Why manufacturing’s move to the cloud will be irreversible

The forced march to the cloud triggered by Covid-19 and remote working has given way to an enthusiastic scramble among manufacturing organisations keen to build on the advantages they have found there.

Many made their start on this journey during the pandemic, when staff shortages, factory closures and remote-working orders obliged them to fast-track their digital transformation plans. Excited by the new opportunities for efficiency and agility that they’ve uncovered, they’re now voting with their wallets.

It’s a trend that is seen across all industries, of course, as companies respond to a new business and social dynamic. In 2022, traditional on-premises offerings will still constitute around 59 per cent of addressable revenue for technology companies, according to market research company Gartner, but growth here will be far outstripped by enterprise spend on cloud-based offerings.

The firm’s analysts estimate that by 2025, 51 per cent of IT spending across application software, infrastructure software, business process services and system infrastructure will have shifted from traditional solutions to the public cloud, compared to 41 per cent in 2022. And almost two-thirds (66 per cent) of spending on application software - including the tools that companies use to design and build their products - will be directed towards cloud technologies in 2025, up from 58 per cent this year.

Within discrete manufacturing, cloud-based CAD is proving a better fit for agile product development in fast-moving markets than its more traditional, on-premises counterpart. With a cloud-based, software-as-a-service CAD environment, authorised team members get instant access to all CAD data and files, regardless of their location or the device they’re using. They are always working on the latest version of software and they’re always seeing the latest version of a file, regardless of how many people are working on it, because every design change is instantly presented to every team member, without the need for copies or syncing. Simultaneous editing enables them to work in parallel, across multiple sites and multiple countries, with no worries about overwriting another colleague’s work.

Cloud-based product lifecycle management (PLM) software, meanwhile, is improving transparency and communications among dispersed design and manufacturing teams, preventing communication and process errors, while ensuring they’re always on the most up-to-date release and removing many of the security overheads associated with on-premises enterprise applications.

Even where previous investments in on-premises software and skills dictate their continued use, many manufacturers are discovering the advantages of a hybrid approach, integrating cloud and on-premises resources so that they can share data seamlessly, and shifting on-premises software to lower-cost, cloud-based infrastructure. This removes the resource burden on hard-pressed internal IT departments and vastly reduces infrastructure needs and spending.

The cloud is fast becoming the preferred location to host internet-of-things (IoT) data collected from sensors on the factory floor, warehouse shelves and from vehicle telemetry systems. Here, it can be stored and managed in vast quantities, in a cost-efficient way. This provides a platform for advanced analytical technologies, such as artificial intelligence and machine learning, to get to work, drawing actionable insights from that data in the form of alerts, notifications, predictions and so on.

Manufacturing’s new enthusiasm for the cloud, where it has sometimes lagged other industries in the past, seems irreversible now. Digital saved the day during Covid-19. Now it promises a whole new world of more agile, more efficient, more sustainable manufacturing.

As PTC president and CEO Jim Heppelmann points out in a recent blog post on the SaaS tipping point, there are in his mind two key reasons that product development has lagged behind on cloud adoption: the IT performance required to support the graphics and computation needs of CAD and PLM, which in the past led to huge investments in desktop systems and supporting infrastructure; and security concerns, leading companies to insist on keeping intellectual property ‘safe’ on office-based hardware.

“In recent years, however, we’ve seen a series of breakthroughs that have shifted perceptions of these two barriers to SaaS adoption,” Heppelmann writes. The first is improved network speeds, coupled with the elastic compute resources that the cloud offers at comparatively low cost. The second is the dawning realisation that a professionally managed cloud environment is almost always more secure than a company’s own internal network.

In a PTC survey of 150 directors and vice-presidents that oversee engineering design, manufacturing design and product lifecycle management functions for their companies, 91 per cent indicate that they are now considering SaaS for CAD and 90 per cent are considering SaaS for PLM. Over the longer term, maybe the next 5 to 10 years, Heppelmann believes that SaaS will become the dominant deployment methodology for engineering software. In 2022, many manufacturers look set to make the switch for good.

Paul Haimes is vice president EMEAI solutions consulting at PTC.