Cloud for industries: Why the time is now?
The new role of the cloud for industries
The “industrial cloud” has been used as a broad term for the application of cloud technologies in industries such as energy, mining, metals, chemicals, and other manufacturing industries. The role of the cloud in industries began with the promise of reducing infrastructure costs and increasing IT efficiencies by shifting computing workloads from on-premises data centers to cloud service providers.
Today, in addition to the infrastructure benefits, moving computing to the cloud also unlocks new benefits such as delivering more productive, high-performing, and cost-effective technology assets. It enables re-engineering and modernizing both industrial data and applications. With these new capabilities, it increases the speed of adoption and reduces the time-to-value of industrial software which addresses new business realities.
New industry realities are accelerating the shift to cloud
Industries today are responding to unprecedented levels of change in the world driven by factors such as an increased focus on improving sustainability, responding to pandemic-induced economic realities, and adapting to the changing social, political & demographic landscape. These factors have contributed to the need to look differently at digitally enabled business transformations.
Solving these challenges require industries to expand across boundaries of their site, organization, and geography. These problems must be solved jointly with customers and partners from multiple industries. These factors make the time now to be the most suitable for industries to increase the adoption of cloud technologies. Looking at some of the challenges reveals why the cloud is more relevant than ever for industries.
- Solving challenges such as improving sustainability and strengthening the supply chain: Improving sustainability requires addressing challenges such as emissions reduction and waste management. These challenges are globally distributed in nature. As an example, if we look at the end-to-end supply chain, we can see that it generates most of the carbon emissions either through sourcing of raw material, distribution of the product or through the usage of sold products such as fuels. If industries must shift to a lower carbon footprint and develop lower carbon products, the effort to monitor emissions spans geographic and organizational boundaries in bringing transparency, reinventing products, and jointly creating new business models. Similarly, if we look at supply chains, they require seamless workflows of information both up and downstream of the supply chain. An industry’s business performance is directly linked to how well a supply chain performs and responds to changes. Collaboration on planning for anticipated demand or supply disruptions and faster access to information improves end-to-end supply chain visibility. The global availability of cloud applications allows business processes to become more integrated across the supply chain network. This can create end-to-end visibility across all supply chain participants with the cloud providing the necessary technical foundation.
- Improving digital inclusion of industrial workers from the field to the board room: The Covid-19 pandemic highlighted how critical digital technologies are for remote working and ensuring business continuity. While the pandemic enabled many millions of people to immediately participate in the economy remotely, it also exacerbated the digital divide for those it was not an option. The World Economic Forum references that more than 47% of the world’s population remains unconnected. This has brought a renewed sense of urgency to improve the digital inclusion of people across geographic and cultural boundaries and include people of different skill types and age groups. In the context of industries, this will mean addressing challenges such as how to sufficiently build competency, enable productive work, and ensure safety. Capabilities such as remote workforce management and remote operations help industries address these challenges by baselining operations and enabling business continuity. With these technologies, achieving work outcomes requires supporting an inclusive digital workforce that can adopt these new operating models. Another aspect of digital inclusion is the ability to provide training for operators across the world. As the population of the world increases with major demographic shifts, the need to increase the availability of specialized operator training across the world becomes even more important. Cloud technologies provide the foundation to enable the delivery of global competency programs that reduce training time and enable the start-up of operations from almost anywhere in the world.
- Increasing business resilience in a highly volatile and changing world: The recent global events have reiterated that the most important thing is to always keep people safe. Events such as the pandemic, the supply chain crisis and changing geopolitical landscape place additional stress on the business to respond fast. Despite these challenges, businesses and operations must go on. Industries that develop capabilities in the cloud benefit from the speed and flexibility in adapting their business with capabilities such as remote operations, production insights, and supply chain insights at a global level. The cloud provides elasticity which enables industries to scale up and down easily while consuming only those computing resources that they need. During periods of uncertainty, the cloud enables people to remain to function and ensures that industries do not lose the opportunity to innovate by quickly scaling up when necessary.
Technology trends are also accelerating the shift
In the past decade, cloud technology has matured with several capabilities available as software-as-a-service which make it easier to increase the adoption of the cloud for industries. This has contributed to increased readiness for industries to adopt cloud technologies.
