Manufacturers are increasingly realizing the future of manufacturing is in the cloud. That statement isn’t as bold as it sounds; 94% of companies will use cloud services this year because they see the value in enhanced security and lowered operational costs with a more modernized cloud architecture. But manufacturers are also keenly aware that many big cloud migration deployments fail.
In most cases, there is one critical piece of strategic planning for a cloud migration that manufacturers must consider if they want to succeed. People can make or break your move to the cloud, so effective organizational change management at the start of your cloud migration is essential to your success.
In this blog, we will discuss how you can create value with a people-first mindset for your cloud migration and find out more about:
- The major trends in manufacturing impacting cloud migration
- How to engage your end-users from day one
- The key steps in change management preparation
- The outdated stereotypes about change management and cloud migration
- Incorporating customer preferences into the planning process
- How other manufacturers handle their cloud migration
Major trends in manufacturing impacting cloud migration
Manufacturers look to the cloud to enhance data-driven decision-making, manage supply chain complexities, customer demands, growing competition, and risk mitigation. Some of the needs impacting the decision to move to the cloud include:
- Improving planning efficiency in manufacturing is always a critical goal. Cloud analytics can scrutinize high inventory costs, searching for red flags not easily seen through human analysis. Predictive analytics helps with demand forecasting to better meet customer needs
- Overall equipment efficiency (OEE) can be improved by using predictive maintenance. Manufacturers can improve asset performance and uptime by leveraging cloud analytics to maximize equipment efficiency. Internet of Things (IoT) sensors can monitor a production line in real-time, sending critical data to the cloud. Manufacturers can analyze the data for any possible malfunctions within processing
- Product margins are shrinking as cost pressures rise. As a result, many original equipment manufacturers (OEMs) are using the concept of manufacturing-as-a-service to open new revenue streams. MaaS monetizes existing infrastructures by selling manufacturing efficiency rather than products. Leveraging big data enhances production line efficiency by understanding usage trends. Aligning big data with business processes enables agile reconfiguration to manufacture 3rd-party goods. Companies can monetize by building products and offering internal expertise. In MaaS, manufacturing becomes the product for sale, opening new revenue streams.
- High operational costs, sustainability during climate shifts and even the talent shortage are forcing manufacturers to develop mixed reality models combining virtual and real models. At least 40% of organizations leverage virtual and physical experiences, with around a 30% return on their investment. Mixed reality can cut equipment inspection costs significantly, reduce training time, and increase manufacturing revenues by up to 5% by minimizing the need to go on-site.
- All these trends incorporate the expansiveness of a cloud services model. The shift to big data and the imperative for real-time information, not to mention the scalability of cloud, all cry out for manufacturers to make the move. Recent global events pushed many manufacturers over the adoption edge, and while there are some laggards, according to Eleviant, over 90% of global enterprises report using cloud computing in some part of their business. Importantly, an article from McKinsey boldly states, “Many companies are prone to self-delusion.”
That delusion is that a cloud shift is easy or that ROI is immediate. McKinsey’s survey showed 40% of organizations overrun their cloud budgets. McKinsey suggests that manufacturers miss the true value of cloud, which lies not in IT cost reductions but in the overall value of the business model. That business model is tied irrevocably to people—customers and internal staff.
Manufacturers must therefore carefully plan for any shift to the cloud with both a clear understanding of the business value they want to achieve and the change management strategies they will use to drive user adoption. It’s the people who put value into cloud adoption.
Engage your end-users from day 1
Transitioning your business systems to the cloud represents a fundamental shift toward improvement. However, change doesn’t occur spontaneously; it requires careful management to prevent unexpected disruptions during the project’s implementation. It’s essential to identify and address your business’s specific needs thoroughly. Managing change and harnessing your cloud platform’s potential involves overcoming resistance and hesitation among future system users—it’s all about fostering adoption.
Executing a cloud project adds value for all stakeholders, from customers to suppliers and your employees. Exploring benefits for these audiences enables you to create clear value adds to cloud migration planning.
This approach prioritizes value while recognizing that it’s also a people-focused endeavor. Employees may not always fully grasp the company’s vision and are often primarily aligned with the goals of their specific business area. It’s crucial to listen to employees’ concerns and engage them from the project’s inception to bridge this gap between company objectives and those responsible for achieving them.
Implementing best practices in change management will uncover more effective working methods, aided by advanced analytics that provide insights across the entire value chain. By understanding what’s in it for them, users will feel actively involved in the change process, making them more inclined to contribute to its success.
This critical discovery establishes a connection between long-term strategy and the immediate requirements of change management. It encourages goal sharing and a diligent exploration of how to attain them, aligning people toward shared outcomes.
