Not so long ago, the thought of hosting core business applications in the cloud was unthinkable to most businesses. One comment I often heard on the subject was that no one would ever put critical business information into the cloud. But that mindset is changing as we all become more comfortable using cloud-based applications and storage with our smartphones and tablets.
In fact, it’s not difficult to find plenty of evidence on the dramatic about-face business has made when it comes to cloud computing. For example:
- Forbes reports that more than half of U.S. businesses use cloud computing;
- An IDC study found that 69 percent of manufacturers were either using, implementing or planning to use cloud software within several years; and
- Analyst firm Mint Jutras reports that only 24 percent of manufacturers would consider a traditional on-premise system when it comes time to implement a new ERP, while 48 percent would consider a cloud-based software-as-a-service (SaaS) solution.
Though the days of numerous, major companies using the cloud for enterprise computing is still a ways off, we are beginning to see increasing use of cloud-based enterprise systems in manufacturing. The catch is that most companies are extremely reticent to talk about their use of such systems for fear of revealing a competitive advantage or simply not wanting to go out on a limb about using a service that, although proven, is not yet widely accepted.
Fortunately, iAutomation, an East Coast supplier of machine automation products and services has been willing to talk about its use of cloud-based ERP (enterprise resource management) and CRM (customer relationship management) systems.
iAutomation, formerly known as AutomationSolutions is a 150-person company that currently serves more than 5,000 customers with products such as machine and motion control, actuators, pneumatics, pumps, and sensors from companies such as B&R Automation, Balluff, Banner, Festo, Maple Systems, Opto22, and Teledyne Dalsa.
The company has grown over the past several years through acquisition. One of those acquisitions (Integrated Motion) exposed the company to the idea of using a cloud-based ERP system.
“NetSuite [the cloud-based ERP used by Integrated Motion] was one of the attractive elements of the acquisition,” says Al Morrison, iAutomation’s vice president of manufacturing. The software’s “tremendous ability to mine data” as well as having “everything all in one platform—that total integration was huge.”
After merging Automation Solutions and Integrated Motion into iAutomationin 2008, the company standardized its ERP and CRM systems on NetSuite’s cloud-based applications. In 2011, iAutomation acquired Action Automation and Controls and replaced its 18 in-house servers and on-premise ERP system with the NetSuite cloud applications used by the company’s other facilities.
Morrison says that, with NetSuite supporting core financials, manufacturing, inventory management, sales, and CRM, iAutomation has realized double-digit revenue gains to more than $70 million in 2013 while improving customer service and capitalizing on cross-sell opportunities to its base of approximately 5,000 customers.
The move to cloud-based business systems held two key benefits for iAutomation: 1) reducing costs associated with on-premise IT systems and personnel; and 2) the ability to give its field service engineers access to the company’s systems while at client sites. About one-half of iAutomation’s workforce are field service engineers who routinely work at client sites.
“With over 280,000 individual items in our catalog and 40,000 assembly types, access to that information in the field is absolutely critical,” Morrison says.
iAutomation engineers use the SuiteCloud development platform to customize NetSuite for their purposes. Their system is currently running about 240 scripts and “Suitelets” supporting transactions, pricing, consolidated purchasing, and work orders.
Beyond the IT cost savings and increased revenue opportunities the cloud-based systems has presented, other highlights for iAutomation include:
- Work order customizations. Cycle time to address replenishment demand has gone from once per week to once per day. In addition, the company has cut three hours a week from the process.
- Inventory and order optimization. Barcode scanning of inventory items updates the cloud ERP system automatically, supporting faster access and a broader initiative to restructure warehouse operations around Lean principles of waste reduction. With immediate updates, any staff person can inform a customer of order status at any time.
- Business forecasting. On-demand data enables iAutomation to pinpoint business opportunities and track the sales pipeline, with about 15,000 customer and prospect entities accounted for in the system.