SlideShare a Scribd company logo
1 of 18
Download to read offline
A report from The Economist Intelligence Unit
Sponsored by
Ascending cloud
The adoption of
cloud computing
in five industries
© The Economist Intelligence Unit Limited 20161
Ascending cloud
The adoption of cloud computing in five industries
Introduction 2
Cloud computing—what does it mean for key industries? 3
Banking—disruption of a legacy business 4
Retail—the growth of parallel businesses 5
The rise of digital manufacturing 6
Cloud, technology and education 7
Cloud and healthcare—changing the relationship between patient and doctor 8
Manufacturing—a special case of cloud adoption 9
Enter cloud computing—the rise of digital manufacturing 10
Cloud and the value chain of manufacturing 10
  i. Cloud and the manufacturing supply chain 10
  ii. Cloud and design and prototyping 11
  iii. Cloud and the production process 12
  iv. Cloud and the manufacturing customer 13
The challenges to digital manufacturing 14
Cloud computing—the long view 15
Contents
© The Economist Intelligence Unit Limited 20162
Ascending cloud
The adoption of cloud computing in five industries
Cloud computing has clearly become a driving
force in the information technology world. Over
90% of global enterprises report using cloud as
part of their business.1
With over $33 billion in
projected 2015 spend, cloud is now the largest
category in IT infrastructure budgets.2
But every industry has its unique technology
dynamics. Therefore, to understand the future of
cloud computing you need to understand its
dynamics in key industries.
In September-October 2015, The Economist
Intelligence Unit, sponsored by VMware, asked a
panel of 360 senior executives and thought
leaders their views on the future of cloud
computing. These were decision-makers—all
directors or above, including half from the C-Suite
or board of directors of their companies or
non-profit organisations and approximately
one-third with an IT background. Collectively they
present a strong global perspective, and were
drawn equally from developed and developing
nations.
1	RightScale State of the Cloud Report, 2015
2	IDC, World IT Infrastructure Spending Forecast, 2015
Finally, these respondents were equally
representative of five key industries—financial
services, retailing, healthcare, education and
manufacturing—that are being impacted by
cloud. Questions that required deeper industry
expertise were directed to sub-panels of experts
from each industry.
In this report, we will first present some brief
observations on the role of cloud across these
verticals. The focus will be on the pace of cloud
adoption and its subsequent impact on key
sectors within each industry.
In addition, our research showed that
manufacturing plays a special role in global
development—and so the report will take a
deeper dive into that unique sector. In doing so,
the report will highlight digital trends that have a
broader impact as cloud moves from the digital
to the “cyber-physical”.
For reports on the impact of cloud on
healthcare and education, please click on these
links.
Introduction
© The Economist Intelligence Unit Limited 20163
Ascending cloud
The adoption of cloud computing in five industries
There is certainly a great deal of dialogue about
the growth of cloud—but where does it actually
stand? We asked each industry sub-panel to
assess the current presence in their own industry.
The first observation is significant differences in
the rate of cloud adoption. The first movers
appear to be those that can generate a digital
“pure play” side-by-side with the legacy industry—
for example, digital banking emerging from
branch networks, or e-commerce competing with
high street retailers and shopping centres.
Manufacturing, as we shall see, presents a
more complex problem—the integration of cloud
into physical structures such as factories,
machines and assembly lines. Finally, as discussed
in our review of these industries, adoption in
Education and Healthcare is slowed by regulatory
constraints and less intense competitive
environments.
The second observation is that, as far as cloud
has come, it has a long way to go. “Pervasive
presence”—ready access and widespread
deployment—averages out to only 7% across
industries. The following industry analysis illustrates
just how that rate of growth is expected to be.
Cloud computing—what does it
mean for key industries?
Source: EIU Survey “Cloud Computing and Economic Development”, October 2015
Banking Retail Manu-
facturing
Education Healthcare Industry
average
Pervasive presence
Significant presence
How would you characterise the current presence of cloud in the following industries?
% of respondents reporting a significant or pervasive presence
52
7
57
1
42
7
34
10
31
8
43
7
© The Economist Intelligence Unit Limited 20164
Ascending cloud
The adoption of cloud computing in five industries
Banking—disruption of a
legacy business
Two trends are driving cloud adoption in banking.
The first is the adoption of cloud for back-office
and selected customer operations by traditional
banking institutions. The second is Fintech—digital
insurgents who are regularly using cloud-based
services to compete in key banking products.
According to our banking sub-panel, these
forces will drive a rapid rate of adoption—almost
three out of four predict cloud will be a major
factor in banking in five years. Analysis of banking
products and new markets shows a more
nuanced picture of cloud coexisting with non-
cloud systems. This may indicate the growth of
cloud alongside existing legacy systems, coupled
with concerns about security.
