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Cloud anxiety:What’s holding you back from transforming your manufacturing business?

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Cloud anxiety: What’s holding you back from transforming your manufacturing business?

Manufacturers must embrace digital transformation or risk being left behind

As customer expectations have changed and manufacturers continue to face external pressures, the only path to success is through delivering on customer expectations. This is a relatively new experience for manufacturers that, in the past, have not had to worry about delivering an excellent customer experience. However, in a change known as “B2B to B2B2C,” manufacturers are shifting their focus to become more customer-centric.

To do this, manufacturers need to reduce the time it takes to get products to market without increasing costs. Customers expect a fast turnaround, especially from local manufacturers. The increasing pace of change and competition, along with evolving customer expectations, means manufacturers need to react faster and with more confidence.

Continuous improvement has long been the watchword of manufacturing organisations, especially those competing with overseas manufacturers that are subject to lower costs and can therefore compete more effectively on price.

These combined factors are driving manufacturers to invest in transformation, often with mixed results. However, they must commit to transformation or they may become unable to compete in a tough market.

Typically, manufacturers invest in new systems and processes — only for 74 percent of executives to deem the transformation a failure, according to a 2015 survey by McKinsey & Co.1 However, a successful transformation is possible if organisations are committed to following four key practices: communicating effectively, leading actively, empowering employees and creating an environment of continuous improvement to keep performance from stagnating once the original goals are met.2

For manufacturers, there are three key ways to compete more effectively:

1. Develop new products

Manufacturers need to give customers the products they are looking for. This can often mean taking a chance on entirely new products with the aim of creating a new market for those products. To do this, manufacturers need to understand where the opportunities and pitfalls may lie. Advanced analytics can help manufacturers gain insight into patterns and opportunities that can help them develop and release the right products, at the right time.

Becoming the only source for an in-demand product can increase revenue and create new business opportunities.

Table of contents

Manufacturers must embrace digital transformation or risk being left behind 2

ERP has changed 3

Barriers to moving to the cloud 4

How Microsoft Dynamics 365 functionality can help today’s manufacturers 5

The benefits of Microsoft Dynamics 365 6

How DXC Eclipse helps manufacturers demystify the journey to the cloud 7

Why DXC Eclipse? 7

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1 https://www.mckinsey.com/business-functions/organization/our-insights/how-to-beat-the-transformation-odds

2 https://www.mckinsey.com/business-functions/organization/our-insights/how-to-beat-the-transformation-odds

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2. Implement agile operations

Manufacturers need to create processes and tools that let them respond faster to customer needs and market changes without blowing out costs. This requires appropriate investment in enterprise resource planning (ERP) technologies, as well as a collaborative approach that relies on data sharing.

By becoming agile, manufacturers can potentially overcome the cost differential with overseas manufacturers by reducing lead times and giving customers high-quality, customised products.

3. Make fulfilment smarter

The entire supply chain ecosystem needs to evolve. To remain economically viable, retailers need to sell more products faster, and at competitive prices. This puts pressure on distributors to shorten delivery times and, in turn, on manufacturers to accelerate production cycles.

Smarter fulfilling is about finding ways to deliver products to their final destination faster and more reliably. This can be as simple as reviewing logistics routes and mapping out faster or more cost-effective ways to get products moving. Data analysis can reveal the simple changes manufacturers can make to shave days off delivery times.

Fast fulfilment starts at the factory or warehouse. Instead of paper-based forms and processes, businesses should consider automated, digitalised workflows to manage product movement.

ERP has changed

Enterprise resource planning systems are essential for manufacturers. ERP provides visibility, traceability, quality management, and planning capabilities that let manufacturers minimise costs. Manufacturers looking to optimise capacity, respond to market demand and manage supply chain dynamics tend to benefit from ERP solutions.

ERP systems are no longer large and monolithic; today ERP is all about being agile, which is happening in the cloud. There is no one-size-fits-all solution, and the choice is not just about price. It is important to look at a variety of parameters: depth of functionality, future development path, flexibility to adapt to changing business models, integration with existing systems, cloud versus on-premises and, of course, overall usability. All of these factors need to be considered if a manufacturer is to choose the right technology for its business.

Thanks to better data collection and cloud-enabled analytics platforms, manufacturers can get much greater visibility into their businesses and operations. The data sources available to manufacturers have become much more diverse and can range from radio frequency identification (RFID) sensors and internet-enabled things to product data and customer/end user data. The possibility of accessing such a large volume of data can be daunting. Businesses need the right tools and systems to be able to extract, store, analyse, manage and protect their data.

