Vertex Whitepaper Example

Harnessing the Cloud’s ROI in Manufacturing

Whitepaper | 2019

vertexvis.com | info@vertexvis.com

Harnessing the Cloud’s ROI in Manufacturing Digital transformation is a core initiative in today’s manufacturing landscape. According to IDC, discrete manufacturing alone will spend $220 billion on worldwide digital transformation in 2019.

Most of those funds will be allocated toward smart manufacturing, digital innovation, and digital supply chain optimization.

Of all the technologies made available in digital transformation, perhaps the biggest catalyst for change is the cloud. But the cloud comes with a host of outdated perceptions competing against true benefits. Those that shy away from the cloud tend to not fully understand how it has changed and the capabilities made available today.

When choosing to adopt a cloud strategy, 80 percent of executives rank ROI as a key influencer in their decision. It’s no surprise that the cloud can provide order of magnitude ROI, with promises to modernize IT infrastructure, minimize physical and environmental impacts, and move away from complicated on-premise solutions. Plex’s 4th Annual State of Manufacturing Technology Report showed that:

44%

of respondents are completely on all-cloud systems.

of respondents who are on all-cloud

57%

systems saw strong improvements in integrations with plants, operations, and business management.

84%

of respondents indicate moderate or strong improvement in supply chain collaboration.

Unfortunately, some manufacturers still hold outdated and antiquated views on the cloud, particularly when it comes to security. CIOs block cloud technologies in an effort to keep data safe. Yet, as vice president of research at Gartner says, “CIOs need to ensure their security teams are not holding back cloud initiatives with unsubstantiated cloud security worries. Exaggerated fears can result in lost opportunity and inappropriate spending.”

“CIOs need to ensure their security teams are not holding back cloud initiatives with unsubstantiated cloud security worries.

Exaggerated fears can result in lost opportunity and inappropriate spending.”

-- Jay Heiser Vice President of Research at Gartner

A Primer on the Cloud Simply put, the cloud is a way of accessing compute power, database, storage, applications, and a variety of IT resources via the internet. Rather than investing in on-premise solutions, companies access their solutions with an internet connection and pay-as-you-go pricing. Diving into the cloud a little deeper reveals different cloud models that companies can take advantage of.

1. INFRASTRUCTURE AS A SERVICE

3. SOFTWARE AS A SERVICE

Infrastructure as a Service (IaaS) vendors manage the

Software as a Service (SaaS) providers combine the

physical IT infrastructure and the virtualization layer

elements of IaaS and PaaS, and include cloud-hosted

(which allows for efficient resource distribution). IaaS

software application and data management. Instead of

investments are ideal for environments with temporary,

installing software licenses or applications directly on

experimental, or fast-changing workloads. Specifically,

their personal machines, users access solutions through

IaaS providers manage:

an internet browser. SaaS types range from online

•

Compute

•

Storage

•

Networking hardware

•

Servers

•

Firewalls

2. PLATFORM AS A SERVICE

productivity tools, to accounting, to 3D collaboration in product design.

IaaS

PaaS USER DATA

Platform as a Service (PaaS) builds onto IaaS, providing both the physical IT infrastructure and application stack.

APPLICATIONS

Through PaaS, companies can develop applications much more easily. PaaS includes the needed elements to develop, customize, and manage a software application: •

Operating systems

•

Development tools

•

Database management

•

Runtimes

PLATFORM

PaaS provides customization capabilities (such as customizing text or images in their software development), version management, compiling, and testing services to help developers build new solutions.

Distributed teams access the same tools, files, programs, and virtual desktops.

INFRASTRUCTURE

SaaS

Achieving The Cloud’s ROI: The Cloud vs. On-Premise Solutions

When transitioning to cloud, most executives rely on financial KPI’s to measure success—both in upfront cost and long-term ROI. According to IBM, executives particularly look for: •

Greater revenue

•

Reduced total cost of ownership

•

Increased provisioning

•

Faster multi-sourcing

•

Higher quality of user experience

Many factors contribute to these KPI’s, and manufacturers have to closely compare the cloud to incumbent onpremise solutions to determine if a change is right for them. To start, IT and leadership teams must understand the impact on their IT teams, future growth roadmaps, and how engineering teams share product data.

1. MAINTAINING THE USER EXPERIENCE

2. SCALING & GROWING

In a traditional, on-premise solution, IT teams manage

Despite the industry’s uncertainty in foreign trading,

three high-demand activities:

tariffs, and stock markets, most manufacturers are

•

Installing software licensing on users’ machines.

•

Maintaining all hardware, environmental factors, and required networking. This cascades into HVAC, building requirements, and uptime of the entire organization.

