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Has cloud manufacturing reached the tipping point? Behind Oracle's Fusion Cloud news with Steve Miranda

Jon Reed Profile picture for user jreed March 14, 2024
Summary:
Oracle's flurry of Fusion Cloud Applications news brings this question to a head: have we reached a cloud manufacturing tipping point? If so, what are the factors? Time to press the questions with Oracle's Steve Miranda.

oracle - steve miranda
(Steve Miranda makes his opinion known)

Another quarter, another batch of Oracle Fusion Cloud functionality from Oracle - this time with a gen AI focus (Oracle Adds New Generative AI Capabilities to Oracle Fusion Cloud Applications Suite).

But the backdrop is different. In the days since my virtual sit down with Steve Miranda, EVP of Oracle Applications Product Development, Oracle has blown out the news wires, via stories like Opinion: Oracle finally becomes a cloud company, helped by ‘enormous’ AI demand.

This comes on the heels of intriguing 'frenemies' cloud announcements such as Oracle and Microsoft bring Oracle Database@Azure to Europe, and beating earning expectations: Oracle stock surges almost 12% and closes at a record. These stories tie back to the undeniably good position of AI/cloud infrastructure leaders.

"We're seeing a mass of our manufacturing customer base start to move forward"

However, digging into the Fusion Cloud Applications news with Miranda, another notable story is climbing upwards: the adoption of large scale cloud manufacturing. As Miranda sees it, overall cloud applications maturity is growing:

I think what you'll find now is what you've talked about before: we've got a lot of customers who have gone live. They've gone through multiple phases, and are optimizing business process around SaaS, and really taking full advantage of uptake and new features and, you know - not to sound too clichéd - but continuous process improvement.

But now, the cloud manufacturing adoption is notable. Miranda:

We're really starting to see a mass of our manufacturing customer base move forward, both E-Business Suite and JD Edwards in particular, and some third parties - as well as our largest ERP competitor - having their customers moving into manufacturing and supply chain.

For example?

We just had a great go-live this week at Sherwin-Williams in North America, the longtime E-Business Suite customer, and then you'll hear from LEMO next week, amongst a host of others that will be speaking at our manufacturing supply chain [track at Oracle CloudWorld London].

Oracle's cloud manufacturing news - from gen AI to Smart Operations

Oracle's manufacturing news connects here: we are entering a new phase in cloud-based management of systems typically called MES (Manufacturing Execution Systems).

One [announcement[ is a new set of capabilities called Smart Operations. What we're doing there is really extending our traditional manufacturing supply chain area into much closer to what I'll call a more modern MES type of system, which incorporates things like IoT, digital twins, and has new application features like a operator's dashboard. And by operator we mean somebody who's actually on the frontlines doing the manufacturing.

And, of course, it wouldn't be an enterprise news barrage without mention of genAI. From the generative AI features Oracle announced, a chunk of them tie into Oracle's Fusion Cloud Manufacturing & Supply Chain news, including:

  • Item description generation: "Helps product specialists quickly generate standardized product descriptions that highlight SEO keywords."
  • Supplier recommendations: "Help procurement professionals quickly and efficiently add suppliers to their organization’s supply chain."
  • Negotiation summaries: "Help procurement professionals quickly generate a customized cover page summary for a specific negotiation. With generative AI-powered assisted authoring embedded in Oracle Procurement, organizations can accelerate negotiations, increase savings, reduce risk, and maximize supplier outcomes."

A cloud manufacturing tipping point? Here are the factors

This news raises the question: having we finally reached the tipping point for moving manufacturing operations to the cloud? Miranda sees the Sherwin-Williams go-live as a milestone:

Let me tell you why I think that's the tipping point. Sherwin came to me, I think it was the CloudWorld right before COVID, so it would have been 2019, maybe 2018. The entire discussion was about E-Business Suite support, because they were not going to stay on it forever. They just wanted to make sure they were going to get supported. And what did that mean?

Post-COVID, they came to CloudWorld. And it was, 'We have to go to the cloud; we have to go to the cloud now.'

Why the shift? After all, after the height of the pandemic, perhaps the urgency of remote operations was not as high. Mergers and acquisitions were part of the story:

I think a couple things happened. Most notably, from their side, is they had done an acquisition of Valspar... and they had never really integrated. Then they were hit with a bunch of changes. They went through a big do-it-yourself boom through COVID, and then, let's say, a do-it-yourself normalization post-COVID.

They needed to rationalize these different systems and rationalize process. And they found that they were having a tough time, given their disparate systems. That was one thing. Couple that with the fact that they saw, over that period of time, the number of go-lives that we had, both manufacturing and otherwise - and the progress that those companies were making. What you've got is a stabilizing system. You've got very difficult economies for many types of manufacturers. And then you have things like IoT, digital twins, robotics, for manufacturing and warehouse management - they have really taken over. I think it's that confluence of factors that it's caused him to see the tipping point.

One key factor is surely back to the "smart operations" news. Yes, you can stand up things like robotics and digital twins in an on-premise environment, but digital operations lend themselves well to cloud-based operations.

Just about any manufacturer has at least got partial robotics, if not completely robotic factories and warehouses. What that causes you to do is more or less rethink your systems, and the way that systems interface with things. It's hard for me to tell the economic pressures versus, say, the digital twin, but certainly, let's call it robotics - digitalization of manufacturing- is causing this need to rethink processes.

In a connected manufacturing world, companies pay a price when their old school MES systems - and the equipment running on them - are not connected into the 24/7 data platform/ERP system. The potent impact of data-driven operations, such as predictive maintenance, is very difficult to pull off when some systems are siloed on-premise. I've heard from plenty of manufacturers running cloud ERP who were eager to get their MES systems on the same integrated platform. As always, it was a matter of urgency, timing, and competing priorities. Perhaps those factors have finally converged.

My take - is MES giving way to a new approach?

Miranda isn't sure the term "MES" even applies to what Oracle is trying to do now:

Well, frankly, the only reason I use the term 'MES' is I think for now, that's kind of the way people will understand what I'm talking about. But I wouldn't classify this as an MES system, because it's very different. We built out an operator's workbench, but we think it's a more modern operator's workbench that take into account a  more digital manufacturing type of space than what I would say a traditional MES system was geared to.

I just don't see how a manufacturer can compete today, unless the most expensive equipment on the shop floor has sensors on it, tied into an IoT data flow, feeding a predictive maintenance and cloud ERP platform. This might sound ridiculously obvious, but prior to the pandemic, most of the manufacturers I visited just weren't there yet.

Has cloud manufacturing reached a tipping point? We'll see. It's my belief that anti-cloud concerns over security, performance and scale have diminished. But there is likely still hesitancy from some, when it comes to putting so-called "mission critical systems" in the cloud. Even in my trade of content/analysis, if my web access ever goes down, I can work offline. That's very difficult to do in a manufacturing setting.

But it's entirely possible that for most manufacturers, better ESG/energy grid failover planning would take them further towards 24/7 stability than any fretting over cloud. Besides, cloud uptime is drastically better than it once was, and no matter your deployment choice, contingency planning is a given. On-premise systems have their own long list of vulnerabilities, including hackable unpatched code.

Miranda is right: if cloud manufacturing reaches an adoption threshold, it won't be any one factor. It will be the convergence of economic pressure, remote operations needs, merger and acquisition complexities, business model shifts, and 'connected' manufacturing operations that favor cloud. I look forward to digging into these cloud manufacturing go-lives.

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