The Cloud Scares Me!

like the Squannicook, the Nissitissit and the Merrimac, to the Industrial Revolution and post-Industrial revolution names to whom we look for business leadership in innovation and profits - Biogen, Akamai, Gensyme, Raytheon, Thermo Fisher, MIT and others.  In our January issue of Blue Heron we posted a feature called “Gloucester Engineering, Re-starting an American Icon” that included Cloud ERP laid on a foundation of clean lean production.  But it isn’t enough.  Well, we believe it’s time to look closer at tech initiatives that can help us put the pieces together.  We’ve had years of training and we’ve been scarred by our Crusades  – first the MRP Crusades, then the ERP campaigns, followed by the quality wars, the re-engineering downsizing strikes, and now we seem to be stuck in the Cult of Lean. Did you know, for instance, that although there are hundreds of lean training programs and certifications and plant tours available 24/7, that the Shingo Prize guidelines are missing substantial recommendations about the IT systems that we use to run manufacturing, supply management, and logistics?  “I call that an anti-technology bias,” Emu commented under his breath.  But before you drink the Kool-Aid, I think we should all take a deeper look at what technology can offer us toward Integration, the next initiative dedicated to putting the pieces together, please.  Or what Emu so proudly mentioned in his latest Skype –

Enable, Engage

Management, Manufacturing

Unity!

I swear, he must slip into the motel office after dark and park himself at the computer unobserved because he’s been sending regular missives from the Outback.  He’s using words like “overdue,” “Cloud computing,” “optimization,” “network simulation,” and last month he sent a rant on “spent mangement” – as I mentioned, he doesn’t type well.  Has little prehensile claw extensions on his wings – those aren’t worth a damn on anyone’s keyboard, and sharp scaly feet, ugly but fast. Personally, I’d like to see him rest up a bit, head out on a hunting trip toward the coast, maybe find some ostrich to hang out with.  And I think he just might do that if he sees that we are finally engaged.  That we’re at least willing to investigate, to take a closer look at some big scary issues.  There’s no negotiating with an Emu.

As a follow-on to our Gloucester Engineering story, we sought help from several generous and technologically savvy friends.  We wondered if this Cloud thing will really descend upon us, and whether some sort of migration is inevitable, and if it will hurt.  Further, we were anxious about identifying a reasonable technology map that would make everything look as easy as Apple devices do now.  Our first expert colleague, whom we’ll disguise with the name Dave, is an IT guru in an East Coast technology producer.  Dave knows his way through the clouds of hype and hope that are wafting our way.  His billion-dollar company grew to be a global supplier of elegant and sometimes complex electronic devices.  As one would expect, they are fearless and disciplined about the way they use technology to manage production and supply management operations.

“But are you on the Cloud?” I asked innocently enough.

My friend took another quiet sip of his green tea – he has forsworn all the usual caffeine products and seems to live a remarkably calm work life.

“That depends on the application,” he answered with a slight smile that encouraged me to press on.

“What I mean is, what are you going to do with all those servers?”  Dave laughed and reached for his laser pointer.

“Take a look at our customers, and our products,” he said gently.  “Do you really think we’d risk our IP on some shared server concept located who knows where inhabited by all sorts of strange sorts?”

I knew Emu would identify with that, him being out there in the who knows where of the Outback.

My friend continued to outline a Technology Map whose names were familiar to both myself and Emu.  After all, I designed and implemented a bunch of them, and I’ve heard

some of the ones to which we applied a thick coat of Rustoleum are still out there breaking down upper level requirements into waterfalls of cascading assemblies, sub-assemblies and piece parts.  It’s enough to make a tech lover like myself lose herself in reverie. “But is it on the Cloud?” I repeated.“Tricia, my dear.  You’re like the Lean Cultists, stuck on the obvious.  Let’s go a little farther, shall we?”And here’s what my friend Dave told me, in five minutes, with his mind only half intent on our discussion – the other 50% locked firmly on the clock. For a portfolio rife with complexity – hundreds of suppliers, thousands of products and thousands of customers all over the globe, a centralized ERP system working with central procurement is the starting point.  While an off-the-shelf IT supplier such as Oracle or SAP may be the easiest choice, there are other tools that should be added.  An elegant and powerful forecasting front-end, for instance, must be in place to pick up the slack where the customer order stream drops off; forecasting covers the longer lead-times that purchasers need to buy aggregated quantities or gross requirements of raw material and services such as logistics and warehousing.  Dave’s company uses other add-ons that add to their global capabilities – a simulation package, for example, of a logistics network that allows the user to experiment with different transportation nodes.  “But is it on the Cloud?” I repeated.He started to speak faster, rattling off a barrage of tech terms as the digital clock silently flipped along.  Any proprietary or sensitive company information – new product designs and specifications, for instance, or proprietary process information – cannot, he insisted, go to the Cloud, for obvious security reasons.  Every time a hacker breaks into a retail database – think TJX – or on-line social media registry, we take another cautious step back.Further, systems that require a high degree of integration of lots of data from multiple applications – supply management for instance, drawing on supplier contracts, shipping receipts, Accounts Receivable invoices, even purchasing notes – might be best left and maintained locally.  If your IT department has custom engineered a complete and 93% accurate forecasting module, why move it?  According to Dave, the higher the degree of integration required, the harder it becomes to use The Cloud.  For simple examples such as payroll or a sales support or learning management program, which is very standardized and not strategic, operating on a cloud-based system is easy and hopefully secure.

So, the question comes down to security of IP, integration with legacy or current systems, scalability and costs.  As Gloucester Engineering discovered, the benefits of shutting down the air-conditioned antiquated server room located on the lower forty afforded a great cost saving opportunity, and it was time for them to start fresh.  Other companies may like the ability to dial up or dial down for more processing power on the Cloud without incurring permanent IT hardware or people costs.  As my friend Emu commented, “Just like Netflicks!  Order them tonight, put your account on hold tomorrow!”

In the early days of Target magazine, a publication Tom Peters praised as “the best business periodical going,” we quietly subscribed to a Bulletin Board service where we could post and exchange files with each other and our design and layout people.  This was well before the web enabled direct instantaneous exchange of big files loaded with graphics and attachments.  The service was operated by a former police man, and it was cheap - pennies a day - because on the other side of the “plywood partitions” he had installed to separate us from our neighbors, resided one graphics designer – okay, and the money maker, several soft-porn sites.  We called it “Throbnet,” and for all the years we produced Target magazine for The Association of Manufacturing Excellence via Throbnet, a well-maintained secret, there was never a breach.  Although at times I think the readership might have enjoyed a little slip now and again! 

So it comes down to cost and security.  Every technology advance is subject to Moore’s Law and five to ten years out we can expect that Cloud service pricing structures will of course change.   In fact, my friend Dave believes that although cost may be initially the main reason to move to the Cloud, total cost of ownership shifts after years three to five. And as for security, Emu reminds me that there are even governments sponsoring electronic espionage for Pete’s sake, so security concerns will continue to be one of the big reasons why we need to learn more about Cloud systems.

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