On-Premise vs. Cloud Manufacturing Software - An Important Decision

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By Emilie A Lachance - October 29, 2019


It’s been said that the world’s most valuable resource is no longer oil, it’s data. With the advent of IIoT and Connected Workers, this is becoming increasingly true of manufacturing companies. How manufacturing companies acquire, store, analyze and report data has become a core question of competitive advantage. With so much at risk and unforeseen situations that can happen that threaten the safety, integrity, and possession of a company’s data, how companies manage their data and its security can be an existential question.

Manufacturing companies now have a critical choice, will their data, and indeed the operating systems and software that they use to store and manipulate it, be managed on premises, or in the cloud?

On-Premise Computing

Running software locally and saving information on-premise used to be the standard way of operating. When computer experts say ‘on-premise’, they mean that everything used to operate the IT infrastructure is provided internally by the company. That means that there are servers and storage owned and operated by the company, that software is licensed and usually loaded onto servers or employees computers via some type of media such as a disk, and the company is responsible for the operation of all of this. 

With the burden of  the ownership role of operating the complete IT system came costs and risks. The risks that have become apparent over time have demonstrated that on-premise software and storage can be costly. It can be difficult for an internal IT team to “keep the lights on” with respect to software patches and updates that keep things operating and secure. There are new malware threats everyday and individual companies can find themselves at risk of intrusion and compromise before they know what’s happening. The expenses in software maintenance, support fees with security vendors and complexity that comes with operating complex IT have become difficult to afford to some companies. Smaller manufacturing businesses in particular may have slim profit margins and have to husband resources carefully. Operating expensive IT can be difficult and make it harder to compete with larger manufacturers that have more depth.

Cloud Services, a Brief History

One effective method that has helped with containing software operating costs and preventing data loss compared to operating IT on-premise has been cloud services. While it seems that storing your data in the cloud, or operating SaaS (Software as a Service - running in the cloud) has been a new innovation, the idea has actually been around since the 1960s

The recent proliferation of business cloud services  speaks to the efficacy of the approach. Businesses can now affordably store immense amounts of data securely with cloud providers and SaaS software from core business accounting systems, to marketing applications to engineering tools now exist in all shapes and sizes. 

The Benefits of Cloud Services

Cloud services are far from being perfect, but there are many advantages to manufacturing businesses adopting cloud services. 

Perhaps the biggest advantage of SaaS software is that companies that license cloud software no longer have to purchase, manage and periodically upgrade complex and expensive hardware. The infrastructure costs savings can be significant but the need for highly skilled labor that can be difficult to recruit and retain is also reduced. SaaS businesses consolidate the IT infrastructure needs of hundreds or thousands or in the case of a few cloud infrastructure providers such as Amazon or Google, millions of businesses into one system and spread the costs across a very large number of businesses. The same can be said for the costs of managing security. Large SaaS hosting solutions have the world’s largest cybersecurity teams and the most up to date knowledge and software to prevent attacks and incursions. 

Another advantage of going SaaS is that companies no longer have to manage patches and updates. Companies using SaaS software have ‘always on’ updates and gain the advantage of having the latest features as they are rolled out. SaaS providers have become adept at providing intuitive user interfaces and Customer Success tools and teams that improve adoption rates and usage efficiencies. Developers have a priority to streamline and make the experience as simple and as pleasant it can be to users as this drives customer and as a result, business success.  

Cloud solutions such as online storage and SaaS software are available anytime/anywhere. No longer do employees have to be tethered to an internal system in order to be productive. For manufacturing businesses operating across multiple buildings or more than one site or facility, this can be vital. This is bringing about a revolution in how employees work and collaborate including the explosion of off-site workers.

What is Hindering Cloud Services 

The reason that cloud services haven’t totally become the norm or as popular as one would expect is because of concerns over privacy and how a bad stigma was created that companies didn’t have their customer's security high on their priority list. Over the years, Cloud service providers have responded accordingly and significantly improved security, accelerating the adoption rates of cloud-based solutions.

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