As a group, manufacturers tend to be wired for DIY. Self-reliance runs deep, which is why many small to midsize manufacturing concerns still manage their own servers. That said, the times, they are a-changin’ and, increasingly, growing enterprises are looking to move to the cloud. While some are likely to continue buying hardware, look for the pace of cloud migration to accelerate as more and more applications — including ERP — become cloud-ready.
What’s behind the decision to remain with an in-house solution or embrace cloud server hosting? An organization reaches that fork in the road because it has pushed its servers to the end of their useful lives and now need to do something about it.
They’ve heard the benefits of cloud server hosting: flexibility, cost savings and access to data for employees wherever they are. They might have heard that manufacturers who adopt cloud technologies enjoy higher revenues. They’ve may have even read that some companies are losing money as a result of ineffective IT management, and that they could avoid that fate by using a cloud server.
These days, the apps have it.
For some manufacturers — startups, boutique operations, virtual organizations or those with employees dispersed around the globe — there seems to be little question that a cloud based-environment is the way to go. The same goes for organizations with high internal IT costs or those requiring more compute power.
And, with the emergence of the trend toward BYOD (bring-your-own-device), these manufacturers are wise to consider that their employees use mobile apps on their smartphone and rely on cloud data to make them more productive. These applications simply didn’t exist a few years ago, and their growth and benefits are undeniable. Most notably, enterprise ERP solutions can now live and prosper in the cloud — and cloud service providers (CSPs) can install, manage, update, protect and support ERP software for a low monthly fee.
But for the majority of manufacturers considering a move to the cloud, the answer isn’t always so straightforward. Smart owners and managers who have existing applications running on old servers must weigh their options. In most cases, the final decision is a financial one. While CSPs don’t provide identical services at a uniform cost, most manufacturers can query various CSPs to determine the average cost per month per user to move their existing applications to cloud servers.
At that point, they must do the numbers and compare the cost of moving to the cloud versus buying new hardware plus the associated costs of internal IT and maintenance. Before investing in new equipment, they must determine the length of time need to achieve ROI on those servers — and compare that to the monthly cost of cloud server hosting.
Increasingly, the numbers favor of the cloud — and numbers are just part of the equation. Savvy manufacturers are recognizing that their incumbent (that is, not-yet-virtualized) applications will become out of date all too soon. And when that day arrives, their best option may well be to migrate to cloud-based applications.
Adam Stern is founder and CEO of Infinitely Virtual (www.infinitelyvirtual.com) in Los Angeles.