Navigating manufacturing’s cloud shift: Overcoming organisational challenges
Aaron Blutstein 16 September 2024 Toby Mankertz*, Principal Business Transformation Advisor at Columbus explores cloud migration within the manufacturing industry and discusses how you can create value with a people-first mindset.
Manufacturers are increasingly realising the future of manufacturing is in the cloud. That statement isn’t as bold as it sounds; 94% of companies will use cloud services this year because they see the value in enhanced security and lowered operational costs with a more modernised cloud architecture. But manufacturers are also keenly aware that many big cloud migration deployments fail. In most cases, there is one critical piece of strategic planning for a cloud migration that manufacturers must consider if they want to succeed: people. They can make or break your move to the cloud, so effective organisational change management is essential.
Major manufacturing trends impacting cloud migration
Manufacturers look to the cloud to enhance data-driven decision-making, manage supply chain complexities, customer demands, growing competition and risk mitigation. Some of the needs impacting the decision to move to the cloud include:
Using predictive analytics in demand forecasting can help better meet customer needs, and cloud analytics can scrutinise high inventory costs, searching for red flags not easily seen through human analysis.
- Using predictive maintenance to improve overall equipment efficiency (OEE)
Manufacturers can improve asset performance and uptime by leveraging cloud analytics to maximise equipment efficiency. Internet of Things (IoT) sensors can monitor a production line in real-time, sending critical data to the cloud. Manufacturers can then analyse the data for any possible malfunctions within processing.
- Product margins are shrinking as cost pressures rise
To open new revenue streams, many original equipment manufacturers (OEMs) are using the concept of manufacturing-as-a-service (MaaS), monetising existing infrastructures by selling manufacturing efficiency rather than products. Aligning big data from the cloud with business processes enables agile reconfiguration to manufacture 3rd-party goods and enhances production line efficiency by understanding usage trends.
- High operational costs, sustainability during climate shifts and even the talent shortage are forcing manufacturers to develop mixed reality models
These combine virtual and real models, of which at least 40% of organisations are leveraging and with around 30% return on their investment. Mixed reality can cut equipment inspection costs significantly, reduce training time, and increase manufacturing revenues by up to 5% by minimising the need to go on-site.
The shift to big data and the imperative for real-time information, not to mention the scalability of cloud, all cry out for manufacturers to make the move. According to Eleviant, over 90% of global enterprises report using cloud computing in some part of their business.
Importantly, an article from McKinsey boldly states, “Many companies are prone to self-delusion”, referring to the myth is that a cloud shift is easy or that ROI is immediate. In reality, McKinsey’s survey shows that 40% of organisations overrun their cloud budgets, suggesting that manufacturers are missing the true value of cloud, which lies not in IT cost reductions but in the overall value of the business model. That business model is tied irrevocably to people -customers and internal staff – who put the value into a cloud migration.
Engaging your cloud end-users from day one
Transitioning your business systems to the cloud represents a fundamental shift toward improvement. However, change doesn’t occur spontaneously; it requires careful management to prevent disruptions during the implementation.
It’s essential to identify and address your business’s specific needs thoroughly and overcome resistance and hesitation among future system users—it’s all about fostering adoption. Executing a cloud project adds value for all stakeholders, so exploring the benefits for customers, suppliers and your employees is essential in cloud migration planning.
Employees may not always fully grasp the company’s vision and are often primarily aligned with the goals of their specific business area. It’s crucial to listen to employees’ concerns and engage them from the project’s inception to bridge this gap between company objectives and those responsible for achieving them.
Change management can be aided by advanced analytics that provide insights across the entire value chain. By understanding what’s in it for them, users will feel actively involved in the change process, making them more inclined to contribute to its success.
Common cloud migration assumptions
The high failure rates often attributed to projects are not typically the project’s fault. Issues can arise during the planning and preparation stages, or sometimes, companies skip these essential stages altogether.
Here are some common misconceptions:
- Users will naturally embrace the project because they recognise the significant, wide-ranging benefits
- It’s cutting-edge technology; users will quickly adapt. How difficult can it be?
- This migration is primarily a technical project; the IT team can handle it.
These are well-known pitfalls, yet businesses continue to fall into them.
Ian Kingstone, UK Director of Strategy and Growth at Columbus, advises “Success is about people working together. And you can achieve it by enabling people to share information and skills, acknowledging the value of giving and receiving help and advice, and being open and susceptible to change”.
Successful cloud implementation revolves around emphasising these principles and crafting comprehensive people management strategies. By emphasising business value, business stakeholders are motivated to embrace the change rather than having IT impose it upon them.
Creating value in cloud migration: Watson-Marlow Fluid Technology Solutions
Manufacturers today need to be flexible and forward-thinking. Our work with Watson-Marlow Fluid Technology Solutions (WMFTS), the global leader in peristaltic pump manufacturing and fluid path technologies, has proved that.
They started with one plan for their digitalisation, to update their ERP system. But as we further explored their goals – like centralising their global operations, connecting better with customers, and achieving some other internal targets – it became apparent that focusing on customer engagement was a higher priority. Columbus helped WMFTS recognise that without user adoption none of the other benefits were achievable. This shift allowed WMFTS to realise the benefits of moving to the cloud sooner than planned.
The move drove real organisational value through improved operational efficiency, a more customer-focused culture, better data insights and a more systematised approach across the team. It’s a great example of how combining technology and strategy can lead to real success.
Migrating your manufacturing organisation to the cloud
Increasing pressures are pushing more manufacturing firms into cloud models. Be careful to avoid the assumption that this is strictly an IT project; instead, organisations must focus on how the cloud migration can add value across the entire business.
The lesson for manufacturers is clear: engage your stakeholders early in the cloud migration to create real value later. Having an executive sponsor to foster value during the change management process is a critical piece of any manufacturing cloud deployment.
*Toby is a Microsoft certified Principal Consultant with more than 25 years of experience delivering successful engineering and IT projects globally, always with a focus on outcomes. Toby is highly experienced in end-to-end Business Transformation delivery, particularly for IT business systems. He also has 20+ years of experience using Lean, Six-sigma, Prince 2 and Agile methodologies.
Reach out to Toby at: toby.mankertz@columbusglobal.com