ERP systems are no longer large and monolithic; today ERP is all about being agile, which is happening in the cloud. There is no one-size-fits-all solution, and the choice isn’t just about price.

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Barriers to moving to the cloud

According to a recent Telsyte survey in Australia, 22 percent of businesses have already subscribed to platform as a service (PaaS), with an additional 48 percent planning to do so within the next year.3 PaaS is a cloud computing service that lets businesses run applications without having to build and maintain infrastructure in-house. PaaS makes customised applications easier to manage.

Most manufacturers want to move to the cloud, but many are anxious. Some of the top concerns include high costs, difficulty in replicating customisations, and fears about security levels. Consequently, some manufacturers believe they need to stick with legacy, on-premises solutions rather than leverage the agility, speed and cost savings offered by cloud-based solutions.

High costs

Many manufacturers believe implementing a new platform or even upgrading existing systems will come at a high cost. As additions to the application cost, businesses are concerned about having to devote internal IT resources and new infrastructure to the project. However, cloud-based ERP solutions can be more cost-effective than on-premises solutions. For example, for a cloud-based ERP system, businesses pay a monthly subscription. Microsoft Dynamics 365 simplifies the licensing of business applications. The primary licensing is by named-user subscription, so the business pays only for the functionality or “workloads” used by each individual and not for any unnecessary functionality. This subscription licensing model makes ERP an operating cost rather than a capital investment. This can help some organisations manage cash flow more effectively.

Furthermore, there are few hardware or infrastructure costs associated with hosting the ERP application in the cloud, reducing the total cost of ERP ownership and freeing up internal IT resources.

Customisations

Manufacturers often have highly customised ERP solutions that map closely to the business’s processes. It is therefore natural that business leaders are reluctant to invest in new systems, potentially losing the deeply familiar and customised functionality that is often seen as a competitive advantage.

3 https://www.telsyte.com.au/announcements/2017/10/16/appetite-for-paas-and-saas-growing-in-australian-organisations

22%of businesses have already subscribed to platform-as-a-service.

48%of businesses plan to move to platform-as-a-service in the next year.

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However, highly customised systems tend to cost more to maintain and become less stable over time, introducing risk to the business that can greatly outweigh any perceived market differentiation. This type of risk may have been acceptable a few years ago when it was essential to customise an ERP solution to make it a perfect fit for a manufacturing business. Partners such as DXC Eclipse have developed manufacturing-specific ERP functionality that extends the base solution, closing the gap between “out-of-the-box” and customised ERP systems.

Today, manufacturers should map their current business processes to new and modern out-of-the-box, cloud-based functions to ensure that their business requirements are being met for today’s digital world. Identifying what existing modifications are truly required to meet specific business differentiators and then migrating them to new, modern cloud-enabled technologies while ensuring continuity can be daunting.

Manufacturers can take advantage of the greater stability and regular updates that cloud-based solutions allow without having to compromise on functionality and specificity. These solutions are also faster to implement, so the manufacturer can be up and running with its new solution sooner, at a lower cost.

Security

Security is no longer an IT issue; it affects the business’s ability to operate. Therefore, security has been elevated to board level in most businesses. When considering a cloud ERP solution, therefore, most businesses are concerned about data security.

A successful cyber attack can cost a business dearly, with potential ramifications including loss of commercially sensitive plans and blueprints, sabotaged systems, loss of other data, and unscheduled downtime leading to production stoppages.

Microsoft Dynamics 365 is based on a cloud service designed using Microsoft Azure™. In Dynamics, security has been divided into three areas: secure identity, secure infrastructure, and secure applications and data. It places a strong emphasis on ensuring continuous access to applications, infrastructure security and data security.

It is important to remember that cloud-based ERP is also likely to be more reliable than on-premises systems because of the redundancies built into cloud services. To replicate this level of redundancy and availability with an on-premises solution, manufacturers would need to commit huge amounts of resources that would be better deployed for core activities.

How Microsoft Dynamics 365 functionality can help today’s manufacturers

Dynamics 365 for Finance and Operations has been developed specifically to help manufacturing organisations overcome many of the customisation qualms these businesses have when it comes to changing the ERP system. Created with flexibility and change in mind, and built with operational excellence at its core, Dynamics 365 lets businesses drive innovation to stay ahead of the competition.

As a cloud-based, modular system, Dynamics 365 can grow with the business, keeping costs low and functionality high. It lets manufacturers develop new products and take them to market faster, run factories more flexibly, and fulfil orders more intelligently — all while saving costs.