•

Upgrading hardware and software to stay current.

growing rapidly. Many companies are looking to hire new, digitally oriented talent. But as new employees join a company, the IT team frequently needs to invest in and maintain new compute, storage, and software resources. It’s not just the technology—companies also need to scale in help-desk staff and additional time spent in maintaining hardware and supporting users.

Cloud service providers automatically update software,

Cloud solutions are much easier to quickly scale—in

maintain hardware aspects, and scale resources as

many cases, without any loss of performance for

necessary, all without impacting a manufacturer’s IT

the users. Manufacturers simply invest in additional

team. A cloud solution thrives on frequent updates, with

software or platform licenses, and the cloud provider

providers releasing upgrades and new features in real-time

manages the rest. This greatly impacts both upfront

without additional cost. In a traditional approach, IT has

cost and long-term ROI.

to manually scale hardware resources, creating significant upfront cost to purchase and long-term costs to maintain.

CLOUD SOLUTIONS ARE MUCH EASIER TO QUICKLY SCALE

|

IN MANY CASES, WITHOUT ANY LOSS OF PERFORMANCE FOR THE USERS.

3. SHARING AND STORING PRODUCT DESIGN INFORMATION Today’s manufacturing workflows depend on agile

the most up-to-date design at a time, if they can access

and flexible collaboration to innovate, design, produce,

it at all, due to limited hardware capabilities. The result of

and service a product across its entire lifecycle. Every

these inefficient, cumbersome collaboration processes?

department plays a critical role in a product’s success.

Orphaned data, confused colleagues, and uninformed

Yet, on-premise methods of storing and sharing product

decision-making.

designs don’t allow for easy, agile collaboration—and that can severely damage a company’s long-term ROI as teams from engineering to procurement frantically meet (or miss) deadlines, overlook product innovations, and struggle to access critical information.

Sharing and storing 3D information becomes much easier with a cloud solution. The cloud gives a central place for both internal and external stakeholders to access information securely. Collaboration with the same data and seeing real-time changes allows responsive

For example, users create multiple content versions

and tight feedback loops. Collaboration and version

of product designs to track changes. When it’s time to

control available in cloud solutions also adds a level

collaborate, the user shares only what they want to share,

of transparency, accountability, and redundancy to

perhaps over email or through a manual check-in on a

communications along the workflow.

software platform. Only a handful of users can access

THE BIGGEST NAMES IN CLOUD PROVIDERS—AMAZON WEB SERVICES (AWS) AND AZURE—AGREE:

A SHARED RESPONSIBILITY MODEL TRULY PROTECTS A COMPANY’S MOST VALUABLE AND MISSION CRITICAL DATA.

Keeping Data Secure in the Cloud If the cloud provides such significant upfront and long-term cost savings while making collaboration easier—why do manufacturers still hesitate to transform into a cloud-based enterprise? Leadership teams don’t make this decision lightly, as the security of their data is of the upmost importance.

The 2019 Thales Data Threat Report says that over half of US companies have experienced a security breach, and a third have experienced one within the past year. Plus, when asked to cite cloud security concerns, organizations pointed fingers at vendors, including: •

Security of my organization’s data if my cloud provider fails.

•

Security breaches or attacks on the service provider.

•

Lack of data privacy policies and visibility into security practices.

These two reports demonstrate the importance of internal and external security practices to keep data safe. Keeping data secure is a joint effort between the cloud provider and the manufacturing organization. The biggest names in cloud providers—Amazon Web Services (AWS) and Azure—agree that a shared responsibility model truly protects a company’s most valuable and mission critical data.

HOW CLOUD PROVIDERS KEEP DATA SAFE

HOW MANUFACTURERS KEEP DATA SAFE

The best cloud providers will build their infrastructure,

Unfortunately, some manufacturers believe that

platform, and software with security policies and

keeping data safe is only the responsibility of the cloud

appropriate compliance regulations at their foundation.

provider. In fact, Gartner indicates 95 percent of cloud

Manufacturers should not only have the expectation that

security failures will be the customer’s fault through

their cloud vendors follow these laws and compliances,

2022. But, 60 percent of enterprises that implement

but they should also request attestation and audit records.

appropriate cloud visibility and control policies will

Depending on the manufacturer’s industry and level of

experience one third fewer security failures.

requirements, their cloud vendors should follow: •

GDPR: GDPR is the controlling set of regulations for any cloud provider doing business in any member country of the EU. GDPR’s 160-page preamble and 99 articles comprehensively break down how users give consent to have their data stored and how their data remains protected at all times.

