For the past several columns, I’ve written extensively about Cloud Computing and its potential game-changing role in advanced manufacturing. Someone recently admitted they were a “little fuzzy” on exactly what Cloud Computing is. And they were even more uncertain as to how a manufacturing organization could best prepare to take advantage of the Cloud.

This is a great topic and of interest to many because there is no single definition of Cloud Computing. Sure, the term refers to having your computing horsepower, network capabilities, data storage and even software apps enabled for “ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction” (NIST’s definition of the Cloud…phew!). From the broader business perspective, there’s a lot more to Cloud Computing than just technology.

I believe Cloud Computing is a form of business model virtualization, which is a paradigm shift away from capital expenditures towards operational expenditures. This brings agility to one’s business model by compelling an organization to examine its core competencies and make better use of its resources and supply chain. This enables the organization to decide which capabilities and processes can be “transitioned and managed” by a trusted partner.

Some may call this a pooling of resources with an economic gain in mind.

So, how can an advanced manufacturing company position and prepare itself to take advantage of the many business benefits the Cloud will offer? The answer to this question is as varied as there are different types of manufacturers today. Therefore, each organization will have to chart its own course. To help navigate, I’ve devised a six-point plan to harness the benefits of Cloud Computing for advanced manufacturing.

1.     Approach the Cloud from a business angle, not an IT perspective. As noted earlier, the Cloud is all about changing the way you do business, not just the way you apply technology to your business. An advanced manufacturing company has to strategically examine its core competencies, those business processes and functions at the heart of the organization. If some are trade secrets that are unique to the company and should be conducted with inside personnel and resources, keep them behind the firewall. Most other processes (e.g., some QA/QC work) can be transitioned outside the organization.

2.     Create a trusted partnership network. To move certain business functions into the Cloud, you have to find partner organizations that can perform these processes on your behalf. These may be third-party computer networking services or they might be a non-competing manufacturing firm with extra resources down the street. Where you can find these partners? Start with the pages of this Digital Manufacturing Report or visit the websites of the National Center for Manufacturing Sciences, National Institutes for Standards & Technology’s MEPs or the National Digital Engineering and Manufacturing Consortium (NDEMC).

3.     Develop Key Performance Indicators (KPIs) to measure success. Manufacturers should know the costs (direct and indirect) associated with critical business processes, and there should be metrics to evaluate them. Cost savings related to running apps in the Cloud versus keeping software updated can be obvious. But KPIs should extend to subjective benefits, such as increased in productivity elsewhere in the company. At the very least, these KPIs should give a simple “thumbs up or down” indicating that benefits have been realized and insight why these results occurred.

4.     Build a parallel proof-of-concept pilot. So you’ve already run an application in the Cloud as a test? Did it really save time and money? The only way to know for sure is to run an internal pilot at the same time using traditional resources. Yes, this indeed takes time and resources, but you’ve made a business decision (step 1) that this engagement is of priority. You’ll quickly know which ran better, faster and cheaper.

5.     Learn from the pilot. Use the KPIs to compare the parallel pilot experiences, but don’t rely on one test run. A Cloud pilot may not perform as well as it could the first time, so it’s crucial to recalibrate and try it a few more times. You may have to reduce the scope of the pilot to make sure you’ve set the pilot “parameters” correctly, and run it again.

6.     Expand the pilot and repeat. If the Cloud pilot did work out well, don’t declare victory right away. Incrementally expand the purview of the pilot, run it longer or with greater scope. Use your KPIs to measure and track progress. “Eat the elephant one bite at a time” until you’re assured this business process can run at an operational level outside the firewall.

Let me close by encouraging your organization to get started now – because there is one thing that Cloud Computing is NOT. It’s not a passing fad that will be gone soon. Letting another entity sweat the details of maintaining the computing resources and other processes that are not your core business competencies is a natural consequence of the information age. Cloud Computing is here to stay.