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Manufacturers Have Embraced Cloud Technology

April 14, 2015
41% of manufacturing respondents indicated they are accessing IT resources via the public cloud,

In the United States, 41% of manufacturing respondents indicated they are accessing IT resources via the public cloud, according to the IDC Global Technology and Industry Research Organization IT Survey, 2014. 

One reason for the overwhelming acceptance is that for manufacturers the advantages are significant since line of business leaders and their IT organizations increasingly rely on cloud to flexibly, the survey says.

The trend is global, according to the IDC European Vertical Markets Survey, 2014, as almost 50% of European manufacturing respondents noted they have adopted or will adopt ERP in the public cloud.  And in Asia Pacific, 49% of manufacturing respondents are using cloud – public or private - or intend to use cloud.

Key findings from this new report include:

  • A majority of manufacturers worldwide are currently using public (66%) or private cloud (68%) for more than two applications.
  • "Cloud Also" remains the most common strategy for new and replacement IT investments in the public cloud; 61.6% indicated their company's posture for net new IT services is "cloud also", and the number is only slightly lower for replacing IT existing functionality (56.8%).
  • IT operations are the primary benefactor today from manufacturers' cloud strategy, and only 30 – 35% of respondents indicate operations, supply chain and logistics, sales, or engineering expect to benefit.  And only 41% of respondents believe giving business units more direct control over sourcing their own IT services is a top 4 driver for moving to the cloud. 
  • Cloud services and cloud architecture's share of the annual IT budget allocation is going to increase 27% in the next two years for manufacturing respondents said.
  • Cloud computing will become the de facto standard for new operations (through organic or acquired growth) over the next 10 years for manufacturers that want to operate and serve customers globally. Manufacturers will increasingly rely on enterprise and industry clouds for access to information, technology resources, and operational support. To prepare, manufacturers will also need to review their underlying network and communication infrastructures.

“Manufacturers are in the midst of a digital transformation, in which 3rd platform technologies are absolutely essential to the way they do business and in the products and services they provide to their customers, "said Kimberly Knickle, research director, IDC Manufacturing Insights.

Consequently, a strategic approach to adopting cloud is absolutely essential," Knickle added. "Because of cloud's tremendous value in making IT resources available to the business based on business terms –speed, cost, and accessibility- manufacturers must  ensure that the line of business and IT management work together in defining their requirements.”

According to the report, one of the ways in which cloud will bring significant value to the business is in allowing manufacturers to more easily make use of the data that will be connected from sensors throughout the manufacturing operations with IP-based connectivity and the Internet of Things.  Essentially, data from sensors on connected products, on equipment in use in the plant, and on assets and inventory in the supply chain, is most valuable if that data can easily be accessed and analyzed by various organizations within the enterprise or even by partners in the value chain.  

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