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Major factor
Moderate factor
Future cloud penetration of the banking
industry
% saying cloud will be a moderate or major factor
In one
year
In three
years
In five
years
52
19
53
36
15
74
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Very important
Somewhat important
How important is cloud in supporting
sectors of the banking industry?
% saying cloud will be somewhat or very important
New ways to make payments
Lowering banking costs
Banking for remote populations
New ways of saving
Banking for poor populations
New ways of lending
68 21
60 32
57 34
50 45
43 42
42 47
© The Economist Intelligence Unit Limited 20165
Ascending cloud
The adoption of cloud computing in five industries
Retail—the growth of parallel
businesses
Our retail experts predict a similar pattern of cloud
penetration in the retail business. From a relatively
modest base, the expectation is that cloud will
grow five-fold as a major factor in retailing.
One of the impacts of cloud appears to be
making retailing more consumer-friendly, as a
technology being used to increase access, lower
prices and reducing costs for the customer.
Another result appears to be enabling the growth
of new products and the start of new businesses—
indicating cloud’s place as a central technology
of e-commerce.
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Major factor
Moderate factor
Future cloud penetration of the retail industry
% saying cloud will be a moderate or major factor
In one
year
In three
years
In five
years
57
14
43
41
23
70
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Very important
Somewhat important
How important is cloud in supporting
sectors of the retail industry?
% saying cloud will be somewhat or very important
Reducing costs of goods and services
Helping new companies grow
Increasing access to retail
Making goods more available
Making shopping more convenient
58 33
49 45
48 41
43 44
40 51
© The Economist Intelligence Unit Limited 20166
Ascending cloud
The adoption of cloud computing in five industries
The rise of digital
manufacturing
As noted before, manufacturing appears to have
something of a late start in cloud. One reason is
that unlike digital “pure plays” such as financial
services, manufacturing requires embedding of
cloud into physical equipment—for example
sensors into a machine tool, or GPS-markers into
an order of parts.
However, with extensive investment in the
internet of things by manufacturers (which is
largely cloud dependent), cloud penetration is
expected to increase significantly and rapidly.
Cloud is also expected to play a significant role in
every step of the manufacturing process (from
supplier to customer)—more detail in the analysis
that follows.
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Major factor
Moderate factor
Future cloud penetration of the
manufacturing industry
% saying cloud will be a moderate or major factor
In one
year
In three
years
In five
years
46
15
43
43
21
71
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Very important
Somewhat important
How important is cloud in supporting
sectors of the manufacturing industry?
% saying cloud will be somewhat or very important
Supporting production processes
Better supply chain management
Enabling design and prototyping
Inventory, orders and distribution
60 30
54 35
52 39
48 40
© The Economist Intelligence Unit Limited 20167
Ascending cloud
The adoption of cloud computing in five industries
Cloud, technology and
education
Education shows a somewhat slower adoption
rate than other industries. Possible reasons include
a less competitive environment and traditionally
slower rates of technology adoption by
government.3
But after much initial hype, online education
has also suffered a series of disappointments as
“MOOCs” (massive open online courses) found
that large numbers of enrolled students did not
pursue their studies. Nonetheless, adoption looks
set to pick up speed in the 3-5 year timeframe,
and cloud looks set to impact the entire spectrum
of education.
3	 Information Week, Public Sector Slow to Adopt Cloud
Computing, June 2012
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Major factor
Moderate factor
Future cloud penetration of the
education industry
% saying cloud will be a moderate or major factor
In one
year
In three
years
In five
years
55
20 29
47
18
67
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Very important
Somewhat important
How important is cloud in supporting
sectors of the education industry?
% saying cloud will be somewhat or very important
Higher education (university)
Education for remote areas
Continuing/adult education
Mid-level students (ages 11-17)
Education for low-income
Educating young students (ages 3-10)
51 34
42 38
40 44
40 46
34 42
25 48
© The Economist Intelligence Unit Limited 20168
Ascending cloud
The adoption of cloud computing in five industries
Cloud and healthcare—
changing the relationship
between patient and doctor
As in all of the industries analysed, cloud is
expected to grow to become a major factor in
delivering services. One area that the research
indicates cloud will have an impact on is the
actual delivery of health services—and the
doctor-patient relationship.
Specifically, cloud is geared to support remote
diagnostics and treatment—helping to empower
the patient with knowledge of their own
condition. It may also support the extensive data
requirements of preventative care, supporting a
long-term industry goal of holistic medicine.
