Manufacturing is uniquely coupled to the economic uncertainty currently impacting the wider economy, with rising energy costs decimating budgets across all departments. As a result, there is much less room for error when making investments to maintain competitiveness. With technology changing so rapidly, standing still is no longer an option. In its 2023 Manufacturing Survey, Deloitte found that 32% of manufacturers are planning to invest in cloud technologies over the next 12 months. This makes sense, as migrating business applications and services to the cloud removes significant obstructions in terms of legacy applications that impose inter-operability constraints. A reliance on legacy applications will hinder further investments in areas such as automation, IoT and data analytics which are key to delivering innovation and securing the future of the enterprise.
But there is a problem. Before a company can undertake any meaningful digital acceleration project designed to enhance the productivity and efficiency of the company, such as migrating to the cloud, they must have a single source of truth regarding the IT they already own, licence or utilise.
It would be extremely unusual to hear a Production Director saying they had only a rough idea of how many assembly robots were working on the vehicle production line, and what tasks they performed. But within the IT department of any large manufacturer, that’s exactly the situation.
While manufacturers rely on hundreds of applications, across IT, sales, production and finance, Camwood research shows that 53% of IT Directors or CIOs are unable to confirm exactly how many applications their company really has. As to how many are in active use, who uses them and how many are redundant or no longer fit for purpose – this is another question that is extremely difficult for most IT departments to answer correctly.
This lack of visibility presents many risks to a manufacturer, from both a financial as well as a security perspective. This overwhelming lack of awareness adds an additional layer of risk as manufacturers continue on their digital acceleration journeys and are preparing to migrate applications into modern cloud environments. Because, to put it simply, you can’t migrate what you don’t know, and any migration program will spiral out of control without a clear understanding of what steps need to be taken to ensure that business continues as usual while major changes are going on under the bonnet. Indeed, 62% of Digital Acceleration Programmes are delayed by 3-6 months and cost on average 40% more due to a lack of understanding of the application environment.
What applications do manufacturers really need?
Behind the lack of knowledge is a sense of fear. It’s a little like putting off a visit to the doctor for a regular check-up. While there’s a good chance that everything is okay, there’s still a possibility that things aren’t quite as rosy as we think they are. It’s the same apprehension of uncovering something unpleasant that puts manufacturers off from embracing a proper applications audit and inventory.
It’s common that manufacturing firms that have not conducted an audit for so long can find the task is too complex, too time-consuming, and simply too much of a headache to do it themselves. But that headache could turn out to be an expensive one if it’s not properly addressed.
There are good reasons why the volume of applications within a manufacturing enterprise can creep out of control of the IT team, despite a robust policy. The term ‘Shadow IT’ captures this concept very neatly. It comprises all the smaller apps and services that companies use – perhaps on premises, or perhaps via a cloud subscription, which are embedded in the working fabric of the company, but have arrived without the explicit consent, control or management of the IT team. Shadow IT is a major source of security vulnerabilities within an enterprise, but it’s also a source of risk when it comes to migration and introducing new innovative processes.
Essential steps for manufacturers to take before a migration
To remedy this, manufacturers need to conduct a thorough audit and inventory before they consider migration. This will allow them to better understand their users, devices and applications running across all departments. There are likely to be a few surprises in store that will impact the migration workflow, but there is nothing that can’t be solved if there is visibility of the issue in advance.
Understanding the application estate in its entirety prevents migrating duplications and common compatibility issues. It’s better to rationalise the application portfolio once and do it right to reduce maintenance and licence costs, timescales, and engineering costs for a migration. In fact, the process of rationalising an estate will lead to a much-reduced app estate and typically result in 30% cost savings. Rationalising implies optimising, bringing licences and software versions under control. At a very basic level, it’s a rewarding cost saving exercise.
Where’s the value in understanding the IT estate?
While manufacturers rightly focus on the value of their finished products as a measure of company value, there is also value in ensuring that the business has the necessary agility to take advantage of opportunities that present themselves, particularly in the current climate. Looking at digital acceleration through the lens of applications, means taking applications under control, and promoting their importance in the hierarchy of business assets. Forward thinking manufacturers are continually looking at opportunities – right now this might mean taking business from struggling rivals, or even considering acquisitions. Understanding the IT estate, its applications, capabilities, and true cost is fundamental to taking advantage of any opportunities that may present themselves rapidly or even fleetingly, as well as paving the way to introduce new innovative applications such as AI, advanced data analytics and IoT that will be important for manufacturers to drive efficiencies, meet sustainability goals and stay ahead of the curve.
Other magazines that may be of interest - Healthcare Digital.
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