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Developing Your IoT Strategy – Cloud or Premise Based?

IoT Strategy
By: Dan Johnson 

With the rapid growth of the Internet-of-Things (IoT) and advanced high-speed, high-bandwidth 5G connectivity just around the corner, more and more companies are jumping on the IoT bandwagon to make their manufacturing and distribution processes “smarter.”

By connecting systems, machines, and processes so they can “talk” to each other and provide real-time information to workers and managers, the IoT is seen as a game-changer for many manufacturers. If you’re considering an IoT strategy, the first major decision is whether to host your network on-premise or in the cloud.

While there can be many reasons to move your IT infrastructure to the cloud, it’s important to consider the advantages and disadvantages associated with each environment with regard to the IoT. While the very nature of the IoT requires some level of Internet connectivity, it does not mandate a comprehensive switch to the cloud and a hosted software-as-a-service (SaaS) model. Instead, it encourages a transformative IT hybrid option that combines the best of both an on-premise legacy system and cloud-based SaaS solutions to more effectively accommodate the IoT.

There are, of course, numerous reasons to move your manufacturing IT functions to the cloud. Here are five ways that the cloud can benefit manufacturing operations: 

  • The cloud makes it easier to capture, manage, and analyze data. Flexible, scalable cloud platforms are especially valuable to manufacturers with build-to-order, configure-to-order, and engineer-to-order business models who may have highly fluid manufacturing requirements that require a dynamic computing environment. 
  • The cloud more easily accommodates seamless supplier integration for better supply chain visibility. SaaS solutions can help streamline collaboration and workflows while enabling manufacturers to deliver real-time order status and forecasts. 
  • The cloud enables more efficient integration of cloud-based services with products. With the growth and evolution of the IoT, the number and variety of smart products is growing exponentially. Incorporating cloud-based add-on services into products, such as automated software upgrades and user-controlled customization, adds value and a competitive edge.
  • Cloud-based platforms can speed product development. Faster time-to-market can often make the difference between success and failure. The cloud enables greater collaboration earlier in product design cycles.
  • SaaS-based solutions enable highly flexible ERP models. Increasing numbers of manufacturers are rejecting large, relatively inflexible ERP systems for more versatile, cloud-based two-tier strategies.

While these are certainly compelling reasons to adopt a cloud platform as the foundation for a transformative IT strategy, it’s not a slam-dunk solution for all manufacturers. A case can be easily made for sticking to a premise-based system as the IT foundation for your manufacturing IoT strategy: 

  • Regulatory compliance. Depending on your industry, market, or location, government regulations may play a big role in how and where you store data and its accessibility. While most reputable hosted datacenter providers have rock-solid security measures in place, it may still be safer and easier to keep sensitive data stored in private, premise-based datacenters to ensure compliance.
  • Enhanced security. As previously noted, most major cloud-based datacenters have sophisticated security systems in place – many may even surpass most private datacenters. However, some industries, such as defense- related ones, may require more advanced security measures that only private, premise-based data storage can provide. 
  • Visibility. The cloud, by definition, is a fuzzy, nebulous place. Do you really know where your data is being stored? While a private, hosted cloud may provide a little more peace-of-mind, you still may not know where your data is and who might be able to accidently or intentionally see it.
  • Accessibility. High-speed, high-bandwidth Internet connectivity is still not guaranteed in all locations. If your manufacturing operation is nationwide, never mind global, data accessibility may be unreliable and inconsistent. 

As the IoT brings substantially greater amounts of data into play for manufacturing operations, the ability to handle it all effectively and efficiently becomes critical. The flexible, versatile, highly-scalable nature of the cloud make it a logical choice for many companies. Still, as we’ve seen, there are compelling reasons for some manufacturers to remain premise-based with their IT infrastructure. In many cases, however, a hybrid ecosystem that utilizes a highly-secure, firewalled premise system to protect sensitive data while incorporating cloud platforms to gather and manipulate less sensitive operational data makes a lot of sense. A hybrid cloud/premise IT infrastructure to support manufacturing optimization might be well worth considering.

Regardless of whether your IoT strategy is on-premise, in the cloud, or a hybrid model, the fact that you’re developing a strategy at all will be transformative. Any IoT strategy, properly implemented and maintained, will enable you to significantly increase efficiency while reducing costs and risk. Welcome to the dawn of smart manufacturing.