“After industrial development has entered the 21st century, with the rapid development of emerging technologies such as the Internet of Things, cloud computing, and big data, the world has ushered in a new round of industrial transformation. In the process of deep integration of industrialization and informatization, a large number of However, the traditional software platform cannot realize the storage and application of these massive data, so cloud computing came into being. However, the true value of the cloud is far more than IT: it can help industrial enterprises completely change the development of products , Delivery, sales and service methods.
Arranged from-Mckinsey, Joe Dertouzos
After industrial development has entered the 21st century, with the rapid development of emerging technologies such as the Internet of Things, cloud computing, and big data, the world has ushered in a new round of industrial transformation. In the process of deep integration of industrialization and informatization, a large number of However, the traditional software platform cannot realize the storage and application of these massive data, so cloud computing came into being. However, the true value of the cloud is far more than IT: it can help industrial enterprises completely change the development of products , Delivery, sales and service methods.
Many cloud migrations have not been as successful as initially expected. Almost every industrial company is drawing up its own cloud plan, but most companies have not yet established cloud native capabilities or expanded business impact. It is estimated that the average expenditure of enterprises on cloud computing exceeds the budget by 23%, but it is estimated that 30% of the expenditure is wasted. It is estimated that next year’s enterprise cloud computing expenditure will increase by 47%, and this problem will only become more and more serious. In order to avoid snowballing deterioration, industrial companies must rebalance cloud programs and shift from focusing solely on infrastructure to software engineering, data and analysis, and changes in business processes. Many organizations are already trying to reset their cloud programs.
COVID-19 intensifies enterprise demand for cloud
COVID-19 has strengthened the demand for the cloud, driving e-commerce, remote sales, and flexible cost structures. During the blockade, e-commerce achieved a decade of growth in three months. B2B distance sales will also continue to exist, because 89% of buyers are satisfied with it, and 42% of buyers actually rely on it more. In addition, the global health crisis has increased economic uncertainty, making companies more than ever need flexible operations and channels, as well as infinitely variable technology costs. Cloud helps in all these areas.
Challenges of implementing cloud computing
Many industrial companies are faced with the challenges of overly complex systems. For example, a company wants to rationalize more than 30 enterprise resource planning systems accumulated in a series of acquisitions. This complexity limits transparency and slows down the process of strategy, finance, pricing, and other functions. The data that can help the company improve its business are scattered in spreadsheets and hard drives throughout the company. It takes many years of planning to make a real impact.
But using the cloud to solve such business challenges is not easy. Since they did not first simplify the IT environment and establish data governance, this has caused most cloud migrations to fail. In addition, additional costs often threaten financial success:
Since both the cloud and data center are running, complex applications and tight business transformations take longer, which leads to double bubble costs.
When platforms, tools, and services are not well understood and supply/demand is not actively managed, hidden costs may arise.
Motivated by time and material models, the cost of system integrators may continue until the third or fourth year after switching to cloud computing.
If the application is not properly configured, the price of additional services may be three to four times higher than the necessary price.
Improper financial accounting rules and governance may exacerbate these costs or incur additional costs in offsetting undepreciated IT assets.
These additional costs, as well as the increasing complexity in the legacy environment, have made the business case for cloud computing increasingly difficult. In 2015, only 7% of executives had difficulty proposing to adopt cloud computing. In 2019, this number more than tripled, reaching 23%. Many companies have stopped cloud computing projects, and the cost of expenditure has made the large-scale adoption of the cloud beyond the reach of enterprises.
In addition, the chief information officer (CIO) also sees other difficulties. Among the respondents to the cloud survey, 58% said that due to the shortage of talents, cloud projects are more difficult. The following table lists the issues they are most concerned about. Talent, training, and safety are all issues involved.
The survey also shows that the soft side of change management and migration to the cloud is creating huge challenges. Companies cannot ignore these issues, because changing the mindset and habits of employees is as important as building a technology stack. One interviewee pointed out: “This requires not only top-down decision-making, but also operational participation; another believes that it is necessary to “make a comprehensive change in the way the company operates.”
How the cloud can make companies make big money
The publicity of cloud in the market can be described as diverse, but it is difficult to find actual value signs and actual impact examples. Most companies don’t realize that the true value of the cloud is much more than that. Cloud computing, digital channels, data and analysis can improve everything industrial companies do from business operations to product development, delivery, sales, and service. The cloud computing business can unlock more than $1 trillion in shareholder value for industrial companies-half from revenue growth and half from profit margin expansion.
Another way is to let cloud payment go beyond simple infrastructure replacement in order to obtain greater benefits. It requires software engineering, operational process improvement and business innovation. It is profitable in the short term.
