The big picture: COVID-19 sparked an acceleration of businesses migrating to the cloud.
- The mothballing of on-premises infrastructure in favor of the cloud continues to gain momentum and shows no signs of slowing.
By the numbers: Worldwide end-user spending on public cloud services was $491 billion in 2022, according to Gartner. Gartner forecasts that spending will grow to nearly $600 billion in 2023.
Our thought bubble: Manufacturing and distribution (M&D) organizations are also embracing the cloud. They are looking to reap benefits that include resource elasticity, rapid innovation, cost savings, enhanced data security and recovery capabilities, and a heightened ability to analyze data and optimize operational performance.
Why it matters: More M&D firms are running their SAP ERP platform on Microsoft Azure. The two technologies possess a natural synergy thanks to back ends that feature complementary APIs and robust security and governance features.
The bottom line: By leveraging complementary solutions available through SAP and Microsoft, M&D organizations can:
- Simplify their move to the cloud.
- Gain valuable insight into complex data sets arising from a variety of human, machine and third-party sources.
- Establish a robust and securely governed cloud environment.
Go deeper. Learn more below.
COVID-19 sparked an acceleration of businesses migrating to the cloud as employees working remotely necessitated systems access, flexibility and availability. And several years later, the mothballing of on-premises infrastructure in favor of the cloud continues to gain momentum and shows no signs of slowing, even as pandemic-driven guidelines have been relaxed as we move to an endemic phase of the virus.
Worldwide end-user spending on public cloud services was $491 billion in 2022, according to Gartner. Gartner forecasts that spending will grow to nearly $600 billion in 2023.
Manufacturing and distribution organizations are embracing the cloud as well, despite their inability to shift to remote working as fully as organizations in other industries. But manufacturers and distributors are looking to reap the benefits that moving to the cloud provides – namely, resource elasticity, rapid innovation, cost savings, enhanced data security and recovery capabilities, and a heightened ability to analyze data and optimize operational performance.
As part of this trend, we have observed more manufacturing and distribution firms running their SAP enterprise resource planning (ERP) platform on Azure, Microsoft’s cloud infrastructure and services. The two technologies possess a natural synergy thanks to back ends that feature complementary application programming interfaces (APIs). They also share robust security and governance features that constantly monitor for cyber threats and how data is accessed.
But by working with service providers that offer additional plug-ins and methodologies, preconstructed reporting models, acceleration tools and scripts, and other verticals, manufacturing and distribution organizations running SAP on Azure will realize a significant opportunity for even greater innovation and insights.
The good news is that manufacturing and distribution organizations across the technology maturity spectrum can avail themselves of these advancements. This includes those that have already implemented leading-edge cloud solutions as well as those managing conservative legacy environments or technical debt, both of which can make migrating to the cloud more difficult and time-consuming.
Get the most from SAP on Azure
Here are a few examples of how organizations can leverage the SAP on Azure combination:
- Data exchange – Manufacturing organizations often struggle with siloed information and processes, and in some cases, this requires companies to copy information from one system and place it in another. But by using a bidirectional series of plug-ins that support the transformation and management of data into or out of SAP while leveraging the Azure platform, companies can achieve integration seamlessly and realize economies of scale. For example, workers in field locations or on the shop floor can generate purchase orders – an SAP process – from within Microsoft Teams. Plus, because Azure and SAP handle the authentication together, they control who has access to what information. Ultimately, the solution provides organizations with process improvements that deliver financial, security and safety benefits.
- Insight views – Multiple reporting platforms, methods of working and data operations typically prevent manufacturing and distribution firms from capturing consistent, timely and reliable information, thereby foiling efforts to become more efficient and reduce system downtime. An insight view solution provides preconstructed, auto-generated reports that pull information from multiple sources and transfers it into Azure. This supports best-practice reporting from SAP and opens up a world of opportunity to improve processes. For example, a machine learning algorithm can combine data from the shop floor with depreciation or other historical financial information to better predict equipment maintenance needs or replacement. Additionally, importing third-party data assets like industry trends, weather patterns, traffic, fuel costs and other variables into the system can provide even more robust insights that are not readily apparent from analyzing a more limited number of data sources.
- End-to-end security – The lack of internal resources knowledgeable about SAP authentication, authorization, security hardening, encryption and other security concepts continues to challenge manufacturing and distribution organizations trying to build a case to migrate SAP systems to Azure. End-to-end security in Azure allows these organizations to manage SAP identities securely from the moment they are onboarded and strengthen Microsoft Sentinel’s capabilities for monitoring high-risk areas of SAP systems. The solution features risk policies, rulesets and a roles-based design to control access. Users experience improved access provisioning and real-time visibility into authorization and system configuration risks.
- SAP Analytics – Manufacturing and distribution organizations that have SAP Analytics and Data Services installed on-premises frequently want to move to the cloud to simplify their architecture and reduce operating costs. And they typically want to do it in such a way that reduces risk and provides time to go live. Similar to end-to-end security, however, firms largely lack internal knowledge regarding upgrading and migrating these modern SAP technologies. An SAP Analytics solution can move SAP BusinessObjects as well as the full suite of SAP Data Services environment from on-premises to Azure. By utilizing an advanced set of tools and scripts, a cloud environment can be established in a streamlined and reliable manner, and additional processes can facilitate the transfer of on-premises reports and content to the cloud. Once up and running, the solution provides manufacturing and distribution organizations not only with immediate access to an optimized SAP environment that connects to existing data sources but also with a simplified, scalable and easily upgradable architecture. The end result is a solution that enables the organization to generate better and faster insights for areas such as forecasting and supply chain transparency.
Many manufacturing and distribution organizations became aware of the advantages they could accrue by migrating to the cloud in the early days of COVID-19. But supply chain disruptions, increasing costs and competitive pressures continue to stress their businesses, making the adoption of a cloud strategy even more urgent today.
The growing practice of marrying SAP and Azure has created an accessible, cost-effective and manageable route for these organizations to accomplish this task. By leveraging additional complementary solutions available through service providers, manufacturing and distribution organizations can simplify their move to the cloud, gain valuable insight into complex data sets arising from a variety of human, machine and third-party sources, and establish a robust and securely governed cloud environment. This shift in technology is one of the key steps in enabling the business to better engage with their customers as well as obtain more well-rounded insights from all the data generated within the organization.