The world is a very different place post pandemic, and will forever be beyond debate. Today, the crisis management and siege mentality of the early pandemic years has given way to a kind of economic existentialism. It is up to us. Enterprises can ensure their survival through acts of will and strategy. Entire industries are reinventing the rules of engagement. Manufacturing, for example, examines nearshoring and onshoring as strategies for the future, while furiously evaluating internal proposals for digital transformation.
Across the Middle East, these acts of will and strategy can be seen at the government level, as countries reorganise their manufacturing sectors to diversify their economies, build resilience, and boost GDP. The UAE Ministry of Industry and Advanced Technology (MoIAT) came up with Operation 300bn, designed to boost the GDP contribution of the sector to AED 300 billion (US$82 billion) by 2031. However, regionwide, work remains. In 2021, the World Bank was telling us that manufacturing accounted for 17% of global GDP and rising but in the Middle East and North Africa (MENA), that figure was 12%.
Digitisation will be key to advancement. The regional sector will continue to incorporate IoT solutions, workflow automation, and a range of field, floor, plant, and back-office technologies to elevate operations and introduce previously unimaginable efficiencies. At the heart of this new digital ecosystem sits the ERP system, enabling and optimising everything from materials sourcing and inventory management to quality assurance and delivery. But unless this ERP lives in the cloud, it may not bolt into the corporate vision neatly enough to guarantee success.
Cloud Steaming Ahead
Epicor research shows there is growing momentum in cloud migration. And in the Middle East, we can infer the same from the influx of hyperscale providers like AWS, Microsoft, and Google. Many different industries have benefitted from access to digital service marketplaces and safe, secure homes for their digital stacks. And the region’s adoption is primed for acceleration through these established hyper-platforms, especially when one accounts for the slew of government initiatives that encourage every business from agile startups to venerable incumbents to make their base in the cloud.
But to return to regional manufacturers, we see many hesitant players shuffling their feet at the touchline rather than stepping onto the pitch. That lingering attitude to legacy on-premises IT of “If it ain’t broke…” is robbing some of the many pluses the cloud brings. The manufacturing sector is known for its long, drawn-out upgrade cycles. Heavy machinery is a significant upfront investment and purse-holders are anxious to squeeze every bit of value out of it before retiring it from service. This mindset migrates from operations and OT to IT. Manufacturers, having procured ERP as a working on-prem solution, see little point in upsetting the apple cart of efficiency.
But is it really that efficient? With the cloud, stakeholders get a prebaked infrastructure. And the capital requirements for unlocking innovation potential are far less. Smaller businesses often race to the cloud to take advantage of enterprise-grade capabilities they could otherwise not afford. This opens doors to scalability and agility. Cloud ERP solutions offer this same scalability and flexibility, permitting changes to business workflows without as much effort or investment. And those expensive, prolonged upgrade cycles become a thing of the past, as they are included in the subscription cost and managed by vendors and their partners. Indeed, the maintenance and refresh of entire chunks of infrastructure — servers, backup systems, and more — as well as their physical security, can be left in the trusted hands of others.
Risk and reward
It does not stop there. The cloud is the gift that keeps on giving. Operational overheads such as electricity, cooling systems, backup systems, and remote-access technologies are all but eliminated when moving ERP systems from premises to the cloud. And implementation turnaround times for cloud-migration projects normally run into days rather than weeks or months.
But the touchline naysayers are not unjustified in their reticence. It is understandable to perceive risk in change. Manufacturing operations come with a standard “no downtime” mission statement. Offline machinery translates to second-by-second losses. And that is just during implementation. We are talking about connecting precious intellectual property and critical operations to the untrustworthy Internet. Data, much of it sensitive, will routinely cross corporate boundaries and the enterprise’s crown jewels will be in the hands of a third party. And let us not forget that the Internet connectivity, that is vital for a working cloud, may go down.
Many of these fears, while understandable, may be appeased by considering how far the cloud has come. The UAE has some of the best connectivity in the world, and cloud data centres have, on average, better security records than self-hosted environments. And a pragmatic risk assessment also must include gauging the risk of inaction. Ageing infrastructure is also prone to downtime. And what of the ultimate risk to the business? What is the advantage to keeping the factory floor ticking over when your competitors have one that is more efficient and cost-effective? Looking inward could lead to obscurity.
Innovation hatches
And given the momentum in cloud adoption, this concept is sinking in. The cloud is the home of competitive advantage. It is a time saver, a cost saver, and quite possibly a business saver. The cloud is like a new member of the IT team, willing to work nights, weekends, and every second in between. How much is that worth to a growing business? That is why ERP belongs in the cloud. With much of the humdrum automated, the enterprise spends more time thinking and training, which leads to more thinking. Sooner or later, innovation hatches. And competitiveness soon after.
