The CIOs of many manufacturing companies are in a dilemma; they are being tasked to reduce costs, optimize existing infrastructure investments, and provide new applications to support the business. Whilst it is easy to say these things, the delivery of new strategic applications to the business, with a smaller team, is much more difficult. One possible solution to the CIO's dilemma is the use of cloud computing.
However, our research shows that whilst cloud options are being considered, manufacturers have a number of concerns that vendors will need to address.
According to the IDC Manufacturing Insights Asia/Pacific Business and IT Priorites survey, April 2009:
The biggest concern is security: close to 60% of the survey respondents cited confidentiality of company information as their prime concern. The need to protect financial information is a given, and this typically has not been an area where we see interest in cloud computing initiatives. But even if we look beyond the ERP systems, there is a growing need for the protection of intellectual property as well as security of supply chain information. So as new applications connecting the supply chain and supporting product lifecycle management are being considered, security is the top concern.
The second rated issue with just over 50% of all companies citing as a concern is that the cloud delivery model is not able to replicate and support business processes that are specific to the company. As companies seek to differentiate themselves, their applications become increasingly personalized, and the question I often find myself discussing these days is: Can the cloud deliver – and how? This also relates to data integration concerns, where over 40% of respondents expressed their concerns over data integration from applications in the cloud to applications within the four walls.
The third-highest ranked area of concern was the view that moving to a cloud model will not be cost effective in the long term. The shift from a capex to an opex model has long been discussed, and where the shift to an opex model will benefit in the short term by getting new applications deployed and/or scaled quickly, the long-term cost implications are a concern that vendors will need to address if they want companies to embrace this new way of operating.
Cloud does offer a lot of opportunity for manufacturing companies to embrace new applications and scale very quickly; however, vendors must ensure that the needs of security, personalization and ROI are addressed before cloud becomes widely adopted in the manufacturing segment.