Why More Manufacturers Are Finding Quality Maturity in the CloudCloud ERP Manufacturing
All manufacturers—from startups to those in the Fortune 100—are concerned with quality. However, where each is along the path to quality maturity varies. At LNS Research, we like to refer to the process of progressing forward on this path as an “endless journey,” because with an ever-evolving set of quality obstacles as well as continual innovation in strategies and technologies, there’s room for even leading companies to improve year over year.
Although many factors contribute to maturity, we’re finding that the strength of a company’s quality IT resources are a good indicator of where it is on the journey. Leading companies have robust Enterprise Quality Management Software (EQMS) implementations, while many less mature—often small-to-medium sized businesses—still rely on outdated legacy systems or homegrown solutions.
In terms of quality IT, the gap between market-leaders and many smaller manufacturers has traditionally been very wide and difficult to close. Though, advancements in cloud-based technology are changing that. Below, we’ll detail how cloud-based quality solutions are benefitting less mature manufacturers and then share some data on adoptions of such solutions.
The Motives Behind Cloud-Based Quality Adoption
Cloud-based EQMS delivers similar, and in some cases enhanced, functional benefits of traditional on-premise solutions—automating, centralizing, and standardizing quality processes while enabling communication and collaboration across the value chain. Because of its alternative delivery model, however, it has emerged as a way for companies with fewer resources to level the playing field with larger competitors.
Some benefits that resonate specifically with smaller, resource-constrained companies include:
- Lower total cost of ownership: In contrast to on-premise solutions, cloud-based EQMS with a subscription pricing structure doesn’t require large up-front investment in hardware, servers, and so on, and system maintenance takes place by the solution provider remotely (over the internet). This reduces burden on the IT department, and actually frees it up to focus more on value-add activities. Combined, these aspects of cloud-based EQMS can deliver a lower total cost of ownership. At the very least, it can reduce the need for capital expenditure, allowing expense dollars to deliver the same capabilities that previously required large capital investment.
- Lower time to implement new solutions: As mentioned above, implementation of cloud-based EQMS has significantly less requirements than on-premise solutions. Consequently, the time to implement new solutions is often much quicker, which makes the time to ROI quicker as well. This is typically attractive to smaller companies that are hesitant to make IT investments.
While the benefits are clear, many professionals are quick to ask, “Well, why doesn’t everyone adopt the cloud?” The answer is multifaceted, but we’ll address some top reasons. Many companies—especially larger ones—already have a robust IT footprint, making replacement and reintegration cost-ineffective. Also, some are sensitive to cybersecurity, privacy, and the lack of control that are sometimes associated with the cloud.
Data: Cloud-Based Quality Technology Adoptions
Like with any investment decision, there are numerous costs and benefits of taking a cloud-based approach to EQMS, but our research has shown quite a positive response to it. For companies with less resources, it’s making increasingly more business sense to evaluate the cloud. Our research shows that in 2013, 31% of SMB manufacturers had a cloud-based EQMS deployment. We expect to see this number continue to rise in the 2014-15 data.
It’s important to note that this data accounts for cloud-based EQMS deployments delivered by pure-play EQMS vendors as well as by ERP, PLM, and MOM providers. Because of quality’s importance to operations, many tangential solutions providers—especially ERP and PLM—are now offering EQMS solutions that are in many cases competitive with what’s delivered by pure-play EQMS vendors. It’s something to consider while evaluating solutions.
Moving Forward on the Quality Maturity Journey
With the cloud delivering comparable functionality to on-premise solutions in a way that’s more cost-effective for many smaller organizations, it’s facilitating the opportunity to operate at an advanced level of quality IT maturity. And in today’s competitive global economy, where customers have the power to be more unforgiving, it’s only becoming more of a requirement to operate at this level of maturity.