With the IT organization under pressure to provide IT resources quickly and easily to the lines of business, cloud represents an increasingly appealing option. We can already see signs of the transition to "cloud also" or "cloud first" for manufacturers around the globe. In the 2014 IDC CloudView Survey, we found that "Cloud also" is the most common strategy for new and replacement IT investments in the public cloud: 61.6% respondents indicated their company's posture for net-new IT services is "cloud also," and the number (56.8%) is only slightly lower for replacing IT existing functionality.
Perhaps this is a short sighted view but most manufacturers still associate cloud services first and foremost with the benefits they bring to the IT organization in cost savings, agility, and flexibility. We see that attitude in our survey results, but 30–35% of respondents indicate operations, supply chain and logistics, sales, or engineering expect to benefit. Although these numbers are not as high as we would like, the fact that core business areas in manufacturing — supply chain, engineering, and operations — are in the top 5 organizational beneficiaries is an improvement over data from several years ago.
For manufacturers, cloud can bring critical advantages to line of business such as an easier and much more agile deployment approach to access business applications and information necessary to support consistent processes and decision making across the company. For example, cloud computing offers a way to "turn on" a factory with minimal IT staff onsite and facilitate communication and coordination with headquarters or other plants or offices located thousands of miles away. Other important drivers for adopting cloud in manufacturing include:
- Providing a foundation for adopting many in-demand and new technologies, especially business intelligence and analytics (not just for big data), and for accessing increasing amounts of data and data sources (such as sensor-generated data from IP-enabled connected products, connected supply chains, or smart manufacturing).
- Supporting significant business change — divestiture or merger or acquisition or rapid business growth — or those that are greenfield operations, such as new plants or new joint ventures with IT resources.
- Delivering IT resources on a temporary demand, such as for a program or promotion that has a defined time frame. Examples include collaboration on a government-funded project with multiple participants or a sales and marketing campaign that involves two companies bundling two products together.
From "Cloud Also" to "Cloud First"
We believe over the long run that cloud computing will become the de facto standard for new operations (through organic or acquired growth) and an expected option for existing operations, especially for manufacturers that want to operate and serve customers globally. Traditional IT spend is clearly on the decline, and manufacturers should update their cloud road maps to ensure their investments benefit the business.
We'll continue to release findings from the almost 600 manufacturing respondents worldwide in our 2014 IDC CloudView Survey throughout the year. Our first report based on the survey was recently published in April 2015. Let me know what your company is doing with cloud by emailing me at kknickleidc.com.