Cloud manufacturing software vs On-premise: which is right for you?

October 21, 2022


The rise of cloud manufacturing software, is newer, better?

With advancing technologies and government initiatives around Industry 4.0, there is a greater push for use of cloud-based systems. This is true of all industries, but especially in manufacturing. Cloud-based systems can connect people, plant and systems with Internet of Things (IoT). This in-turn can enable lights-out automation, improved communication, and it can facilitate remote working too. The need for robots and machines in the factory to transmit information is generally understood. However, the true benefit comes from moving all systems to be cloud-based. Inclusion of cloud manufacturing software alongside cloud-based hardware accelerates the progress you’ll make towards succeeding in the fourth industrial revolution.

Furthermore, the buying trends are reflecting this. According to one study, 93 percent of enterprises used cloud-based software or system architecture. In addition, use of hybrid cloud systems increased from 19 percent to 57 percent.  

Even platforms like Microsoft Office are moving to cloud; with roughly a third of all Microsoft platform users opting for Office 365 ahead of the traditional on-premise equivalent, Office 2016.  

But why is this change happening? 

And how could your business benefit from moving to cloud-based platforms? What are the differences between cloud-based and local systems, and why is cloud-based deemed to be better?  

This blog will compare various factors of both cloud-based and local systems. 

The differences

The main difference is how the 2 systems are deployed: 

  • While On-premise (Local) software is installed locally, on a company’s own servers,  
  • Cloud-based software is hosted on the vendor’s servers in secured and monitored data centres. 

This is all well and good, but what does it mean to your business?  

Cloud manufacturing software advantages

1. Cost

Perhaps the most important difference is cost. Cloud-based manufacturing software has a number of advantages over on-premise solutions in terms of spend. 

Lower initial upfront cost

Firsly, cloud-based systems are usually available on subscription. Therefore, they have a lower initial upfront cost. However, that cost has the same ongoing monthly cost. Like a Netflix subscription, the cost is always the same each month. Whereas, on-premise software costs more upfront, with lower monthly costs to follow. Payments for cloud-based systems are more spread out over time, so the buyer can realise ROI more quickly. Also, typically, you can turn it off if you feel you’re getting benefit, rather than being stuck with a huge upfront investment, so there’s lower risk too.

No additional hardware investment

Secondly, there are often hidden costs when buying software. For example, a big cost often not anticipated can be server costs – particularly in on-premise deployments. Your server may have some problems over time and require regular maintenance. If that’s your server, then it would be your cost to fix it. However, with cloud-based systems, the responsibility is with the hosting provider to absorb maintenance costs. This means you don’t pay any more than what you signed up for. You don’t have to monitor it, or replace it every 3-5 years, or learn new skills how to fix it, because it’s handled by professionals.

Scalable without additional hardware/infrastructure costs

Cloud-based systems do not require any further upgrade, hardware or software to support more users, so it’s very cost effective to scale. A good software provider should also provide sufficient digital learning materials to help those new users get up to speed. But the key is, you will never have to buy more server space to handle more users. It’s covered.

2. Security

A common misconception with Cloud hosted software is that it’s less secure than on premise solutions. This actually isn’t true, and cloud actually have the following advantages: 

Information encrypted points and spread out

This can be confusing, but, to explain it simply. An on-premise server is a physical server in a static location. You can see it in the corner of the IT office, and that sever stores your information. On the one hand, you can put in lots of physical security systems to prevent people accessing it, so it may seem secure. On the other hand, if you gain access to the location, you only need to plug in an Ethernet cable, and all of your information is available there.

In contrast, cloud manufacturing software stores your data across several servers across the world in different locations. Furthermore, heavily encrypted passwords protect each server. This means 2 things: Firstly, your data is in an unknown location to any potential hacker so it is harder to find. Secondly, if there was a breach, only some of your data would be compromised, because they would have only accessed one of several areas that the information is stored.

Security is continually monitored

Cloud-based software will use secure data centres to hold information. It’s essentially the same as a server, but bigger. Data centres put security measures in place that many businesses simply can’t afford. These include real time monitoring of Firewall defences and attempted breaches of systems, which means your data is likely safer in the cloud than on a local server. 

Cloud systems are encrypted

Local systems would require SQL Enterprise for fully encrypted databases (with a starting price of around $14,000). Your software provider will encrypt those data centres for you, so it comes as standard.

3. Availability

Availability is perhaps the most publicised benefit of cloud-based systems, in that you can access information from anywhere when stored on the cloud.

Access the systems from wherever required

Users don’t have to be in the office to access the system. You can access your information securely, anywhere that has Wifi. This means that travelling representatives or field engineers can view key information via any device while out of office.  

Servers distribute information to provide high availability

Because software providers will use a service like Amazon Web services or Microsoft Azure, which have servers across the world, you’ll automatically connect to the one closest to you; meaning that download time is quick and easy.  

No fixed physical location

Any laptop or device you use to access your cloud-based software is a portal to access information. It doesn’t store your information. Also, the same is true of the data centres. Each data centre is able to access a back-up of your information. So, if a natural disaster hits one of the servers holding your data, you actually won’t lose any data at all. The same applies if someone steals or breaks your laptop.

