Why should manufacturing SMEs switch to a cloud-based system?
The manufacturing industry is continuously going through change. But few could have foreseen the level of upheaval that occurred in 2020 and beyond. As a result of this drastic shift, more manufacturers than ever are considering cloud solutions.
But what exactly is cloud-based software, how does it differ from on-premise systems, and what are the main benefits of switching to the cloud?
In this article, we answer these questions, and explain how easy it is to adopt this transformational technology.
What is cloud-based software?
The term ‘cloud’, in computing, can be used synonymously with the internet. Therefore, cloud-based software is a system that is accessible via the web.
If you pay for a streaming service in order to watch movies at home, this is a similar concept. You receive access to on-demand content, rather than needing to physically buy a DVD at the store.
With cloud-based software, you pay a monthly fee to a provider (this is also known as Software-as-a-Service), and then you have access to their system. Rather than needing to have your own servers, this is hosted for you by the provider.
What are the benefits of using cloud-based software?
Paying for software through a subscription model protects cashflow, which is crucial for a small manufacturer. On-premise systems usually require a large set-up fee. And then there’s the costs associated with maintaining it as time goes on.
There are no financial surprises with cloud-based software. You’re aware of exactly how much you’re paying each month. This payment includes any ongoing updates of the software, and any support you may require too.
As a result, manufacturers can budget appropriately and plan for the future. The money that is saved can be invested in other areas of the business.
During the pandemic, there has been a huge increase in people working from home. This is a trend likely to continue long into the future. It’s now imperative for employees to at least have the option to work remotely.
Remote access through the cloud makes it easier to keep data current. If any sales, inventory or financial information needs to be changed, this can be done from anywhere (and at any time). In the case of emergencies, this can be the difference between avoiding a catastrophe or not.
Cloud providers host their systems on off-site servers, making it far less likely for sinister forces to access them. If you have a server in your office, it is much more vulnerable to physical sabotage.
Hosted servers are continuously monitored by the provider (from a security perspective). They will also take regular backups of your data, so that there’s a safety net in the event of a system crash.
The software is updated automatically at regular intervals, so the latest security protocols are always in place. As a result, the system will also be compliant with the latest legislation.
Cloud-based software improves a manufacturer’s overall performance. With financial information being more accurate (due to real-time data), it’s possible to make bold predictions about the future, which could influence important decisions.
With inventory data being updated straight away, it reduces the risk of customer’s ordering products that are out of stock.
Cloud solutions also save businesses time. Gone are the days where a technician must come out to upgrade the software on each individual computer.
All this extra efficiency speeds up the whole supply chain. Manufacturers can use this time focusing on value-adding activities. Not only this, but cloud computing provides an edge over the competitors that don’t use this technology.
For manufacturing SMEs looking to grow, there may be a concern that any software purchased will become unfit for purpose at some point (resulting in the need for frequent investments).
But this isn’t usually the case with cloud-based systems, as they are extremely agile. These solutions can be scaled up and down to match the needs of your business. If you’re facing busy or quiet times, it can adapt accordingly. When you grow, it will grow with you.
Are there any disadvantages of using cloud-based software?
Some may argue that cloud-based software is less secure, as it is more vulnerable to cyber threats. However, as long as you choose a reputable provider, they should have sufficient precautions in place to nullify this risk.
Having complete reliance on the internet could be seen as a drawback too. Any kind of internet outage would have a negative impact on productivity. But in today’s world, a large percentage of workers must use the web on a daily basis anyway. So, this threat is not limited to cloud systems.
As with any tool, cloud systems are not free, and do require a monthly subscription fee to be paid. But as discussed earlier, this model actually protects cashflow, and includes aspects that would normally cost extra.
The potential drawbacks of cloud-based software are far outweighed by the gained benefits. But as with any investment, it’s a matter of weighing up the pros and cons, and making sure it’s right for your unique circumstances.
Cloud-based software vs on-premise software
On-premise software must be physically installed on every computer. You must also maintain your own server, and possibly hire a dedicated IT team too. Not to mention the management of security and data storage.
A busy manufacturing owner may prefer to outsource these tasks, as it is more cost-effective, and allows workers to focus on activities within their realm of expertise.
If an on-premise solution ever needs to be fixed, this cannot be done remotely. It will likely involve further costs too.
There are some manufacturers that may prefer to use these systems, as it perhaps gives them more direct control over their business. However, adopting cloud technology is undoubtedly a great way to stay ahead of the curve, and is a proven way to facilitate growth.
Which cloud-based system should manufacturers use?
If you’re the owner of a manufacturing SME, you may use a variety of systems for each separate business function. For example, you may use Exchequer as your accounting solution. If this is the case, and you’re looking to make the leap to the cloud, it’s never been easier to switch systems.
Having different software for each business area can be limiting. In this instance, your departments will never be fully synchronised. Data will likely be inconsistent, with individuals across the organisation using different sources. This lack of cohesion can prevent small manufacturers from performing at an optimal level.
Manufacturing Software not only possesses all the benefits discussed from being cloud-based, but it also unifies all your activities in one system. This includes the accounting, e-commerce, contact management, inventory control and production planning aspects.
A change in one part of the system will impact other areas. This allows for a level of automation not possible before. If a sale takes place on your e-commerce platform, this will then be reflected in stock levels (which will also influence orders that are placed with suppliers).
This sales activity will also filter through to your finances, meaning your accounting team have a constant snapshot of overall financial health.
Manufacturing Software also has powerful reporting capabilities. This, partnered with highly accurate data, ensures you can make invaluable predictions around market trends, product demand and customer behaviour.
If you’re looking to implement a cloud-based system that unifies all your business processes in one place, take a look at our Manufacturing Software (which is tailored for small to medium-sized manufacturers).