An Executive’s Guide to Cloud Computing #1

Power-Grid-Blog 

Editor’s Note: This particular blog series is meant for the non-IT manufacturing executive—heads of sales, manufacturing, operations, supply chain, compliance, quality, and more. You have a role to play in the design, manufacture, sales, delivery, and support of your products.  The information systems you use are just a part of your world.

So What is Cloud Computing and Why Should You Care?

Business executives rely on information systems in much the same way they do other systems in their business—shop floor equipment, transportation, supply chain, and so on.  Like many innovative information technologies, the story of ‘The Cloud’ has been, well, a bit cloudy. Confusing and conflicting claims about the cloud abound—how it works and how it can help you run your business better. Let’s start by clearing up some of that confusion.

Electrical Power and Information Power: Cloud Analogy

Let’s draw an analogy between two types of energy that power your business—electrical power and information power. Comparing the two, and how they are delivered, can be useful in seeing where the cloud might be useful for your company.

Since the first tool makers, humans have used power in the production of their products. The earliest products were developed using human and animal muscle power. Output was always limited to the amount and type of power available.

As power demand grew, muscle power gave way to more powerful mechanical alternatives. Since Roman times, water and wind provided the ability to use greater amounts of power in the production of products. Of course, both wind and water power were completely dependent upon location and natural conditions. The size of the wheel to be turned, or the load to be lifted, could never exceed the capacity of the available water flow or wind.

The factories of the Industrial Revolution gave rise to machines with ever greater appetites for power.  Originally fed by water and steam power, these machines evolved to rely on electric motors and controls.   In the 1870s and 1880s, early power systems, generating direct current (DC) power, ran factories around the world.  Innovators like Edison and von Siemens provided on-premise power systems to manufacturers. These manufacturers then had to own the related capital and labor costs . The manufacturers now had power, and were making progress. However, output was limited, and each factory owner was burdened with the entire cost of his own on-premise power system.

The Energy Cloud Changes the Paradigm

In the late 1800s, innovations like alternating current and three-phase power, coupled with the construction of major power generation plants, made it feasible to create what I call an “Energy Cloud”.  For the first time, factory owners could subscribe to power, rather than owning their own generating system. Power usage could be purchased “by the drink”, as needed. Reduced capital costs and support overhead freed up manufacturers’ resources, which could then be diverted to other areas. As technology evolved and costs came down, advances in transmission and distribution of electric power, and the construction of nation-wide power grids, brought this type of power into nearly every home.  Electrical applications for lighting, heating, cooking, and other conveniences, brought the average consumer squarely into the Energy Cloud.

So, why was this so exciting?  Wasn’t this new “Energy Cloud” delivering the same thing as the on-premise solutions?  Yes, it was. The differences, however, were significant:

  • Capital expenditure, depreciation, and support costs for power were slashed
  • Human expertise to tend to on-premise power systems was no longer needed
  • Availability, capacity, quality, and flexibility of power rose dramatically
  • Standards of voltage, current, and connections led to more and greater product innovation
  • A common power technology platform, used by both manufacturers and consumers, gave rise to entire industries of products

cloud computing

Fast Forward to Today

What does all this have to do with cloud computing?  In some ways, we’re seeing history repeat itself.

Early information systems, like early power systems, were primarily human-driven. After World War II, the earliest automation of information processing was the large-scale mainframe, or in-house power plant. Like their electrical predecessors, these on-premise information generators have traditionally consumed large amounts of capital and labor. Software, servers, networks, data centers—it’s the on-premise power system all over again.

Today, manufacturers stand at a brink comparable to the breakthroughs of the late 19th century. Decades of experience with in-house information systems have given rise to real alternatives.  Several key technologies have evolved, including servers and storage, software development techniques, the Internet,  and high-functioning personal computer devices, among others. Manufacturers may now buy their information systems as a service, rather than having to rely on expensive in-house data power plants.  The business processes which rely on the steady, reliable flow of information, may now be served by a highly available, high-capacity grid of cloud computing services and applications.  And that grid is no longer limited to the factory. You can now plug in your business units, customers, partners, suppliers,  and consumers.

In forthcoming blogs, we will take a deeper dive into cloud computing.  We will clear up vendor jargon, examine some real-life manufacturing use cases, and see how the cloud can impact the business of designing, manufacturing and delivering products.

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