4. Implementation

If you remember installing Windows operating systems from a disk, you probably also remember the hassle that came with it. Cloud based platforms are typically easier to implement.

System ready to use straight away

Cloud-based systems are quick to set-up. No one has to install hardware, so as soon as you pay your license fee, you have access to start using the software.

Upgrade to as many users as required straight away

As mentioned previously, local systems require maintenance or even replacement after a certain number of users, which incurs extra cost and prolongs the users’ ability to use the system. Cloud-based systems can hold as many users as possible, without any changes to structure or additional costs. If you need more users, you can buy more users.

Upgrade to additional apps straight away

Maybe you initially bought an entry level system for your business, but then you started growing, and decided you need more functionality or additional user licenses. With cloud-based systems, you can purchase upgrades in the app itself, and receive them instantly.  

5. Collaboration

Cloud-based systems facilitate easier collaboration. If there’s one thing we noticed during the recent pandemic, it’s that cloud-based tools like Zoom, Teams, Google Meet made collaboration and communication so much easier, even for hundreds of people in different locations.

A company is always in full control of their own data

Often, the first cause of concern when discussing cloud technology is data security. Thankfully, due to the Data Protection Act of 1998, it’s illegal for a third party to own your data. Only you can own your data, putting you in complete control when sharing information through cloud platforms.  

Capture and share data from specified suppliers or customers

Think for a moment about how you complete forms like supplier audits, or how you communicate your live Work Order status with customers. Like most companies, you probably imaging using a lot of emails or phone calls – well thankfully, it doesn’t need to be like that.

Some cloud-based software like a supplier portal, gives you a direct communication line to your suppliers or customers. So, more than sending a survey for them to complete, they can fill in the survey on your software with a log in. This saves time by reducing emails, documentation and paperwork, but also reduces risks of capturing incorrect information.

Moreover, cloud manufacturing systems can track your live WIP and you can visualise this manufacturing software. So, you can share this information directly with customers, which improves customer satisfaction.

Edit documents at the same time as team members

Typically, collaborating with a customer (or even an internal team member) will involve numerous back-and-forth sending various revisions of spreadsheets to each other, never saving over the old ones, until you reach a version you’re happy with. Thankfully, multiple parties can login to their personal accounts and edit the same documents simultaneously through apps like Office 365, Google’s G-suite, and almost any cloud-based system. These systems also track who does what, when, and for how long, for full traceability.   

Cloud-based disadvantages

Despite the reduce costs, and how easy cloud systems make it to collaborate, and the improved security, there remain some benefits to using on-premise systems that might be more important to your business. 

1. Customisation

Limited ability to customise

Generally, cloud-software is configurable to your company’s needs and wants. However, hosting may limit this. For example, the hosting may not be able to support a very complex system. A local system offers more control over the set up and is typically better at handling more complex systems. This is because of nature of cloud-based systems. Any software application needs to be responsive and easy to use. However, if you have lots of traffic, and the software application is heavy to run (takes up a lot of ram), the speed of the software can impacted. So, the providers will need to invest a lot more in the server capacity, and they may instead make choices in the software that makes it lighter to run, therefore providing less functionality.

However, on-premise systems will only have your company sending traffic to it. Not only that, but you can choose to increase server capacity as you own it. This becomes very expensive, but it is a good option if your company is very large. However, you need to ensure your IT team has reviewed any software before purchasing it, and ensure they are committed to upgrading the server if needed.

2. Connectivity

Requires internet connectivity

Probably the biggest common objection. Cloud manufacturing software requires an internet connection. However, when choosing to set-up your factory before the dot com boom, this probably didn’t factor in to your decision. Furthermore, industrial estates often are among the last places to receive the latest internet connections. This means you either have to look at implementing a specialist line to get faster broadband access, or buying a mobile dongle. The dongle is the cheaper option initially, but depending on how much you use and your service provider, could be restrictive or less reliable.

5G would make internet more widely available. However, that also requires your software and computer systems to be able to access it, which may be a few years in the future.

By comparison, local systems do not rely on connectivity or other external factors; so you would never have this issue.

Cloud-based vs On-premise, which is better?

In summary, cloud-based systems reduce security risks, increase collaboration opportunities, and can reduce operating costs. However, issues and questions remain about the accessibility control. Cloud-based systems are becoming increasingly popular, but if you work in a large organisation which has a dedicated server and the costs that come with that already, then you may prefer to use on-premise systems.

At Fitfactory, we believe cloud manufacturing software provides companies with a platform to be competitive now and into the future. While there is a reasonable pro-con comparison now, in 5 years time, this conversation will be non-existent. It truth, it is almost non-existent now, except in some exceptional cases. This is why all our software is available on the cloud. Our customers can start small and quickly and easily upgrade their users at a time that suits them, with limited intervention from us. And, most importantly, we’re delighted to help our customers to achieve ROI within months by spreading out the initial cost.

If you’re still interested in moving to the cloud, and need the right cloud manufacturing software to help you, please contact Fitfactory and one of our team will be happy to discuss your requirements. 

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