Change management: plan and prepare
Steve Lyon, CE Sales Specialist at Columbus, says companies often focus too strongly on taking current workflows and systems into the cloud. That focuses the effort on IT costs instead of creating value for your end-users—the people truly impacted by this change.
UK Director of Strategy and Change Ian Kingstone, agrees, pointing out how challenging it is to talk about value. He says, “Customers come to us to talk about technology. We often must turn the discussion around and ask why you want to move to the cloud unless you are generating more value in your business?”
He continues, “There is a difference between transformation and change. Let’s not just jump from what you have now and into the cloud—let us drive more new value into our organization when moving to the cloud, which drives change.”
George Westerman, Principal Research Scientist at the MIT Sloan Initiative on Digital Economy, suggests cloud migrations should be like a caterpillar turning into a butterfly. It’s an opportunity for manufacturers to reinvent themselves.
Common cloud migration assumptions
The high failure rates often attributed to projects are not typically the project’s fault. Issues can arise during the planning and preparation stages. Sometimes, companies skip essential stages they perceive as obvious, or they assume any problems will self-resolve.
Here are some common misconceptions:
- Users will naturally embrace the project because they recognize the significant, wide-ranging benefits
- It’s cutting-edge technology; users will quickly adapt. After all, it’s just clicking, dragging, and dropping; how difficult can it be?
- This migration is primarily a technical project; the IT team can handle it. How the business utilizes it is their responsibility. We’ve provided the tools, and it’s up to them to use them properly
These are well-known pitfalls, yet businesses continue to fall into them.
“Success is about people working together. And you can achieve it by enabling people to share information and skills, acknowledging the value of giving and receiving help and advice, and being open and susceptible to change,” according to Ian Kingstone.
Effective change management strategies for successful cloud implementation revolve around emphasizing these principles.
Kingstone underscores the importance of initiating cloud change management planning before delving into the technology. The foundations of success stem from crafting comprehensive people management strategies.
These strategies should be grounded in business value, encompassing people, processes, technology and data within a holistic framework. By emphasizing value, they motivate business stakeholders to actively embrace the change rather than having IT impose it upon them.
Incorporate customer preferences
One of the most significant motivations to adopt cloud services is to pursue more data-driven decision-making.
In the case of manufacturers, the objective is to gain deeper insights into their customer base. However, these organizations need help with leveraging their available data effectively. These challenges involve integrating information seamlessly, boosting operational efficiency, reducing costs and maximizing automation.
There are four primary catalysts prompting change within the manufacturing sector:
- Data enhancement
- Customer understanding
- Integration optimization
- Process streamlining and efficiencies
Lyon says, “Customer expectations have changed dramatically. It is hard to respond if you are not able to be flexible and adapt quickly. Cloud technology allows you to be both.”
He continued, “We help our clients to hunt where the value is. We talk to the business about their ideas, and we ask them to prioritize the most important ones for their business. We discuss, align mindsets and look at the necessary capabilities needed to achieve the desired outcomes and at what pace they can reach their goals.”
Creating value in cloud migration: Watson-Marlow Fluid Technology Solutions
Manufacturers today need to be flexible and forward-thinking. Our work with Watson Marlow Fluid Technology Solutions (WMFTS), the global leader in peristaltic pump manufacturing and fluid path technologies, proved that once again.
They started with one plan for their digitalization, but as we further explored their goals – like centralizing their global operations, connecting better with customers, and achieving some other internal targets – we helped WMFTS change their approach.
It became apparent that focusing on customer engagement was a higher priority than updating their ERP system. This shift allowed WMFTS to realize the benefits of moving to the cloud sooner than planned. It's a great example of how combining technology and strategy can lead to real success.
Another highlight was implementing the new customer relationship management (CRM) platform. Together, we conducted a 12-workshop series with 60 key Watson-Marlow worldwide stakeholders designed to identify value and the organizational changes required to deliver it.
The goal was to increase user buy-in early in the technology transition process. Therefore, user Adoption of the new CRM system across their 650 person user base became the highest priority KPI. Columbus helped WMFTS recognize that without user adoption none of the other benefits were achievable.
The move drove real organizational value in improved operational efficiency, a more customer-focused culture, better data insights and a more systematized approach across the team.
Lessons learned
Increasing pressures are pushing more manufacturing firms into cloud models. Be careful to avoid the assumption that this is strictly an IT project; instead, organizations must focus on how the cloud migration can add value across the entire business.
The lesson for manufacturers is clear: Engage your stakeholders early in the cloud migration to create real value later. Having an executive sponsor to foster value during the change management process is a critical piece of any manufacturing cloud deployment.