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Manufacturing businesses look to modernise operations with hybrid cloud

By Catherine Knowles
Thu 13 Jun 2019
FYI, this story is more than a year old

The manufacturing industry is adopting hybrid cloud solutions at a rapid rate, according to a new report by Nutanix the enterprise cloud computing company.

The Enterprise Cloud Index looked at manufacturing companies’ plans for adopting private, public and hybrid clouds. According to the results, the industry’s hybrid cloud usage and plans outpace the global average across other sectors.

The findings show manufacturing leaders are ‘aggressively’ adopting new technology and looking to modernise their operations instead of remaining with sluggish legacy systems. The report states that the distributed cloud model offers a solution that delivers speed, flexibility, and localisation, allowing manufacturers to improve efficiency without compromising quality.

Manufacturers move to hybrid cloud models

At present, the deployment of hybrid clouds in manufacturing and production companies has reached 19% penetration, which is above the global average. However, in the next two years this is set to increase to 45% penetration as they double their hybrid cloud deployments, putting them above the global average by 4%.

According to the report, 91% of business leaders consider hybrid cloud to be ‘the ideal IT model’, but despite this the global average of hybrid cloud penetration remains at 18.5%. The report states this is largely due to the challenges that come with the transition to a hybrid cloud model.

When it comes to the manufacturing industry, barriers to adopting hybrid cloud are limitations in application mobility, data security/compliance, performance, management and a shortage of IT talent - all factors that are considered barriers on a global scale. However, significantly, when compared to other industries manufacturers reported greater IT talent deficits in AI/ML, hybrid cloud, blockchain, and edge computing/IoT.

A closer look at the numbers

Of the manufacturers surveyed, 43% are currently using a traditional data center as their primary IT infrastructure, slightly outpacing the global average of 41%.

However, manufacturers currently use a single public cloud service more often than any other industry. More specifically, 20% of manufacturing companies reported using a single cloud service, compared to the global average of 12%.

According to the report, this indicates that manufacturers are beginning to see cloud options as valuable solutions where legacy IT systems and on-prem options cannot handle workloads.

Manufacturers are also advancing the movement to private cloud with 56% of manufacturers stating they run enterprise applications in a private cloud, which is more than the global average by 7%.

One key challenge for manufacturers adopting cloud solutions is maintaining control over IT spend. Organisations that use public cloud spend 26% of their annual IT budget on public cloud, with this percentage predicted to increase to 35% in two years’ time. Most notable, however, is that more than a third (36%) of organisations using public clouds said their spending has exceeded their budgets.

Another key finding of the report is that manufacturers chose security and compliance more often than companies in other industries as the top factor in deciding where to run workloads. While 31% of respondents across all industries and geographies named security and compliance as the number one decision criterion, 34% of manufacturing organisations chose security and compliance as the top factor.

A desire for change despite challenges

On the whole, manufacturing companies are looking to innovate and drive transformation, leading to a greater adoption of hybrid cloud solutions, and yet they are still running into issues around the constraints of legacy IT systems, the report shows.

As such, the authors highlight the importance of executives focusing on new opportunities to create value and not only prioritise traditional business operations.

This is especially important as manufacturing companies are in a highly competitive marketplace and are under pressure to meet productivity and operational goals while also striving for future growth.

The report states there's an increased demand in this sector for technology solutions to help balance the trade-off between current and future goals.

Striking the balance between the old and new

Ultimately, IT leaders in the manufacturing sector should be steering clear of short term solutions and instead look to invest in long term solutions that include automation, better use of data and improve the customer experience.

Nutanix SVP of global marketing Chris Kozup, says, “Manufacturers are investing in modernising their IT stack, and adopting industry 4.0 solutions to keep up with ever-changing business demands in areas like production and supply chain management.”

“A hybrid cloud infrastructure gives manufacturers a fresh approach to modernising legacy applications and services, enabling manufacturing IT leaders to focus on their long-term investments in big data, IoT, and next-generation enterprise applications.

“While the manufacturing industry is still facing obstacles in transitioning to multi-cloud use, this study shows us that manufacturing organisations are ready to accelerate growth and take the lead in IT innovation in the future,” says Kozup.

Nutanix commissioned Vanson Bourne to create the report. More than 2,300 IT decision makers were surveyed, including 337 worldwide manufacturing and production organisations at varying sizes and stages located around the globe. They were asked questions around where they are running their business applications, where they plan to run them in the future, what their cloud challenges are and how their cloud initiatives stack up against other IT projects and priorities.

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