In the past several days, I have received emails from some of our external service providers advising us of “potential” cloud server interruptions. Some marketing operations of our business were not working, and we internally knew this as we could not access some of our cloud-based marketing data. The funny part is that those providers sent us emails to let us know that we could not access their cloud applications. The emails read something like this: “…no big deal, it will be back up soon, just be patient.” Really! One service was down for over four hours, and maybe even a day or more, but fortunately, our internal cloud functions were not mission-critical operations for us and we barely noticed.
It seems that one of the largest cloud service providers on the planet just had issues, as did one of the largest internet service providers. Cloud services provider Amazon Web Services (AWS) was down for several hours, and Time Warner Cable (new name Spectrum, an internet services provider - ISP) was also down for a while. This is about the third largest outage I have read about in the past few months for these types of companies. There were some other widely-publicized systems that were down for a few hours a couple of weeks ago, the airline systems for Delta and Southwest. When these types of mission-critical systems go down, it’s a massive outage that affects many companies and consumers.
Thinking about this from the perspective of our customers who are engaged in mission-critical operations for manufacturing and distribution, I am certain that none of our customers had any supply chain operation issues from this outage. How can I say that? Well, we always work with our customers to plan and prepare for worst-case scenarios. Remember the old saying, “failing to plan is planning for failure.”
As an industrial manufacturing engineer writing and speaking about the supply chain for many years, as well as being in the field helping companies for most all of my career, I wanted to pass on some thoughts and information for those of you that are considering this type of deployment option – especially if your mission-critical business depends upon a working cloud.
What is the Cloud?
In some of my previous articles on this topic, I have written highly technical documents about what the cloud really is, what makes up the cloud, and how it works and backs up data, etc., but I will spare you the technical details here. On that note, some of you may remember a movie from a few years ago where a character asked her spouse in the movie what the cloud was, and he quickly answered: “… nobody knows what the cloud is, once our information goes there we will never get it back!”
That is a very funny line for those of us in the industry, but it’s not that far from reality (see note below.) The cloud is great for storing and sharing data using an internet connection and it’s great for those consumer apps that we use on our personal devices like cell phones and tablets for Facebook, Gmail, Drop Box, Netflix, email, etc. Having a lapse in any of those apps is inconvenient, but certainly not a big reason for a major concern. But for time-sensitive mission-critical businesses, there are some things to consider, and I am going to share both advantages and disadvantages regarding these types of cloud deployments in this article.
What to Consider for Cloud Deployments:
The very first and most important thing if you are considering deployment in a cloud is to work with your provider to create a good disaster recovery plan (DRP). For example, if you are a medium to large scale business and your cloud provider is down, or your cloud connection is broken to your manufacturing or distribution operations, your system is down and you are literally out of business for that period! Forty to fifty trucks could be waiting at the dock doors for loads, the receiving area is stalled out, no trailers can be moved in or out, customer orders will be shipped late, the automated sortation system is down, driver’s yard is in chaos, thirty-five fork trucks are idle along with their drivers, and the manufacturing lines and all of the workers are at a standstill. What a mess, and I know because I’ve seen it when a centralized cloud server went down at one of my competitor’s sites! Two hours into that kind of situation you will certainly want to review your service provider for their 99.93% contracted uptime!
What I find very interesting today as I did research for this article is that there are new cloud players to the supply chain market that are touting the cloud as their main selling feature for their application. I’m sure that makes great marketing copy, but for those of us who live in the complex trenches of distribution centers and manufacturing plants, the cloud is NOT the main feature we look for. As seasoned veterans, we look for feature-rich applications that solve the ever-increasing complex needs of our customers to keep happy customers. Therefore, what we look for to keep our operations running are instant system responses and flexible, reliable, configurable, secure, more intelligent directed work flow systems. And the most important thing: these systems MUST be operational 100% of the 24hr/7day/365days a year cycle.
There can be many reasons FOR or AGAINST a cloud-based deployment, but I wanted to focus only on the items that are directly comparable to a typical business-class enterprise deployment for distribution and manufacturing operations versus a public cloud deployment. By comparison, both cloud and enterprise business-class deployments offer shared documents and collaboration. Both offer one source of data (for that one source of the truth). Both offer applications for many industries, can operate in a global environment, and have application providers that will offer “SaaS pricing” for low costs entry. Also, both will require application implementation, configuration, and training services if they have any features at all.
Reasons FOR a Cloud Deployment in Manufacturing and Distribution:
- 1- Capital Expenditures are Low: Cloud deployments eliminate the need for capital budgets for hardware. A subscription based model is very pleasing to a CFO as there are lower entry costs. Plus, since the servers are all outsourced, you may not need an IT team – if you are a small company, it may make more sense. (But larger companies need security and high-availability of knowledgeable IT staff for many reasons.)
- 2- Automated Software Updates: Off premise providers usually provide all updates for the client including server patches and security updates. You may also be working with the application software provider on this and not just the cloud services provider or the internet services provider. (Just make sure your updates that are applied are tested for your use before they are placed into the live system. Sometimes updates will have issues, so know your roll-back plan.)
- 3- Flexibility to Scale Servers: Cloud services can be ramped up (and down) as needed for operations, so if you are a small company and you grow larger, more server power and data space can be added later if needed without a capital investment. This is sometimes called operational agility by CIO’s. Make sure you consider the backup requirements as you grow.
