Wednesday, June 16, 2010

IMTS Insider: Cloud Computing Makes Good Business Sense

Cloud Computing Makes Good Business Sense
by Dave Edstrom
June 9, 2010 for the IMTS Insider

What are examples of cloud computing in manufacturing today? Last month we discussed the basics of cloud computing and why someone in manufacturing should care about cloud computing.  Just as a quick refresher, cloud computing simply means using remote, large Internet server farms as if they belong to your company and only paying for what you use. All of your data and all of your processing happen outside of your business, in the cloud.

A simple method I like to use to determine the relative legitimacy of a given topic is to Google the topic inside double quotes to find exact matches.  For example, the exact search text of "manufacturing in the cloud" returns 19,700 hits.  If we Google manufacturing cloud computing without double quotes, we get 24,000,000 hits.

Before we get into the specific examples of "manufacturing in the cloud" it is important to remind everyone what is involved prior to the emergence of cloud computing. Before cloud computing, the owner of a manufacturing shop would have to perform the following steps when acquiring new software:

  • Decide which software to use
  • Purchase the software
  • Acquire the necessary servers and storage
  • Install the software
  • Configure the software
  • Integrate the software with business operations
  • Customize the software for your specific use
  • Keep the software up to date with patches and new versions
  • Make sure no viruses or malware get into the servers and software
  • Make sure staff can manage the new software
  • Back up data and patched software
  • Come up with contingency plans if servers and/or software go down
  • Continuously monitor and manage the systems and software
  • Oh, and also — use the software

Now, compare those steps to what happens when you use cloud computing:

  • Decide which software to use
  • Point your browser at the new software site and download
  • Use the software
  • Most importantly: Pay for what you use and only for what you use

As you can see, there are many economic and logistical advantages to using cloud computing instead of purchasing your systems and software. The time it takes to implement, monitor, manage and support purchased software as well as systems are major factors.

A month ago, at Google's Official Enterprise Blog, there was an entry regarding Manufacturing in the Cloud.

As the article states:

"LiquidConcrete is a medium-sized Seattle-based manufacturer of high-performance concrete coatings and flooring systems for industrial and transportation markets.  LiquidConcrete relies on Google Apps for email, calendar, and document collaboration, and onSmartsheet, an integrated app from the Google Apps Marketplace, for online project management, general work management, and team collaboration."

Why did LiquidConcrete decide to go with cloud computing? As Tom Hippensteel, Vice President for LiquidConcrete, said:
"We win business because we have great products, and because we run a lean operation that differentiates on quick turnaround of custom jobs with high levels of customer service. Everything about our operation is focused on efficiency, so we’re always looking for software solutions that fit that model." is one of the best examples of cloud computing.  Many credit with starting cloud computing by offering Customer Relationship Management (CRM) as Software as a Service (SaaS).  SaaS is simply one of the categories of cloud computing that most manufacturing companies would be interested in using. The requirements for using SalesForce changed from a detailed list of what server hardware a customer needed to support a large CRM system on-site, to the very simple and straightforward, "all you need is a browser and you have a CRM system." takes care of the rest.   This is not an advertisement for, but rather an example of the dramatic differences when you use cloud computing versus the standard method.

The question for software vendors is not if they will have a cloud computing offering, but when.  If you are talking to a software company that does not have a cloud computing strategy, it would be the equivalent of a company in 1995 stating they have no plans to have an Internet presence. Cloud computing is multibillion industry that is very real for both economic and technical reasons.  Customers love the "pay by the drink" model for using computers in the cloud. Cloud computing should absolutely be part of your IT strategy. You can learn more about it in the Emerging Technology Center in the front of the North Building at IMTS 2010.