Cloud vs. On-Premise: Four Reasons to Make the Jump
Nancy Sarpolis - September 26, 2023
Small and mid-size manufacturers inevitably face an important choice as their companies grow: Continue to host their supply chain IT infrastructure on site or move to the cloud. The sticking point for many is a perceived lack of control when moving servers and software outside the four walls.
While on-prem solutions allow full control of your infrastructure, there’s a reason the global cloud computing market size is projected to grow from $677.95 billion in 2023 to $2,432.87 billion by 2030. “Nothing is more critical to a corporate digital transformation than becoming a cloud-first business,” according to McKinsey. “The benefits are faster time to market, simplified innovation and scalability, and reduced risk when effectively managed.”
The case for cloud-based solutions
Although on-premise systems are still predominant in the manufacturing sphere, there’s a growing trend towards cloud infrastructures. Cloud computing is the use of comprehensive digital capabilities delivered via the internet for organizations to operate, innovate, and serve customers.
With computing services delivered via the cloud, companies no longer need to buy and maintain physical servers and infrastructure. Instead, cloud platforms can deliver everything a company needs for their IT department, using the internet. This includes everything from servers to data storage and software tools. Unlike with physical infrastructure, this means that all these services can be accessed from anywhere with an internet connection, on almost any device. As companies become increasingly global, with dispersed work forces, the resulting system can be an efficient way to manage and deliver IT services.
The main benefits of cloud computing are cost, data security, speed and accessibility.
Cost advantages of the cloud
Cloud-based systems offer a number of advantages. With cloud computing, organizations essentially buy a range of services offered by cloud service providers (CSPs). The CSP servers host all the client’s applications and services, such as server space, is leased. The payment model provides for billing based on actual usage, resulting in significantly lower fixed costs. High initial investment and the costs for hardware maintenance and upgrades are eliminated, just as recurring hardware updates and replacements are no longer necessary. This further decreases the relative total cost of ownership (TCO) if the cloud solution is operated in an external data center. The benefit is that organizations pay only for the infrastructure and computing services that meet their evolving needs.
Greater data security and protection
Security is a pressing issue for supply chains and is perhaps one of the biggest concerns when making the transition to cloud-based solutions. “Virtually all public cloud use is within services that are highly resistant to attack and, in the majority of circumstances, represent a more secure starting point than traditional in-house implementations,” according to Gartner. “Only a very small percentage of the security incidents that have affected enterprises using the cloud have been due to vulnerabilities on the part of the provider.”
When it comes to data security and protection, choose technologies that adhere to the strict European and German standards such as the DSGVO and ISO27001 or the TISAX standard for information security as defined by the automotive industry. The flexis platform leverages Microsoft Azure, renowned for its extensive array of compliance documentation among major cloud providers. It also guarantees the option to host data in nearby data centers, such as those in Germany within the European region. Some flexis customers have strategically chosen a provider of public cloud services such as Amazon (AWS), Microsoft (Azure), or Oracle (Oracle Cloud). Due to the support of open standards and the architecture of the flexis platform, we can easily support all providers and offer a secure environment for customers.
Improved speed and accessibility
One of the potential drawbacks of locally hosted storage and applications is speed—both in terms of processing power and the speed of the data itself. The modular structure of cloud-based software can accelerate implementation and simplify operation. For example, even if an in-memory calculation is performed lightning fast via an on-prem application, there is no guarantee that the operation itself will be performed with the latest available data.
With cloud computing, real-time data can be easily stored and fed into software solutions to garner rapid insights into company operations. The flexis cloud-based Supply Chain Services, for example, can use the data from systems of records (ERP, MES) via and allow planning in scenarios in a digital twin. With improved computing speed and reduced latency, real-time data analytics can be powerful, supporting rapid decision-making at all management levels.
In addition, data entered into different parts of the system may take time to centralize for use on other touchpoints in traditional on-prem software environments. In cloud ecosystems, however, an update in one module is immediately reflected in every other part of the system. This means that transportation planners, for instance, know whether a particular warehouse has enough products in stock to fulfill an order. Because the data reaches every touchpoint more quickly, it can also be analyzed more quickly to produce smarter and more accurate demand and production forecasts, ultimately leading to true real-time planning.
Today’s cloud solutions have a clear advantage over on-premise computing. No capital expenses, real-time data for better decision-making, greater security and only paying for the resource needed make it a worthwhile consideration for growing companies of all sizes.
If you want to learn more get your Guide "Why the cloud is the future of manufacturing"
In this Guide you will learn:
New potential of cloud-based manufacturing
Opportunities of the cloud for the production
Technological advantage of flexis technologies
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