- Enterprise-grade software is now available on the cloud and extends to the edge: With the advent of cloud hyperscalers, the ability to serve a globally distributed or large organization is easily now possible at reduced costs than before. Their capabilities now extend to on-premises and the edge which increases the possibility of transitioning critical business services to the cloud while ensuring the least disruption.
- Software product categories are converging which is simplifying cloud migration: Fewer separate point solutions are required as major product categories have started to become increasingly integrated and they are available as a seamless capability on the cloud and often as software-as-a-service. For example, Asset Performance Management today is becoming more integrated with products that integrate asset registers, strategy libraries, real-time performance monitors, integrity risk tools as well as predictive maintenance. Similarly, Manufacturing Execution Systems are becoming far more integrated with ability to plan, schedule, manage production operations and extend into dispatch and supply chains from within a single product. These trends make it easier for industries to adopt purpose-built cloud technologies.
- Embedding AI/ML capabilities across software applications is easier: As analytics becomes mainstream in industries, it is being embedded more and more within major software products in the market. The cloud allows building and scaling industry specific analytics capabilities. This reduces barriers of availability of skills and having to create AI/ML use cases specific for each site and manage disparate sets of data.
- Cybersecurity capabilities on the cloud has significantly improved: Cybersecurity compliance is becoming more streamlined with increased adoption of standards such as IEC 62443 for industrial automation and control system cybersecurity, ISO-27001/270002 for information security management, ISO-27017 for information security controls for cloud services, and ISO-27018 for protection of personally identifiable information in public clouds. Availability of AICPA SOC 2 audit reports also helps when companies consider software-as-a-service or other cloud vendors in their journey to adopt cloud technologies.
- Availability of industrial software-as-a-service applications: Industrial companies are often perceived as late adopters of digital technology. Most industries have preferred to stick with on-premises software solutions largely due to the lack of suitable software-as-a-service options at a cost that is viable to many of them. This is rapidly changing with several industrial software capabilities delivered as a service. These capabilities include foundational infrastructure such as data, analytics & production insights in addition to major software applications such as manufacturing execution systems, asset performance management, and remote operator training.
Five capabilities for the industrial cloud
Strategically thinking about the role of the cloud for industries requires thinking beyond just technology. Most industries have already initiated some form of digitally enabled business transformation programs. An incremental and agile approach to cloud transformation reduces risk and avoids business disruption when compared with large and expensive rip and replacement of existing systems.
Making cloud for industries easy to adopt across the organization, requires tailoring capabilities that address long term needs for the industry. These clouds must bring together common industrial data models, industry-specific standards, business workflows, application programming interfaces and interoperability with multiple clouds. There are five capabilities that industrial organizations adopting the cloud must create:
- Industry-specific building blocks: Each organization must develop common capabilities that scale across the boundaries of its enterprise to address industry needs. These are modular building blocks that speed up the development of industry-specific digital solutions. Examples of these are shared building blocks such as asset models, process models, simulation engines, and/or planning & scheduling models which allow applications to consume as a common resource on the cloud.
- Cross-application architecture blueprint: An industry-specific architecture that covers all aspects beginning with data, network, computing infrastructure and the range of applications will serve as a blueprint for enabling industrial cloud transformations. Industry clouds need an industry-specific blueprint against which organizations can modernize and innovate capabilities that are most relevant for their business.
- Openness and interoperability: Cloud applications for the industry must be thought of as a highly interoperable ecosystem of applications that must be capable of maximizing existing software investments such as their current on-premises environment. A successful industrial cloud will drive an increased level of openness and interoperability while promoting a common view across the enterprise.
- Cybersecure foundation for connectivity, data, and access: Building an enterprise-wide data, analytics, and connectivity model is critical to function in the new world of cloud. Cybersecurity threats are risks that must be managed for both information and operational technology applications. These threats are ever-changing. For fully exploiting the benefits of the cloud, a foundation to manage cybersecurity must be built starting with connectivity and extending to data and access.
- Secure integration for partners: We are currently in a world of multiple cloud environments from different providers. The landscape is even more complex if we consider the overlap between many SaaS and IaaS providers. Most companies who started their cloud journey seem to have focused on proving their success with a single cloud provider. Over time, to fully exploit an open ecosystem with partners, the ability to integrate and operate across multiple cloud ecosystems is an important building block.