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Major factor
Moderate factor
Future cloud penetration of the
healthcare industry
% saying cloud will be a moderate or major factor
In one
year
In three
years
In five
years
26
25
32
49
27
61
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Very important
Somewhat important
How important is cloud in supporting
sectors of the healthcare industry?
% saying cloud will be somewhat or very important
Centralisation of health records
Supporting preventative care
Care for low-income populations
Supporting remote diagnosis
Supporting remote treatment
57 27
53 32
45 35
44 32
43 37
© The Economist Intelligence Unit Limited 20169
Ascending cloud
The adoption of cloud computing in five industries
Manufacturing—a special
case of cloud adoption
Different industries can be expected to make
different contributions to economic growth. The
EIU therefore asked our panel which sector—
irrespective of its penetration by cloud—will have
the greatest impact on economic prosperity. By a
clear majority the panel identified manufacturing
as the leading driver of economic growth.
Why is manufacturing so important to
economic growth? An obvious reason is its sheer
scale—manufacturing currently employs one in
eight of all workers around the globe, and
accounts for 16% of global GNP. Any changes in
this massive sector cannot help but impact the
larger economy.
Manufacturing also makes a disproportionate
contribution to R&D and innovation. It is
responsible for 20% of global innovation, and
funds 77% of global research and development.
Given the above, it is no surprise that
manufacturing accounts for 37% of increases in
global productivity.4
This briefing will therefore
focus on the impact of cloud on the key
manufacturing sector.
4	McKinsey, Manufacturing the future, November 2012
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
Which sectors will drive economic growth?
Which of the following do you feel will have the
greatest impact on your country’s overall
economic prosperity in the next three years?
(% respondents)
New forms of manufacturing through
new technologies
New forms of education through
new technologies
New forms of retailing through
new technologies
New forms of banking through
new technologies
New forms of healthcare through
new technologies
29
21
19
18
14
© The Economist Intelligence Unit Limited 201610
Ascending cloud
The adoption of cloud computing in five industries
Enter cloud computing—the
rise of digital manufacturing
Cloud has a relatively small current presence in
manufacturing—only 7% of respondents believe
that cloud has a pervasive presence in the
industry. Accordingly, it lags behind more readily
digitised industries such as banking and retailing,
while leading traditionally slow-moving, regulated
industries such as education and healthcare.
The primary obstacle is the physical element of
digital manufacturing. Creating cloud
applications in banking and other services, for
example, is a relatively simple matter of proper
coding. But embedding cloud into a factory
requires the design of new sensors, ensuring
common standards across machines,
communications protocols—and a host of other
“cyber-physical” challenges to be met.
That said, firms are currently investing billions to
overcome these hurdles. Indeed, our survey panel
expects an extremely rapid penetration of cloud
into manufacturing—with over 90% projecting
cloud will be a significant factor in only three
years’ time. Moreover, this high adoption rate is
expected for all major manufacturing regions
across the globe.
Interviews with experts in cloud computing
support these findings. “The first initiatives we’ve
seen around cloud and manufacturing were very
much driven by a single dimension in terms of
value creation and that was cost” says Ralf
Dreischmeier, global leader, Technology
Advantage Practice at the Boston Consulting
Group. “Looking at the value of cloud today we
hear more about agility, quality and innovation. I
think that the more sophisticated parts of the
business, like design and R&D, are much more
likely now to adopt cloud because those benefits
are there. This is a very clear trend that we have
observed.”
In sum, cloud-based manufacturing is starting
from a low base, but is expected to be widely
deployed in a few short years. When “digital
manufacturing” arises, what will its benefits and
challenges be?
Cloud and the value chain of
manufacturing
Manufacturing can be understood as a linear
progression—supply chain, design, production
and the shipment to customers. The impact of
cloud is best understood as a transformation of
each of these steps.
i. Cloud and the manufacturing
supply chain
A modern television is built from 2,000 components,
a car from 30,000 and an Airbus A380 from over 4
million. These raw materials and parts must flow in
from thousands of locations to arrive across the
globe on-time, on-spec and in-budget.
This complex chain requires huge scalability,
access by multiple devices with different operating
systems and the ability to manage large pools of
data, all done cost-effectively—it is difficult to
imagine building this outside of a cloud network.
       
Supply
Chain
Design and
Prototyping Production
Distribution/
Customer
The manufacturing value chain
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
What will be the importance of cloud in
manufacturing supply chain in one year’s
time?
(% respondents)
1 10
3554
Very
unimportant
Somewhat
unimportant
Somewhat
important
Very
important
© The Economist Intelligence Unit Limited 201611
Ascending cloud
The adoption of cloud computing in five industries
For example, cloud-based solutions allow the
dissemination of designs, specifications and
contract terms to thousands of suppliers
instantaneously.
