The Manufacturing Cloud in 2014

Greylock Partners, one of the most prominent Venture Capital firms in the world, just posted a great presentation about 7 trends that illustrate cloud and SaaS (software as a service) are changing the Enterprise Software market.

It’s a great presentation and definitely worth checking out to get some trends. The Manufacturing Industry's solutions are behind other enterprise applications like Sales, Marketing, HR, and Finance that have already moved to the cloud, but change is coming to the manufacturing as well.

Here are a couple theories about what's going to happen in the Manufacturing Industry in 2014 based on general trends.

Greylock Trend: Manufacturing IT departments will stop blocking cloud services and CIOs will become cloud enablers

The competition between hardware companies is becoming hotter and hotter. Speed to market is everything and finding the right talent is becoming more difficult.

With these trends, Engineering and Manufacturing Managers are looking for different ways to help individual engineers become more productive, and have internal and external supply chain teams work together. The key for this transition is creating clear communication and process around the workflow. The best way to manage this is through software that is designed for the new environment. Because teams are becoming increasingly distributed, people are looking for a new type of software, one that enables this new type of team. This new software is typically in the cloud and very easy to use (like Dropbox), with no training involved. Historically in large companies these tools were blocked by IT but now the the role of the IT department is changing. IT needs to start play offence and help people to get their products to market faster, not block these tools. CiO 's and CAD managers who fail to  embrace this new environment will be in the hot seat.

Greylock Trend: Incumbents go on a cloud buying spree

I don't think this is going to affect the CAD/CAM/CAE/PLM market next year because compared to different horizontal products, like ERP and CRM, the manufacturing industry is still far behind on cloud adoption and most incumbents don’t see the cloud coming.  CAD vendors are busy satisfying their bigger accounts and since big companies are not going to ask for cloud solutions in 2014, the vendors will likely ignore the growth of cloud solutions in the small and mid-size segments.

Greylock Trend: Enterprise cloud apps will go mainstream, sparking the rise of niche apps

This is something we at GrabCAD believe deeply.  With infrastructure costs going down it now makes sense to replace those generic solution with niche apps.  I have written about this in depth here. But overall the point is that with niche apps you can build much better and deeper experience for the end-user because you will have a certain user in mind that you know very well. Another great way to illustrate this is the below - a snapshot of the opening screen of Microsoft Excel.

There have been many successful businesses built around every Excel Template:

Greylock Trend: IaaS and PaaS are the two final nails in the coffin of the traditional firewall

The main driver for going beyond the firewall in the Manufacturing Industry is the need to effectively collaborate outside company boundaries- for example with outside engineers or suppliers. I predict that in 2014 we will see announcements about how heavy PLM solutions are moving their products to the new cloud hosted environments, even though big challenges still remain for these tools. The reality is that for most people, these tools are not easy to use even after they have been made available outside the firewall.

It’s already 3 months into 2014 and I feel strongly this is the year where manufacturing will start to move to the cloud. The questions is no longer "if" but "when" a company puts their engineering and manufacturing data on the cloud.


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