THE EVOLUTION AND ADOPTION OF CLOUD SOLUTIONS

Cloud software has evolved over the last decade. Many companies and manufacturers were hesitant to adopt cloud solutions due to perceived risks. Today, many companies are embracing cloud-based solutions to speed time to deployment and adoption, and eliminate long-term capital expenses associated with on-premises software.

Past debates about whether the Cloud was inherently insecure or susceptible to more data breaches prevented many manufacturers from considering enterprise solutions that were not installed within the manufacturer’s firewalls. As more software vendors move to the Cloud and introduce more secure methods for storing and managing information, the perceived security risks are diminishing.

Furthermore, CIOs, CFOs, and other executives are expected to produce immediate results and cloud solutions sold under software-as-a-service (SaaS) models offer a quicker ROI. Instead of paying for the entire solution all at once, companies can pay as they go with monthly or annual subscriptions. This allows them to manage cloud software as operating expenses (OPEX) instead of capital expenses (CAPEX)ⁱ —eliminating longterm depreciation of larger investments.

With these financial benefits of SaaS cloud solutions, manufacturers gain faster time to benefits and quicker payback when compared to on-premises solutions. Furthermore, cloud solutions and apps have become ubiquitous. Consumer expectations to subscribe, download, and easily use apps have driven enterprise cloud software vendors to simplify the user experience and deployment model. These factors have led to faster implementations for significantly less money. According to Deloitte Insights, “cost and performance of IT operations have long been a significant driver for cloud adoption. Cost, although still an influence, has become less of a factor over time as the Cloud’s other business benefits have emerged.”ⁱⁱ It’s no longer a question of whether companies will adopt cloud solutions, but rather how fast and broadly they will.

FINANCIAL BENEFITS OF CLOUD SOFTWARE INFRASTRUCTURE

As touched on earlier, one of the compelling financial reasons for using cloud solutions is the payback period, which impacts the total cost of ownership (TCO). Companies should consider not just the initial purchase cost for the software, but also the implementation, training, and ongoing administration to support and manage software in-house vs. in the Cloud.

“I didn’t need to hire a team to manage the infrastructure associated with an on-premises siloed system anymore. I now only needed one person to help me, which kept my overhead costs low..”

– Bruno Strul, Chief Executive Officer, Apical Instruments

Cloud software vendors manage their own infrastructure and technology stacks, eliminating those investments by manufacturers’ internal IT departments. By removing infrastructure-related expenses, IT resources and expenditures for hardware, software, virtual private networks (VPNs), and other related tools are avoided. Moving away from client/server on-premises software further eliminates the need to establish complex networking solutions or install software on every user’s workstation.

With today’s increasing remote-centric work culture, the ability to enable teams and partners to collaborate via cloud solutions is essential to ensure productivity when teams cannot meet together in person. A Gartner survey revealed that 74% of CFOs and finance leaders will move at least 5% of their previous on-site workforce to permanently remote positions post-pandemic. Engineering, operations, and quality teams need to make remote collaboration an effective part of their normal operating routines, starting now.ⁱⁱⁱ