with a chosen provider, to ensure full backup and system availability.

Clearly, a move to cloud computing may not be right for every manufacturer. For companies located in places without proven, reliable Internet service (including both hard-wired and wireless access), stronger in-house staff and infrastructure is a better bet. But if the demands of a growing internal IT operation are limiting core business opportunities or expansion plans, public or privately hosted cloud services may be a beneficial investment.

Learn more about how a McGladrey Rapid Assessment®can help you make sound decisions on cloud computing and your company's overall IT operations.