Why Manufacturers Are Switching To Cloud Computing

Improved Business Performance, Better Security & More. For years now, many manufacturing companies have used Enterprise Resource Planning (ERP) systems to manage their finance and shop floor information.While these systems have been popular, a new ERP system is now entering plants around the nation, and that's cloud ERP systems.These have proven to provide deep functionality and flexibility at a much lower cost than traditional on-premise systems.   Cloud solutions also offer cross-functional visibility and consistent data across functions, faster low- or no-cost upgrades, lower operational costs, and guarantee security of critical customer and internal data.“The majority of our work is now setting up cloud ERP systems for clients, which is really the way to go, and particularly in manufacturing,” said Stuart Nottingham, Director of Technical Services of Management Applications Inc., of Raleigh, N.C., which has been providing businesses in all industries with ERP solutions and other consultative network services for more than 20 years.  “Cloud ERP software such as Acumatica, which provides an ideal SaaS scenario for most, are changing the way manufacturers run their operations.”Why Cloud ERP?As a manufacturer, you likely use an ERP or other software to manage the customer, production, and financial information to run your business.  Unfortunately, you may lack insights and miss efficiencies due to the limitations of your existing software system.These software systems are intended to improve the efficiency and sustainability of the business process.  Regrettably, what often occurs is the software and supporting technology infrastructure itself becomes the focus, rather than a tool to enhance business processes and customer experience.  In other words, your employees work for the system, instead of the system working for your employees and your company.Rather than providing information to help identify ways to cut costs and become more agile, running and maintaining your ERP software can add costs and impede the business.And costs can keep coming.  Speaking ballpark, add another 15 to 22 percent on top of the purchase price for annual maintenance paid to software and hardware vendors – and this for a system that combined with the historical statistics of traditional on-premise software system implementations – deliver value to the business only 25 percent of the time!Advantages Of Cloud/SaaS Solutions Cloud-based or SaaS solutions are delivered by the provider via the Internet and counter many of these issues.  Cloud solutions leverage technology to bring agility and speed to the business, rather than maintaining the technology.  Significantly lower costs are an additional benefit.Top prospects to consider then examining your needs, according to Nottingham:1 – Functionality and flexibility that meet the needs of your businessn  For most manufacturers, the last major ERP upgrade occurred years ago.  Many use manual work-arounds to help retrieve needed information when the insights are not provided by their existing software systems.  Cloud solutions, due to their flexible platforms and customer-focused product development approach, offer robust functionality out of the box, often eliminating side spreadsheets which are found in nearly all organizations today.  In addition, Cloud architecture enables rapid development.n  Some vendors have made their development tools available through Platform as a Service (PaaS), creating partner ecosystems of add-on applications.  These development partners create industry or functional extensions of the software in the native development technology to meet needs not delivered out of the box.2 – Cross-functional visibility and consistent data across functionsn  Cloud solutions provide integrated data across all functions of an organization, which is a top concern of executives when asked about their company’s use of internal information.  As a result, this reduces the instances when an order date is changed by the sales team but not communicated to production.  Likewise, no longer will two team members attend a meeting with two versions of the same report because they were using different data.3 – Faster and nearly no-cost upgrades to new functionalityn  System upgrades with an on-premise system often take several months to complete due to the testing and re-building required for customizations made in the initial implementation.  This type of upgrade timeline and effort is not required when using Cloud solutions.  Due to multi-tenant architecture, upgrades happen seamlessly behind the scenes and customizations are carried through in the new release.4 – Lower software purchase and operational costsn  Traditional on-premise systems charge an up-front license cost plus on-going maintenance fees between 15 and 22 percent of the license cost.  They also require highly-paid specialized IT resources and expensive upgrades.  Cloud vendors charge a monthly, all-inclusive subscription fee.  The result?  Over 5-7 years, we often see organizations save 25 to 50 percent compared to on-premise solutions.  Hidden costs and opportunity costs are also eliminated.5 – Improved ease of use and higher user adoptionn  Cloud software screens are typically intuitive, based on consumer-based web browser experiences.  This means the system is naturally familiar and easy for users to navigate.  Increased usability and user adoption translates into accurate and complete information efficiently being entered into the system, resulting in improved decision-making.6 – Critical customer and internal data is securen  Cloud vendors take the burden of data security and backup off of your company and let you focus on your core competency.  Using advanced server authentication and data encryption technology, users access Cloud solutions with more security and safety than most manufacturers can provide themselves.  The vendor runs the software on their servers, in their data centers, with their disaster recovery procedures.  Backups and the necessary data center infrastructure are no longer necessary for your company to build and manage.According to Nottingham, perform a diligent analysis of your current system, considering all direct and indirect costs associated as it compares to productivity and efficiency.  Analyze the direct and indirect costs of your existing systems.  Identify the existing maintenance costs for your software licenses as well as the cost for the staff to support your existing systems.  Consider the cost associated with manual processes and workarounds.  Indirect costs include lower customer satisfaction due to delays in timely responses to customer requests, lost production time due to a lack of integrated data across functions, and lack of insights into efficiencies or opportunities to grow with existing customers.Then speak with a specialist that knows Cloud technology.  These external organizations can help review your initial assessment and identify the potential opportunities.  “But make sure you're working with an outside source that knows not just Cloud solutions, but the potential process improvement opportunities when implementing the new solution,” stressed Nottingham.  “The two go hand in hand.”