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Will Cloud Computing Work For Material Handling?

 “Cloud” computing is a relatively new alternative to traditional internal hardware and software computing solutions. It exploded in popularity across many industries during the recent recession due to its metered system of payment and ease of use. It has not yet caught on as much in material handling. The question is, why not?

Basically, cloud computing is when companies use the Internet to store their data and access their applications instead of investing in fixed hardware solutions. The cloud may sound like a complicated and confusing concept, but it really isn’t, especially considering that many applications that people use everyday are cloud-based. Facebook, LinkedIn, Google Gmail (or Yahoo! mail or Hotmail), Amazon transactions, Dropbox and countless other Internet mainstays are all cloud applications. A simple way to define how the cloud is different than traditional computing is that instead of purchasing, installing and supporting computer hardware and software in your own data center, you access these resources from a remote data center.

Cloud computing offers several advantages for businesses, especially small to medium-sized companies. A study of 130 companies by research firm Gartner found that 95% of them are either using or considering using cloud computing solutions for their supply chain. Of the companies surveyed, 41% saw quantifiable savings and nearly three-fourths of those using the technology had cut their IT expenses anywhere from 5% to 20%. By utilizing cloud systems, companies no longer have to worry about server maintenance. If there is a problem with the technology, they need only to call the service provider. It is also far easier to customize storage space. Because it is a “pay as you go” system, companies pay only for the storage they need and never have to worry about running out of space. It also saves businesses the time and hassle of manually installing software on every computer and server in the building(s). As one of the executives who was surveyed in the Gartner report puts it, “We were tired of the long installations of ERP and upgrades, when other companies are reaping value such as quicker time to productivity, greater ROI and lower costs.”

The cloud is not without its challenges, however. The biggest reason that companies haven’t universally jumped onto the cloud is security. Because the data is stored off-site, companies worry about potential security risks. This may be a valid concern, as researchers from MIT were able to figure out a way to place “malicious virtual machines” onto hosting servers in Amazon’s cloud environment. The researchers claimed that if a hacker were to do the same thing, it would be possible for them to steal data that was stored on the same server. For this reason, it is vital that companies opting to use cloud storage are made aware of where their data is residing and have it isolated and stored away from other companies’ data. Another concern is data ownership. Some companies fear that by hosting their data on an outside server they may cede ownership to the host, but most contracts can be written with language that specifically addresses ownership.

Material Handling and the Cloud

Though the material handling industry has been slow to adopt the technology, a hosted computing environment, like the cloud could be of use to some in the material handling industry. For example, by utilizing a cloud service companies that offer warehouse management or warehouse control systems would need only to tailor the parameters of the WMS and WCS to fit its requirements and input the data. If done correctly, the service would save companies time and money.

Some distributors are prepared to offer cloud technology in the event that customers begin to ask for it. Gary Niklas, sales manager for Wecon Systems (Mississauga, ON Canada), sees several potential advantages that the cloud could offer the material handling industry. “From an integrator’s point of view, several of our value-added activities involve developing concepts. This usually involves design verification and presentation software of some type. Most firms have basic CAD packages and have developed drawing libraries for their own equipment. There might be an advantage to having a common library accessible in a cloud environment with input from various OEMs.” Niklas also points out that the recent trend toward smart phones and tablet technologies (like the iPad and Galaxy Tab) may push the industry further toward cloud computing. He says, “These are wonderful portable interface devices, but they lack resident memory. There will be no alternative but to use cloud-based services.”

Anne Ewing, sales and operating manager at Dysel Business Software (Louisville, KY), also sees the trend moving towards the cloud. “We have seen interest increase lately in what companies are referring to as cloud environments. Mostly we are seeing small to medium sized companies express an interest in cloud environments because they do not have the resources in-house to manage the hardware and software and because of cash flow. As business activity continues to improve, we’ve seen an increased level of interest in new business operating systems that will be hosted and managed by the supplier.” Expanding this thought, Niklas opines that the cloud would lead to a rise in apps that could control equipment and processes and automate tasks. “There are apps now that can start your car and monitor your home remotely. It’s just a matter of time before one of the standard interface options provided for industrial control is iPad connectivity.”

Others in the industry are more hesitant to call cloud computing the trend of the future. One industry software provider has not seen demand from his customers. He says, “It hasn’t been adopted in this industry. We are prepared to offer this option for anyone interested, but so far we haven’t seen the demand.” He cites the common fear of data security as the biggest reason that material handling dealers are leery of adopting it. He also cautions that cloud computing has its roots in the 1960s and that the industry has seen several iterations of it under different names. “The idea of the cloud started in 1960. It has been marketed by several names over the years such as Platform as a Service (PaaS), grid computing and now cloud. Another technology might replace it before cloud use is widespread.”

What do others think? In a time when companies are looking to cut costs and increase efficiencies, is cloud computing a viable solution that will continue to gain in popularity? Or are the looming security concerns too much of a risk to take with valuable company information? Let us know via the comments section.

Material Handling Equipment Distributors Association

One comment

  1. Great article. I do think cloud computing is just touching in its infancy, I will become a main stay in business computing in the near future,

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