Interest in cloud computing and Software as a Service (SaaS) has been growing among manufacturers in recent years, as companies have attempted to downsize their IT operations
PaaS refers to the virtual renting of servers, hardware, storage, operating systems and other data storage capacities. If SaaS is the hosted version of a software package, then PaaS is the hosted version of the hardware that would run that software package in an internal environment. Infrastructure as a Service (IaaS) is similar to PaaS, but deals more with the components needed to run virtual environments, such as Internet connectivity and virtual desktops. All three of these hosted services make up what is known as cloud computing.
According to a recent report from Framingham, Mass.-based IDC Manufacturing Insights, 43% of manufacturers are implementing or evaluating cloud deployments, while more than 20% have already implemented cloud. The growth rate is especially significant given that manufacturing tends to be slower to adopt new technology than other business segments, according to Bob Parker, group vice president at IDC Manufacturing Insights.“Manufacturers are actually adopting cloud at a faster rate than other industries,” Parker said. “There’s more interest around the public cloud rather than private, with the exception of the private outsourced cloud.”
Low-cost infrastructure and SaaS growth drive PaaS adoption
One of the main selling points of PaaS -- and cloud computing in general -- is its price. “A lot of companies have been doing outsourcing of infrastructure for a while, and cloud computing will accelerate that,” said Steve Phillips, ERP industry expert and author of the Street Smart ERP blog. “I think the biggest thing right now is the cost side of it. [Competition among vendors] is driving down the cost of PaaS.”
The influx of SaaS services is also increasing interest in PaaS adoption, according to Parker. “It’s going to become difficult to handle a bunch of SaaS options,” he said. “To get the benefits of the SaaS world and the Infrastructure as a Service world without the management costs, PaaS will be the pivotal part of the market.”
Although cloud adoption is on the rise, concerns about data security and access to information still persist in manufacturing organizations. “There are a lot of cultural barriers in IT as far as giving up control of infrastructure and applications goes,” Phillips said. “For a lot of IT directors, having something out there in the cloud where they can’t touch it, feel it, or walk into the data centers -- that will spook them. But I think like any technological change, in time people will accept it.”
PaaS vendors offering more customization for manufacturers
While many manufacturers are exploring PaaS, there aren’t many manufacturing-specific PaaS options out there. According to Ray Wang, principal analyst and CEO at Constellation Research Group, NetSuite and SAP’s Business ByDesign software are the PaaS services that come the closest to targeting the industry, but others are likely to follow. “I'd expect Plex Systems to eventually open up their model and Microsoft Azure to mature into a platform manufacturers will use,” Wang said.
Short of designing packages specifically for manufacturing, do PaaS vendors have anything to offer manufacturers? Customization and development may hold the answers. “PaaS makes sense for manufacturers who are used to having their own custom developments and strong app development shops,” Wang said. “If you customize and build your own apps, [doing this through PaaS] will be the approach for the next 10 years.”
Phillips advises manufacturers to approach PaaS with the awareness that, while the infrastructure may initially be inexpensive, customized configurations could lead to steeper support prices. This is especially true for small or midmarket manufacturers that are expanding their businesses. “You may rent the infrastructure fairly cheaply, but if your business changes and you need it to be configured different, that can be costly,” he said.
The days of procuring hardware, manning the data center, tuning the database and installing the hardware so you can use it three months from now after spending millions are over.
Ray Wang, Constellation Research Group
“The key for the platform vendors now is to attract the developers,” Parker said. “Everybody wants to be the app store. They want to get people to develop for their platform.” With a customer base that has become accustomed to instant access to a variety of applications on smartphones and tablets, the differentiation between PaaS vendors in the future will be the number of apps they can offer and host.
Wang agrees. “The future is PaaS for development,” he said. “The days of procuring hardware, manning the data center, tuning the database and installing the hardware so you can use it three months from now after spending millions are over.”
Manufacturers that are still hesitant to move onto a PaaS model or step into the cloud in general, may eventually find themselves left in the technological dust.“I think 10 years from now, anybody hosting software internally might be considered a dinosaur,” Phillips said.
“The movement out onto cloud computing is coming. I don’t see that as a pie-in-the-sky event. I think eventually a great majority of companies will be moving to a service model.”