Dynamics 365 for Finance and Operations has been developed specifically to help manufacturing companies overcome many of the customisation qualms these businesses have when it comes to changing the ERP system.

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Dynamics 365 helps manufacturers compete in three key ways:

1. Make smarter decisions, faster

Dynamics 365 delivers fast, accurate operational insights so people can make informed decisions. They can find, sort, visualise and use information easily with an intuitive user interface that provides contextual insights through Power BI™ and Azure machine learning capabilities. Users can access information regardless of the device or platform they are using, while integration with Office 365™ enhances collaboration and productivity capabilities.

2. Implement agile operations

Managing the production floor more effectively can help overcome skills shortages and deliver increased productivity. Dynamics 365 includes the ability to create workspaces, task guides and work instructions tailored for operators and supervisors, which can adapt to any device’s display, getting even inexperienced workers up and running quickly. It also delivers operational insights that let decision makers take appropriate action to improve efficiency and remove bottlenecks.

3. Make fulfilment smarter

Failing to meet promised delivery times to customers can erode trust and obliterate a manufacturer’s ability to compete. Making realistic promises to customers, and then delivering accordingly, is therefore key to a manufacturer’s ongoing success. Dynamics 365 delivers visibility about inventory, manufacturing and logistics, and it is available anywhere, on any device, so customer service representatives can proactively solve customer challenges and accurately predict order delivery timelines.

The benefits of Microsoft Dynamics 365

Forward-thinking manufacturers have already started on the path to transforming their businesses. With the right technology and the right partner, they can lay the groundwork for long-term growth.

Some of the key benefits offered by Microsoft Dynamics 365 include:

• Optimised processes that deliver more efficient operations throughout the supply chain

• Better insights through advanced reporting and business intelligence, capturing data at every touchpoint

• Advanced collaboration through seamlessly connecting employees and processes with customers and suppliers

• Improved customer experience through enhanced, personalised services to drive sales

Because it is cloud-based, Dynamics 365 lets manufacturers implement new features and versions seamlessly through the cloud’s continuous delivery architecture. This means manufacturers can respond to changing conditions and customer demands faster using up-to-date systems.

This reduces business continuity risks typically associated with accessing new features and offers far more extensive and cost-effective upgrades than could be provided with existing on-premises systems. Customers can also achieve a higher level of customisation through the Dynamics 365 extensions framework, which simply uses extensions to let manufacturers tailor the solution to their specific requirements without breaking existing modifications or customisations.

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Dynamics 365 is also ideal for manufacturers with hybrid cloud solutions because it offers flexible cloud deployment options.

By working with a trusted, experienced partner, manufacturers can dramatically simplify the process of moving their ERP system to the cloud and maximise their return on investment.

How DXC Eclipse helps manufacturers demystify the journey to the cloud

Moving to the cloud requires careful planning to get maximum benefits with minimal risk. Businesses need to ensure that the move is seamless, successful and non-disruptive. As a leading Microsoft partner with extensive global manufacturing experience, DXC Eclipse works with customers to assess their current business systems, processes and readiness to transition to the Microsoft cloud. The team focuses on managing the business risks, optimizing the IT infrastructure and managing the integration, security, and new technical and operational opportunities available in the Microsoft cloud.

In a challenging economic and competitive environment, manufacturers need the right infrastructure and technology in place to help them work smarter and pivot easily to meet customer demand. It is vital to future-proof manufacturing businesses through digital transformation. Implementing the best technology with the right partner puts manufacturing businesses in the ideal position to outperform and outmaneuver the competition.

Why DXC Eclipse?

DXC Eclipse, a practice within DXC Technology, helps enterprise and mid-market companies accelerate digital transformation, solve business challenges and deliver intelligent solutions that make a difference for clients, employees and partners. We believe in delivering expertise, project transparency and excellent customer service in every engagement.

With team members in North America, EMEA, Asia and Australia-New Zealand, we are uniquely positioned to deliver Microsoft Dynamics 365, ERP, CRM, business process, analytics and collaboration solutions to clients across the globe. The largest independent Microsoft Dynamics partner in the world, DXC Eclipse serves more than 4,000 clients across multiple industries. Our practice delivers services and solutions that positively impact our world today and into the future.

About DXC Technology

DXC Technology (DXC: NYSE) is the world’s leading independent, end-to-end IT services company, serving nearly 6,000 private and public-sector clients from a diverse array of industries across 70 countries. The company’s technology independence, global talent and extensive partner network deliver transformative digital offerings and solutions that help clients harness the power of innovation to thrive on change. DXC Technology is recognised among the best corporate citizens globally. For more information, visit www.dxc.technology.

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