Nutanix is forecasting that the ANZ and global manufacturing industry will more than double its adoption of hybrid cloud from 19% to 45% in the next two years, as the sector aims to drive digitisation, enable automation, improve use of data and customer experience.

The firm’s Enterprise Cloud Index found the manufacturing industry’s hybrid cloud usage and plans outpace the global average across industries. The report showed that while manufacturers have a desire to innovate and drive transformation, legacy IT systems have the potential to constrain their ability to do so.

“The opportunity for manufacturers to embrace digitisation efforts including Industry 4.0” initiatives can break the impasse, but executives must focus on new opportunities to create value and not only prioritise traditional business operations,” the report authors said

The study also highlighted that manufacturing organisations face the constant challenge of trade-offs: they are under pressure to meet current productivity and operational goals in an increasingly global and highly competitive marketplace, but they also need to invest in future growth.

This challenge has created a demand for new technology solutions that can help balance the trade-off between current and future goals. IT leaders in manufacturing must avoid the beaten path of finding short-term fixes for increasing revenue; instead, they should look to long-term solutions that enable automation, enhanced use of data and improvements in customer experience.

“Manufacturing is a key component of Australia’s economic engine, adding over 10,000 new jobs in the past quarter alone,” said Nutanix ANZ MD Jamie Humphrey. “As the industry frees itself from the shackles of outdated processes and systems, technology has become an integral part of doing business. New technologies will require digital infrastructure if they are to help the industry thrive into the future. Building a future-ready and relevant industry on a tech infrastructure designed over 25 years ago may undermine that momentum and our future competitiveness.”

“The good news is that the industry sees this and has already begun embracing hyperconverged infrastructure and hybrid cloud to ensure the foundations are in place to build Australia’s digital future.”

The Enterprise Cloud Index findings indicate that manufacturing leaders are aggressively adopting new technology to embrace modernisation instead of getting left behind with legacy systems. The distributed cloud model offers a solution that delivers speed, flexibility, and localisation, allowing manufacturers to improve efficiency without compromising quality.

While 91% of survey respondents reported hybrid cloud as the ideal IT model, today’s global average hybrid cloud penetration level is at 18.5% — the disparity due in part to challenges of transitioning to the hybrid cloud model.

Manufacturing industries reported barriers to adopting hybrid cloud that mirrored global roadblocks, including limitations in application mobility, data security/compliance, performance, management and a shortage of IT talent.

Compared to other industries, manufacturers reported greater IT talent deficits in AI/ML, hybrid cloud, blockchain, and edge computing/IoT.

Other key findings of the report included:

  • 43% of manufacturers surveyed are currently using a traditional data centre as their primary IT infrastructure, slightly outpacing the global average of 41%
  • However, manufacturers currently use a single public cloud service more often than any other industry. 20% of manufacturing companies reported using a single cloud service, compared to the global average of 12% — a testament to the fact that manufacturers are starting to turn to the cloud as a solution, given that they deal with legacy IT systems and cannot handle workloads on-prem.
  • Manufacturers are also advancing the movement to private cloud: 56% of manufacturers surveyed said that they run enterprise applications in a private cloud, outpacing the global average by 7%.
  • Manufacturers are struggling to control cloud spend. One motivation for deploying hybrid clouds is enterprises’ need to gain control over their IT spend. Organisations that use public cloud spend 26% of their annual IT budget on public cloud, with this percentage predicted to increase to 35% in two years’ time. Most notable, however, is that more than a third (36%) of organisations using public clouds said their spending has exceeded their budgets.
  • Manufacturers chose security and compliance slightly more often than companies in other industries as the top factor in deciding where to run workloads: while 31% of respondents across all industries and geographies named security and compliance as the number one decision criterion, 34% of manufacturing organisations chose security and compliance as the top factor.