•

SOC 2: SOC 2 is a standard specifically created to audit service organizations that store customer data in the cloud. SOC 2 ensures cloud vendors develop

Develop a Cloud Governance Policy A company’s cloud governance policy puts a framework and process around how a manufacturer implements, monitors, and manages a cloud solution.

In extremely simple terms, cloud governance policies set a company’s rules on how their teams can use a cloud solution, types of information that employees can store in the cloud, and what the services can be used for.

and implement security policies and procedures that adhere to the unique challenges of the cloud.

•

FedRAMP: FedRAMP certifications are a standardized approach to security used by the US government to allow contracts between federal entities and cloud providers.

The very existence of cloud service providers depends on excellent security standards. This is especially true in industries where intellectual property or even national security is at stake (such as automotive, heavy equipment,

THE VERY EXISTENCE OF CLOUD SERVICE PROVIDERS DEPENDS ON EXCELLENT SECURITY STANDARDS.

and aerospace). Their investment in security significantly exceeds a manufacturer’s resources. Cloud providers build security measures directly into their platforms and continuously test them for improvements, including: •

Data encryption in transit and at rest to protect critical information, including encrypting network connections, files, or the storage drive itself.

•

Least privilege to restrict access to data without a substantive reason.

•

Data recovery and protection to restore data in the event that it is lost, deleted, or corrupted.

•

Incident response to quickly respond to and resolve incidents in a timely fashion.

THIS IS ESPECIALLY TRUE IN INDUSTRIES WHERE INTELLECTUAL PROPERTY OR EVEN NATIONAL SECURITY IS AT STAKE (SUCH AS AUTOMOTIVE, HEAVY EQUIPMENT, AND AEROSPACE).

Perform a Risk Assessment

Train the Workforce

Before investing in a cloud-based solution, manufacturers

The learning curve associated with a new tool and process

have to closely vet a potential vendor—both in terms of

can be steep if leadership teams don’t properly prepare for

their organizational security and their solution’s security.

training and onboarding. Cloud-specific training should be

Many vetting processes don’t account for modern,

a three-pronged approach:

cloud-based risks. Not only should manufacturers update their processes to the new cloud paradigm, they should

•

the facts of today’s cloud security and capabilities.

review third-party audits and attestations,

The re-education process helps to clear up outdated

such as a SOC 2 report.

When looking to update risk assessments and vetting

Business owner training to educate companies on

and unrealistic perceptions of the cloud.

•

Business process training for management and

procedures, manufacturers can take advantage of the

employees, which includes strict training on the

Cloud Security Alliance’s (CSA) Consensus Assessments

cloud governance policy.

Initiative Questionnaire (CAIQ). The CSA provides best

•

Security training specific for the IT team to

practices and cloud security-specific research, education,

understand how to maintain and manage

certification, events, and products. The CAIQ helps

internal security requirements.

companies assess the security capabilities of a cloud provider.

Develop a Pilot Study Companies need to understand how new solutions incorporate into their workflows. Especially in an enterprise-wide implementation that merges new

The good news is, cloud service providers are happy to help train and provide support to ensure companies hit the ground running. Cloud partners can supply the knowledge transfer to leadership teams who can then use that information to initiate their own training programs.

technology with legacy processes, leadership and IT teams must understand change timeframes and impacts that will ripple throughout a manufacturing enterprise.

A realistic pilot study will help leadership teams understand if the solution can deliver ROI as expected. Leadership teams should focus on success from two aspects: •

Are my users using the solution as expected?

•

Does the solution itself work as expected?

THROUGH 2022 95% OF CLOUD SECURITY FAILURES WILL BE CAUSED BY THE CONSUMER ACCORDING TO GARTNER

In Brief •

Eighty percent of executives consider ROI as the biggest deciding factor when transitioning to the cloud. Yet, many manufacturers hold outdated perceptions of the cloud’s benefits and capabilities.

•

The cloud promises to provide significant benefits in both upfront costs and long-term ROI. The cloud provider manages all hardware investments, software updates, and IT resources to ensure high performance for end-users, no matter how quickly a manufacturer may scale.

•

Cloud solutions provide opportunities for easier and more streamlined collaboration during product design across the extended enterprise.

•

Keeping data secure is a joint effort between the cloud provider and the manufacturing organization.

Cloud providers follow compliance regulations and laws while building security directly into the platform.

Manufacturers have a responsibility to appropriately vet cloud providers, determine a cloud governance process, and provide appropriate training for their workforce during implementation, transition, and maintenance of the cloud.

If you’re interested in learning more about how Vertex’s secure platform can improve design collaboration while protecting your most mission-critical data, contact info@vertexvis.com.

vertexvis.com | info@vertexvis.com