With 75% of all manufacturers in the United States in the process of adopting or seriously researching cloud computing, manufacturers are changing the way they buy and use IT resources. IDC Manufacturing Insights research reveals that many manufacturers don't yet have a realistic strategy or road map for adopting cloud. We've researched manufacturers' current assumptions and identified a set of critical questions that manufacturers should address before they select deployment models and the vendors that will support them.
Our research findings include:
- The majority of cloud deployments today are private clouds, but long-term manufacturers expect significant growth in their use of public clouds.
- Concerns over security and data privacy in public clouds may pose significant hurdles for many manufacturers, and this concern may drive the business toward even more shadow IT adoption of cloud. Although technically those concerns may be addressed, companies still struggle with associating technical risk with business value.
- To make the private cloud model practical, manufacturers need to closely reevaluate their relationship with IT vendors and the current pricing models for how they buy and finance IT assets.
Although the economic benefits of cloud help manufacturers' IT organizations do more with their budgets, the consequences quickly relate to their IT staff - over 90% of manufacturers believe they will reduce or redeploy IT staff members. In the results of IDC's recent spring 2012 CloudTrack Survey, manufacturers also identified the following characteristics as critical for their cloud investments:
- Cost-efficient access to IT resources, using virtualization technologies to maximize utilization
- Metering for more transparency regarding usage and enabling, in some cases, chargeback
- Automated and rapid upward and downward scaling
- Flexible migration of workloads between private and public clouds
- Faster deployment of applications or faster information sharing and collaboration
- Self-service capabilities, speeding delivery, and reducing IT staff load
- Ability to establish and distribute standard services
Our research repeatedly shows that most cloud implementations today are private cloud deployments. Yet in the long term, manufacturers and companies from all industries show a high level of confidence in public cloud deployments, with public cloud as the favored model (see Figure).
We believe this is a reflection of popular sentiment - that cloud is fundamentally an IT productivity play, enabling companies to do more with less, assign IT resources to more valuable projects other than maintaining foundational IT assets, and shift capital investments to operations by paying as you go through subscriptions. With public cloud, higher volumes of users on more standardized infrastructure and applications theoretically mean lower costs versus a private cloud.
With private cloud as today's dominant deployment model, we want to ensure that this deployment model is not just a means of addressing concerns over security and data privacy. Any deployment model should be based on a cost/value calculation for the business and the IT organization. We also think manufacturers need to concern themselves with the question: Is there a size element to making private cloud work? In other words, is the business case for private cloud (in-house or hosted by a third party) only practical for leading-edge IT organizations?
We think this decision whether or not to stay on the private model depends on factors such as:
- Current hardware investments and the age and capabilities of those assets
- The ease with which the organization advances and adopts new technology (considering IT skills, skills acquisition, integration, and change management)
- Existing vendors and their offerings and the vendor relationship
- The focus of the deployment - software, infrastructure, or platform
We'll continue to research this issue and update our findings as vendor offerings mature and as manufacturers become increasingly sophisticated in their use of cloud services. Our current guidance includes:
- Create a short-term plan and a long-term road map for cloud, recognizing that the technology will change but the business case will always have to come back to IT productivity and time to value, delivery of standardized services, and business transformation. The road map should factor in the organization's technical and business "readiness."
- Emphasize IT's role of governance. Keep in mind that cloud creates an opportunity for the business to move ahead with its own shadow IT initiatives, and IT's responsibility is not only protecting the company's assets but also ensuring the company receives value from IT investments, wherever they originate. Cloud investments have repercussions related to integration, security, and life-cycle management.
- Project the repercussions for staffing. Perform an honest assessment of existing personnel involved in managing infrastructure and their ability to shift to a cloud-centric strategy. Skills will move from being centered on technology and capacity planning to more of a relationship- and service-level audit set of capabilities. If changes are necessary, start the process as soon as possible.
- Keep the public versus private debate as secondary to what is being delivered as a cloud service. Be realistic about the strengths and weaknesses of private and public cloud models, especially regarding costs, controls, and risk tolerance.