The manufacturing industry is at an “innovation impasse,” meaning manufacturers have a desire to innovate and drive transformation, but legacy IT systems have the potential to constrain their ability to do so. The opportunity for manufacturers to embrace digitisation efforts including “Industry 4.0” initiatives can break the impasse, but executives must focus on new opportunities to create value and not only prioritise traditional business operations.
That’s what a new report has found. Commissioned by cloud computing enterprise Nutanix, Inc., the Enterprise Cloud Index for the manufacturing sector measures manufacturing companies’ plans for adopting private, public and hybrid clouds. However the overall innovation impasse, the report revealed that the manufacturing industry’s hybrid cloud usage and plans outpace the global average across industries. The deployment of hybrid clouds in manufacturing and production companies has currently reached 19% penetration, slightly ahead of the global average. Moreover, manufacturers plan to more than double their hybrid cloud deployments to 45% penetration in two years; outpacing the global average by 4 percent.
Manufacturing organisations face the constant challenge of trade-offs: they are under pressure to meet current productivity and operational goals in an increasingly global and highly competitive marketplace, but they also need to invest in future growth. This challenge has created a demand for new technology solutions that can help balance the trade-off between current and future goals.
IT leaders in manufacturing must avoid the beaten path of finding short-term fixes for increasing revenue; instead, they should look to long-term solutions that enable automation, enhanced use of data and improvements in customer experience. The Enterprise Cloud Index findings indicate that manufacturing leaders are aggressively adopting new technology to embrace modernisation instead of getting left behind with legacy systems. The distributed cloud model offers a solution that delivers speed, flexibility, and localisation, allowing manufacturers to improve efficiency without compromising quality.
While 91% of survey respondents reported hybrid cloud as the ideal IT model, today’s global average hybrid cloud penetration level is at 18.5% — the disparity due in part to challenges of transitioning to the hybrid cloud model. Manufacturing industries reported barriers to adopting hybrid cloud that mirrored global roadblocks, including limitations in application mobility, data security/compliance, performance, management and a shortage of IT talent. Compared to other industries, manufacturers reported greater IT talent deficits in AI/ML, hybrid cloud, blockchain, and edge computing/IoT.
Key findings of the report include:
- 43% of manufacturers surveyed are currently using a traditional data center as their primary IT infrastructure, slightly outpacing the global average of 41%
- However, manufacturers currently use a single public cloud service more often than any other industry. 20% of manufacturing companies reported using a single cloud service, compared to the global average of 12% — a testament to the fact that manufacturers are starting to turn to the cloud as a solution, given that they deal with legacy IT systems and cannot handle workloads on-prem.
- Manufacturers are also advancing the movement to private cloud: 56% of manufacturers surveyed said that they run enterprise applications in a private cloud, outpacing the global average by 7%.
- Manufacturers are struggling to control cloud spend. One motivation for deploying hybrid clouds is enterprises’ need to gain control over their IT spend. Organisations that use public cloud spend 26% of their annual IT budget on public cloud, with this percentage predicted to increase to 35% in two years’ time. Most notable, however, is that more than a third (36%) of organisations using public clouds said their spending has exceeded their budgets.
- Manufacturers chose security and compliance slightly more often than companies in other industries as the top factor in deciding where to run workloads: while 31% of respondents across all industries and geographies named security and compliance as the number one decision criterion, 34% of manufacturing organisations chose security and compliance as the top factor.
The bullish outlook for hybrid cloud adoption globally and across industries is reflective of an IT landscape growing increasingly automated and flexible enough that enterprises have the choice to buy, build, or rent their IT infrastructure resources based on fast transforming application requirements.
“Manufacturers are investing in modernising their IT stack, and adopting industry 4.0 solutions to keep up with ever-changing business demands in areas like production and supply chain management,” said Chris Kozup, SVP of Global Marketing at Nutanix. “A hybrid cloud infrastructure gives manufacturers a fresh approach to modernising legacy applications and services, enabling manufacturing IT leaders to focus on their long-term investments in big data, IoT, and next-generation enterprise applications. While the manufacturing industry is still facing obstacles in transitioning to multi-cloud use, this study shows us that manufacturing organisations are ready to accelerate growth and take the lead in IT innovation in the future.”
To create this report, Nutanix commissioned Vanson Bourne to survey more than 2,300 IT decision makers, including 337 worldwide manufacturing and production organisations, about where they are running their business applications today, where they plan to run them in the future, what their cloud challenges are and how their cloud initiatives stack up against other IT projects and priorities. The survey included respondents from multiple industries, business sizes and geographies in the Americas; Europe, the Middle East, Africa (EMEA); and Asia-Pacific and Japan (APJ) regions.
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