Reasons AGAINST a Cloud Deployment in Manufacturing and Distribution:
- 1- Downtime: Downtime is the single most important factor to consider in mission-critical operations. In addition to today’s four-hour AWS outage, back in in 2012, Amazon (AWS) went down and took down Netflix and Pinterest. In 2014, Microsoft Cloud, Dropbox, Gmail, Basecamp, Adobe, and the Apple iCloud had outages. In 2015 Apple again, Verizon, Microsoft Cloud, AOL, and Google all had outages. Microsoft Cloud had another outage again this year. The problems typically last for just hours, but in mission-critical business operations, two hours may seem like an eternity. No “cloud” provider, not even the very best, could ever claim they have no outages as there are many reasons for a failure.
- Regarding downtime concerns, Apple co-founder Steve Wozniak was quoted in 2012 on cloud computing, saying: "I think it's going to be horrendous. I think there are going to be a lot of horrible problems in the next five years." He was also concerned about intellectual property as to who owns the data in the cloud regardless of who creates the data. (This is the “reality” I was referring to above in my movie comment.)
- 2- Security and Privacy: Be sure to discuss with your provider who owns the data that you place on their servers, and do not forget about sensitive data. If the data there was to get hacked and stolen, or worse, deleted, could your business survive? Be sure to take a “risk” assessment of all security parameters. (Code Space was attacked running on AWS EC2, the attacker gained control of their AWS control panel, deleted their data and their users source code, and eventually they closed their doors. – Source: InfoWorld, June 2014.)
- 3- Vulnerable to Attacks: Every system attached to the internet is a possible attack point. Cloud computing depends on internet connections, so make sure you have adequate security protection. No one at AWS checks your skills as an administrator when they grant you an account, you only need a credit card to get an account.
- 4- Limited Feature Set of the Application: For business applications, there are many application providers today that deploy good accounting, or email, or sales CRM applications via the cloud where the features and speed are adequate for the need. But that may not be the case for the WMS and MES applications. According to a discussion that I had with a lead Gartner consultant a few years ago, most cloud- based WMS and MES systems are very limited on real feature sets and have a slow speed for transactions. Gartner did accurately predict the growth of cloud-based WMS and MES but said it would be years before the cloud versions had the extensive feature-rich sets of the “best-of-breed” WMS and MES systems. I agreed with them and that is still the case today when one compares features and actual speed. His exact analogy was that “if you can get by with the minimal AM factory radio in a car, then why buy a featured version?” True, but with that in mind, we see customer’s needs in today’s distribution world becoming even more complex, not less complex, so just be sure that you get the features that you need to operate your distribution and manufacturing business to its full extent.
- 5- Control and Platform is Limited: There may be limitations on your ability to move to a different cloud provider if the application you chose will only run under certain cloud providers. Migrating this could be a nightmare if you ever have to switch cloud providers. In some applications, you do not have a choice of cloud providers. Plus, you will be managing a contract with each provider so watch the real costs. Further, you may not be able to control anything on the cloud provider’s servers if you needed to install an app for example. In other words, you would never be considered a server administrator for your servers, and you could even be in a multi-tenant situation on some applications.
- 6- Speed of the Transactions: Anytime an internet connection and browser are used, you have to ask yourself three things: How fast can I process a warehouse transaction on a remote device from a moving fork truck? Will the transaction be guaranteed to post properly and not get lost? How fast is the verification step in reality? If you are a very small company, things may be just fine as your business is slow moving, but if you have say, 120 mobile users per site and 30 sites, what is the true turnaround time per transaction for that high speed worker on the factory floor that is constantly moving to a directed workflow? I was invited to a site to see how slow one of the big ERP’s cloud-based WMS module was: it took 16 seconds to log in to a receiving screen on a mobile scanner – so just make sure you have an out if that happens to you.
- 7- Cloud Deployment Costs: If you price out the project, in some cases, it may cost more than if you bought your own enterprise servers and managed them with your own support staff if you are a medium sized company. For smaller companies with no IT staff, or complete outsourcing with no server costs, it seems cheaper in the first pass to use cloud- based. But, go for a 5 year plan ROI to really look at every detail. There could be many hidden costs if you are not considering real-world needs on a factory floor. There are calculators that can assist you from the cloud services providers, but keep in mind these are provided as a sales tool.
In summary, you will need to decide what is best for your company. Just remember that cloud is big business and the marketing hype is certainly everywhere stating the case FOR cloud deployments. For example, the cloud market for Amazon (AWS) was $7.88 B in 2015, up by 69% over the previous year. Also, the worldwide spending on public cloud services is projected to grow at a 19.4% compound annual growth (CAGR) from $70B in 2015 to more than $141B in 2019. (Source: Forbes.)
If you are the leader or stake-holder of a business trying to make this decision, you will need to first decide what your advantages and disadvantages are for public cloud versus enterprise deployments, and what features you need in the application to meet your customer’s needs. Then carefully calculate your total costs to deploy and train, and then factor in your disaster and recovery costs for each path. I hope this article helps you in your decisions, and please do your homework before making that critical decision for your business-class distribution and manufacturing operations.
To learn more about this topic, or how we can help you with this topic, please contact ASC or the author directly.
Author: Pete Gilstrap – February 28th, 2017
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