
Inward Investment Guides

First Person: Manufacturing View on Cloud Computing

The editor of Area Development magazine recently spoke with Dave Edstrom, director of the Office of Strategic Innovation at AMT, about the nature of cloud computing and how it affects manufacturers. Edstrom also recommends that manufacturers read "Above The Clouds: A Berkeley View of Cloud Computing," a white paper from the University of California at Berkeley.

Dave Edstrom, Director, Office of Strategic Innovation, The Association for Manufacturing Technology (March 2011)
What is "cloud computing"?
Edstrom: Simply put, cloud computing is when you access an application and all the processing and storage happens someplace else besides the PC or Mac that you are currently sitting in front of at the time. This "someplace else" is usually a massive data center with hundreds of thousands of computers sitting in large racks with massive amounts of storage. The reason cloud computing is so popular today is not that it sounds cool, but rather that it simply makes good economic sense.

Why is there so much confusion around the term cloud computing?
Edstrom: The confusion exists because cloud computing is a broad, umbrella term for many different types of computing today. If you ask 10 people what the term cloud computing means, you're likely to get 11 different answers. Amazon's Elastic Cloud Computing, Flickr, Gmail, Google, LinkedIn, Facebook, QuickBooks, Google's App Engine, BIRT onDemand,, Carbonite, and Farmville are just some examples of applications or software development frameworks that run in the cloud.

Does it matter where servers are located when processing information requests?
Edstrom: For the most part, end users do not know and do not care about the physical location - provided it is secure and managed in a professional manner. What is very important is the speed of your connection to the Internet. One of the key building blocks of cloud computing is broadband or a fast pipe to the Internet.

How will cloud computing affect manufacturers?
Edstrom: Cloud computing gives manufacturers the ability to avoid the countless business and technical issues associated with running their own data centers; they will save money by only paying for the computing resources when they need them on a "pay-as-you-go" model.

Manufacturers are tired of all the patching, upgrading, malware, viruses, and the plethora of issues that come along with running your own data center. If you are a small manufacturing shop, it is very likely that either you or someone else in your small shop wears the hat of IT manager. However, you do not have time to constantly worry about all of the patches, upgrades, and system administrative work - you just want to run your shop.

What is meant by the "elasticity" of the cloud?
Edstrom: Elasticity of the cloud is the ability to both grow and shrink the number of servers you need in the cloud dynamically depending on the load. For example, most companies have to purchase the number of computers that they will need for the busiest time of the year. A manufacturer of winter sports equipment might very well have certain times of the year that are much busier than others. With the cloud, you can scale up to hundreds of servers during your busy times and then drop down to a handful during the very slow times - paying only for what you use.

Can you provide an example of manufacturing firms successfully using cloud computing?
Edstrom: MTConnect is a great example. Manufacturers are embracing MTConnect, which is an open and royalty free mechanism to get real data from manufacturing equipment. It is not unusual for gigabytes per hour of data to come from a variety of machine tools or manufacturing equipment. Manufacturing companies do not want to store all this information in their own data centers. They are storing this in the cloud and doing the analytics in the cloud as well. There are a number of manufacturing software companies that are offering this type of service. This allows manufacturers to view both real time and historic data on their shop floors at any time, anywhere, on any device.

Are there regulatory issues that need to be addressed?
Edstrom: Absolutely. Just because your processing and data is stored in the cloud does not remove your legal and accounting responsibilities. The best advice is that you cannot assume anything. Whether you use the cloud to create and run your own applications or simply use applications from a software company that runs in the cloud, you must go in fully realizing that you own all of the legal and accounting requirements.

What about data security issues?
Edstrom: An important point to remember is that ALL of your data should be encrypted when it is in flight or at rest. What this means is that you should always have a secure connection to your data, and your data should always be encrypted whether it is sitting on a storage device or it is being moved from one location to another (on a network or physically). It is important to understand all aspects of security including the physical security of where the cloud computing companies are housing their servers.

How does a manufacturer go about performing due diligence when choosing a cloud service provider?
Edstrom: An SLA, which stands for Service Level Agreement, is an important part of due diligence. Simply stated, an SLA outlines the level of uptime that you will be guaranteed. Are you putting all of computer and storage needs in one data center? What if that data center goes down? Is your data replicated? Is there an immediate failover from one data center to another? These are the types of questions you must have answers to in writing.

What functions cannot be performed through cloud computing?
Edstrom: This is a really important question. It is not that some applications cannot be done in the cloud. The question really becomes, which applications do not lend themselves to the cloud? Applications such as video games are great examples of a class of application that challenges the cloud. The reason for this is the amount of data that must come down the Internet pipe every time you make a move.