Cloud-based technology refers to the use of third-party servers to store data and information as opposed to on-site technology where all data is housed within a business’s own servers. In our increasingly digital world, it makes perfect sense that cloud technology would start to replace on-site operations throughout the supply chain just as AI has done with most manual processes. After all, we do nearly everything else in our lives through the use of cloud-based technology, it was only a matter of time before supply chains caught up with the digital trends as well.

But is there something to be said for the old “if it ain’t broke, don’t fix it” model of on-site methods? Or is on-site technology an outdated option that needs to be eliminated to make way for newer, cloud-based solutions?

Let’s take a look at the benefits of using cloud-based technology as compared to on-site methods across two different domains.

Cost Considerations for Cloud-Based Solutions

As with any decision, everything boils down to cost. Will you save money with a switch to cloud-based technology, will you break even, or will you lose money? The ever-frustrating answer: it depends.

“Pay-as-you-go” vs. “Paying it off”

If you choose to implement cloud-based services, you’ll never fully own the servers and other hardware as you would if you used an on-site system. So when the issue is looked at in this light, it’s important to consider your short-term vs long-term needs. If you are a small to midsize company, the thought of the potentially massive early fees to purchase the equipment, plus the cost of maintaining the on-site equipment long-term may make you wince.

For smaller businesses, it’s likely the better option to outsource to a third-party through the use of “pay-as-you-go” models. For large companies with lots of resources, however, it may be more beneficial to purchase the on-site technology and maintain it in-house in order to have everything under one roof and minimize recurring sizeable costs. 

Business growth considerations

Oftentimes, cloud-based service providers will offer flexible rates that are based on monthly data usage. In periods of decreased demand, this is extremely beneficial to your company, as you won’t be paying for storage that you aren’t able to use. Regardless of the size of your company, this is a tempting incentive to move away from on-site technology, as you will not be required to make decisions about your in-house storage needs, but will rather pay only for what is necessary each month.

IT staffing needs

A more indirect cost of on-site technology is that of the IT staff you’ll need to have available. It’s an unfortunate fact of the world, but things go wrong with technology and when they do, you need to have people around who can quickly and efficiently get you back up and running. These costs are essentially integrated into your monthly cloud-service payment, as you do not need to directly address the technical issues as they happen. The responsibility of triaging and addressing these issues is on the third-party cloud service provider.

Does Your Cloud-Based Solution Increase Efficiency?

Most often, cost is the first consideration, but the quality of the system should be take precedence. So, does cloud-based technology actually improve efficiency when compared to on-site tech? Does it mitigate supply chain risks? Let’s take a look:

Speed

Speed is often one of the clearest benefits of moving toward cloud-based software. Because of the nature of a cloud-based system, data exchange is inherently faster than is the case with on-site systems.

How reliable are cloud-based solutions?

One thing that cloud-based technology does well is it provides lightning fast delivery of data. Cloud technology gives businesses better control over data-related issues pertaining to information accuracy.

Privacy and Security

Years ago, cloud technology came under fire after a security breach compromised the security of businesses and individuals involved. Since then, security measures have been improved and cloud providers understand how important privacy is to their clients. There is no absolute guarantee of security with on-site or cloud-based data services. So ultimately, the choice of how you want to handle your security needs is up to you.

Conclusion

Moving forward, cloud-based services are going to have important implications for all supply chains. There are many different ways in which cloud technology can be leveraged for a business, even affecting things such as the WES or the WMS used by the said company.

What you choose for your business should be based on the best available evidence.