Where to start?
One of the most important questions industries try to answer is where to start. Generally, business leaders either expand their cloud transformation efforts to cover operational technology and industrial applications or start with a new industrial cloud journey. For coming up with a phased roadmap with the right governance, there are five principles to follow.
- Start with a business context and a problem to solve: Cloud transformation journeys must be aligned with business objectives and have a shared context with the overall strategy for the organization. As a first step, picking a problem to solve with a cloud-enable business value will help set the stage for future transformation. For example, enterprise-level production insights to improve economic planning across multiple production sites will provide a basis to start adding additional capabilities.
- Build the data foundation and establish interoperability: Operational technology and industrial software applications are largely built on-premises where they have been used for several years. Expanding their availability using the cloud requires breaking down silos and creating broad availability of industrial data for consumption by new software applications and users. A clear strategy for how to connect to different equipment and applications to collect, contextualize, store and scale data must be established. Wherever possible, common master data must be used between applications with shared assets and process models utilized through extensible application interfaces. These enable increased levels of interoperability.
- Select new capabilities to build on the cloud such as cybersecurity: Add to the cloud new technology capabilities which can be shared across the entire organization. These are capabilities such as data science tools, common enterprise applications, data visualization templates, and machine learning models. This helps future-proof investments by adopting new capabilities that can be exploited using the cloud at a scale that was not possible before.
- Shift workloads with a roadmap and plan for a transition period: Moving to the cloud does not have to be wholesale. While workloads are moved between on-premises and the cloud, industries should plan for a hybrid period where an overlap will exist between the current infrastructure and the new cloud infrastructure. The goal of a successful transition includes setting up new infrastructure and software management processes to minimize disruption such as high availability, disaster recovery, and testing on the cloud. Capabilities to have on the cloud must be determined to build a migration roadmap. Industries that adopt software must shift from a focus on software applications to a focus on outcomes. With a focus on outcomes, industries must choose which applications to transform in the cloud, which to simply migrate, and which to keep as-is. Certain legacy systems may never be migrated to the cloud for technology, commercial, or regulatory reasons. Regional differences for data sovereignty or regulatory requirements must be assessed for each industry and the products that are produced. A roadmap must be built which defines how to sequence these capabilities and regions. During the transition period, deployments to existing data centers must be by exception and all new investments must be cloud-first or cloud-ready.
- Build the organization around these new capabilities: New capabilities built on the cloud will require changes to the current organization to enable adoption to realize value. For example, adoption of an open and interoperable ecosystem across multiple industry stakeholders, will require setting up business processes that facilitate collaboration with customers and partner organizations. This will also require governance around aspects such as cybersecurity through intrusion prevention, and detection and response. The organization structure must be built with the right incentives to ensure that new opportunities presented by the cloud get utilized.
Why the time is now?
We are now in a phase of mainstream adoption of the cloud within industries. The increased maturity of industrial cloud technologies makes adoption easier and provides faster time to value. Preparing for volatility and uncertainty in the world also requires industries to adopt new cloud-enabled capabilities such as remote operations, and production insights while increasing the digital inclusion of people. All these factors make the time now most suitable to adopt cloud transformations. Cloud transformations allow industries to achieve operational excellence, improved sustainability, end-to-end process optimization, improved reliability, and better workforce productivity. Utilizing the cloud, industries can embrace bold strategies which create a future which is more efficient, safer, and sustainable and is also inclusive to all people in the workforce and society.
About the Author
Praveen Sam is a Director – Product Management at Honeywell where he focuses on delivering enterprise performance outcomes to industries using advanced software products. He has over a decade of industrial software experience in oil & gas, chemicals, automotive, and other heavy engineering industries. In a prior role, he was a consulting practice leader leading large digital transformation programs in the industrial sector with projects in London, Aberdeen, Muscat, Baku, Oslo, Geneva, and Houston. He has also published thought leadership in industry forums. Praveen holds an MBA from the IMD Business School in Switzerland. He also holds a Master’s degree in Management from NTU in Singapore and a Bachelor’s degree in Engineering from Anna University in India. He is currently based in Atlanta in the USA.
Comments