Think about how Volkswagen, the world’s largest automaker, created value beyond IT through a common cloud platform with 124 factories, 500 warehouses, and 1,500 suppliers. The platform integrates real-time data from all popular machines and systems, while advanced analysis tools track logistics and provide insights into workshop processes. Volkswagen has trained more than 200 experts for its cloud innovation center. Industrial cloud will play an important role in helping the public achieve the goal of reducing factory costs by 30% by 2025, and may stimulate innovation within the partner community.
Cloud can fundamentally improve the overall efficiency of R&D, procurement, supply chain, manufacturing, marketing and sales, after-sales and business support processes. The increased efficiency can significantly increase profitability and productivity. For example, in terms of procurement, the cloud can help companies clean up and integrate their data, which promotes seamless and automated identification of opportunities (for example, under commodity fluctuations, suppliers can be directed to seek cost concessions). Cloud computing can also capture new procurement tools faster and on a larger scale, such as tools related to spending intelligence or Electronic information and quotation requests. These procurement improvements can result in a 60% improvement in procurement savings. The following table shows the typical impact of cloud on other functions of industrial companies.
Cloud computing not only improves profitability, but also promotes growth. It provides access to innovation, such as machine learning engines. Second, because the cost of establishing a “sandbox” environment is almost zero, the cloud facilitates the experimentation of new products and features. It also links the business with new products and services, such as sales tools from the partner ecosystem, which greatly reduces barriers to cooperation.
Finally, although they may not be able to overcome the cost of the cloud alone, the cloud also provides potential efficiencies for IT. By enhancing software engineering practices and promoting the automation of application development and maintenance, development security operations, infrastructure, and ticketing/support, development productivity has been increased, thereby increasing labor efficiency.
The impact of resetting the industrial cloud program
Instead of increasing the budget for cloud computing projects, let cloud computing profit in the short term. This requires four steps:
1. For which applications can be migrated to the public cloud, there must be a strategy and order to manage the use of the cloud. The final state and goals should determine which applications and data should be migrated and which should be retained. Cloud operations can be used in many environments, not just public clouds.
2. To promote gradual changes in speed and productivity, it is necessary to change the IT operation model as soon as possible, especially in DevSecOps and infrastructure management. In addition, there are examples of software engineering that increase the productivity of IT staff.
3. Balancing the infrastructure migration and the ongoing cloud business redesign, the latter can begin self-funded transformation.
4. Strengthen the flexibility of cloud computing, launch new products faster, establish more partnerships with external vendors, and form a new ecosystem to promote continuous business innovation.
Industrial cloud spawns new forms of industrial economy
Industrial cloud usually refers to industrial cloud platforms based on cloud computing architecture and industrial cloud services based on industrial cloud platforms, involving product development and design, experiment and simulation, engineering calculations, process design, manufacturing, and operation management. Common ways of industrial cloud services include industrial SaaS (Software as a Service) cloud services, industrial IaaS (Infrastructure as a Service) cloud services, and industrial PaaS (Platform as a Service) cloud services. Industrial cloud is based on cloud computing technology architecture, making industrial design and manufacturing, production operation management and other tools popular, concise, and transparent. Through industrial cloud computing services, it can greatly increase the total factor labor productivity of industrial enterprises.
Based on industrial cloud services, users can obtain cloud-based industrial design, processing process analysis, assembly process analysis, mold design, mechanical component design and performance analysis, electromagnetic field simulation and other services on the one hand, thereby greatly shortening the product upgrade cycle and reducing design On the other hand, the order management, main production plan, material preparation and many other links of industrial enterprises can rely on ERP (Enterprise Resource Planning), DMS (Dealer Management System), PLM ( Product life cycle management) and other enterprise management tools to improve management efficiency; at the same time, users can also fully mine various data in production design, business management and user interaction based on the industrial cloud service platform, and use big data to develop and produce for the enterprise , Marketing, transaction, service and other activities to provide services.
The integration of industry and the Internet is aimed at accelerating industrial transformation and upgrading, improving quality and efficiency, transforming traditional industrial production and operation methods, and creating greater value. This requires cloud computing and big data to assist industrial enterprises in innovating their R&D, production, operations, and Marketing, service and management methods. At present, industrial design, virtual assembly, precision marketing and distribution, and precision advertising push based on cloud computing platforms have become new trends in enterprise development. It can be said that industrial cloud computing services and industrial big data services have become the promotion of the integrated development of the Internet and industry. The main support means of the company are closely integrated with enterprise technology research and development, process management, production and operation, etc., to shape a new model of enterprise development and give birth to a new format of industrial economy.
For industrial companies, now is the best time to review and adjust their cloud programs, but they must first understand the current and future IT status and operating model, as well as any digital business opportunities. By matching cloud plans to this vision and adjusting the sequence, companies can rebalance spending between IT infrastructure and business. This allows them to increase value faster through business innovation and modernize the underlying IT infrastructure over time.
Link to this article：How cloud computing enables industrial enterprises to obtain real benefits