The Rise of Cloud Computing in Manufacturing

According to Gartner, spending on cloud services is projected to grow 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020. Cloud-based technology is no longer a disruptor in the manufacturing landscape, but the future of modern manufacturing.

Manufacturing has entered a new era marked by digital transformation, known as Industry 4.0. The introduction of Industry 4.0 technologies including artificial intelligence, machine learning, and Industrial Internet of Things connectivity relies on the data storage and information processing enabled by cloud computing.

In this post, we'll explore how cloud-based solutions enable digital transformation, as well as some trends, considerations, and best practices for manufacturers moving to the cloud.

What is Cloud Computing?

“Cloud computing is the on-demand delivery of IT resources over the Internet with pay-as-you-go pricing. Instead of buying, owning, and maintaining physical data centers and servers, you can access technology services, such as computing power, storage, and databases, on an as-needed basis from a cloud provider.”

There are 3 main types of cloud computing: Software as a Service (SaaS), Platform as a Service (Paas), and Infrastructure as a Service (IaaS).

Types of Cloud Computing

SaaS

Software as a service refers to software that is hosted by the provider and distributed over the internet. Most SaaS is licensed through a subscription model, and users can access their account from any location with an internet connection (and in many cases, offline as well).

PaaS

PaaS offerings let their customers design, build, and deploy custom applications. Simply put, PaaS is software that creates more software. With PaaS, the licensing company offers a dedicated underlying infrastructure and a development environment.

IaaS

With IaaS, companies purchase access to storage and computing resources. Providers like AWS and Microsoft Azure provide customers the infrastructure they need to support broader digital initiatives.

Venn diagram of SaaS, PaaS, and IaaS factory solutions
The intersection between SaaS, PaaS, and IaaS creates the opportunity to unlock the connected factory.

Why are Manufacturers Moving to the Cloud?

Agility

Cloud computing technologies enable an agile approach to manufacturing. On-demand availability of data and expanded analytics capabilities allows manufacturers to act on real-time data and identify and solve issues more quickly to keep up with the rapidly changing environment.

Reducing Cost

The total cost of ownership of cloud-based solutions is typically lower than traditional on-premise systems. Rather than paying upfront for expensive hardware or high fees for IT support, businesses are only paying for the resources they use, when they use it.

Elasticity

According to Rosing, “Customers used to have to over provision IT infrastructure to ensure that they had enough capacity to handle the business at peak usage or load times, but with the cloud they can provision what they actually need. Then, they can easily scale up or down along with the needs of the business if demands or production capacity changes”.

Innovation

The cloud allows teams to focus on developing and executing applications when they need them to drive operational results, without spending time on the heavy lifting of managing IT infrastructure or data centers for on-premise systems.

Global Deployment

As businesses expand globally, cloud-based systems can grow with them. As manufacturers start their digital transformation journey, a successful implementation of a pilot can be applied across their global footprint of facilities.

Concerns with Cloud-Based Manufacturing

Security

With big data comes big responsibility, but leading cloud-based solutions like Tulip are designed with security as a top priority. Tulip servers are within a virtual private cloud with access controls to prevent unauthorized access to the internal network.

Training

Because cloud computing technology is a new development, especially in the manufacturing industry, understanding the fundamentals and how cloud-based tools come together on the shop floor can be intimidating. Bellin has seen this reluctance when working with businesses to adopt even basic connectivity: “I think the biggest challenge is the mental game. We always hear from not just manufacturing but all types of customers who think ‘well this is how we’ve been doing it for 30 years’ and making that change out of their comfort zone can be difficult”. No-code platforms that allow manufacturers to build flexible, scalable applications are instrumental in making cloud technology accessible for those closest to operations.

Time-to-Value

Implementing a cloud-based solution can seem like a daunting initiative. Manufacturers can become paralyzed by running multiple pilots, or simply not knowing where to start. However, the cloud actually enables operations platforms like Tulip to deliver shorter time-to-value by focusing on quick wins that deliver lasting impact. Value can be realized quickly while building the foundation for scale.

Best Practices for Implementing Cloud Computing in Manufacturing

Taking Data-Driven Action

Getting production insights with cloud technology and machine learning applications does not drive a lot of value alone. It is important to not only develop a model that generates the insight, but to incorporate the data into processes that will sustain the desired results. Rosing gives the example, “If I’m using a predictive maintenance model and I get an insight that’s going to drive a maintenance task, instead of having that show up in a separate application, I can automatically send a notification to my EAM system that creates a maintenance work order.”

Illustration of Tulip edge computing
This kind of hybrid architecture, where a centralized infrastructure supports decentralized computing, is often referred to as fog computing.

Prioritization

Rosing suggests mapping out priority use cases for implementing cloud-based technologies in order to work backwards from what is going to move the needle most and make the most impact for the business. Everything does not need to be migrated to the cloud all at once. In manufacturing, businesses commonly take a hybrid approach to digital transformation - including the cloud along with edge nodes in on-premise data centers allows business requirements to be met while still enabling cloud-based innovation.

Defining Key Performance Indicators

Before undertaking an initiative with cloud computing, defining key performance indicators (KPIs) is critical to understanding the value that the solution is (or isn’t) driving. Manufacturing KPIs can highlight progress towards goals set at various levels of a company.

Developing a Digital Culture

Digital transformation in manufacturing is an incremental process. Creating aggressive top-down goals and getting senior leadership on board with cloud adoption initiatives will help drive results, but adopting a digital culture throughout the organization and empowering the workers that will actually be using the new technologies is key in a successful digital transformation.

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Day in the Life Illustration