When coupled with radio-frequency
identification (RFID), cloud enables inbound parts
to be tracked by multiple devices across the
globe. Finally, cloud provides the scalable
computing power and software-as-a-service
applications that enables a procurement officer
to closely manage delivery, inventory and pricing.
But this effect goes beyond simply tracking
parts:
1.	 Cloud can reduce supply chain costs: The
ability to source qualified bids from more
suppliers can increase competition, driving
down the cost of goods sold.
2.	 Cloud can connect, expand and diffuse the
global base of suppliers: There is a reason why
parts manufacturers are clustered around
Detroit, Wolfsburg and Nagoya—their
automotive customers want to be sure of close
collaboration and no shipping problems.
Cloud, by providing connectivity to inventory
counts and shipments, can enable original
equipment manufacturers to reach out to
more distant, smaller-scale suppliers with
confidence.
3.	 Cloud supports partnerships between
customers and suppliers: An attribute of
ubiquitous cloud is that it supports
collaboration on a global scale—in design, in
testing and in quality assurance. This can insert
a new agility into supply chain relationships—
where parts are co-designed and tested for
quality.
In the longer term, these attributes can force a
radical revision of the global supply chain.
Suppliers can become more dispersed, more
cost-competitive and compete based on their
ability to collaborate with their manufacturing
customers.
Joseph Salvo, manager, Complex Systems
Engineering at GE Global Research, sees this trend
as a broad social force. “As we connect the
machines of the world to the people of the world
in the industrial sector, the free flow of data and
the free flow of information is going to be the
force of democratisation,” he says. “That
increases GDP more than anything else. It’s the
ability to get access to ideas and knowledge.
That’s what transforms society and culture and
leads to a better living standard for the average
person.”
ii. Cloud and design and
prototyping
Traditional manufacturing design has been driven
by a painful iterative process—design, test, fail,
redesign, test, fail, redesign, etc. Cloud-based
design and its cousin, 3D printing, will likely enable
manufacturers to shorten or even bypass this
painful process.
Cloud computing provides the immense data
capacity and virtualised computing power that
enables dynamic, digitally-based design. Imagine
a working hologram of a part that can be
constantly refined for wind shear, heat expansion,
conductivity, fit with adjacent parts, component
cost and a dozen other variables. Pre-modelling of
these and other properties can allow the cloud-
enabled designer to accelerate the product into
the prototyping stage for physical testing.
This cloud-driven flexibility in design and
prototyping will likely result in:
1.	 Reducing costs: Traditional manufacturing
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
What will be the importance of cloud in
manufacturing design and prototyping in
one year’s time?
(% respondents)
4 6
3951
Very
unimportant
Somewhat
unimportant
Somewhat
important
Very
important
© The Economist Intelligence Unit Limited 201612
Ascending cloud
The adoption of cloud computing in five industries
design requires extensive rework, engineering
time and production resources. Cloud based
can certainly reduce costs associated to
those.
2.	 Accelerating time to market: It takes only a
half day to assemble a car, but it takes seven
years to design a new one. Dynamic design
and testing of parts can take years off of this
cycle.
3.	 Increasing customisation of manufactured
products: Flexibility in the design phase will
enable manufacturers to “design on spec”—
creating products that fit the individual needs
of the customer. Similarly, a change in a
component’s design can be rapidly
disseminated to thousands of suppliers,
enabling them to retool and bring their
product into specification with the new design.
As usual, the unforeseen benefits of technology
may be most interesting. The greatest impact of
digital design may be in the intangible field of
innovation—where a late-night engineer has the
freedom to tinker, test and experiment rapidly at
low cost. In this sense the greatest impact of cloud
on design may well be the innovative
development of unforeseen products.
“We have definitely seen that cloud allows you
to realise simplification and productivity
improvement where you didn’t expect it,” Mr
Dreischmeier says. “In discussions with clients we
started off saying that the cloud is a more efficient
way to store your data, so you save IT operating
costs. The discussion we’re having now is that it
enables highly distributed technical data to come
together in one place where it can be accessed
by next-generation devices. So with all these
additional benefits now coming through, cost
saving is still a lever, but now there are other levers
that are becoming more and more important.”
iii. Cloud and the production
process
The production process describes the physical
creation of the products—the measuring, cutting,
stamping, welding, assembly and testing of the
finished product—be it a child’s toy, a smart
phone, or the airframe of a commercial airliner.
Cloud is the network platform for the internet of
things (IoT)—which includes the embedding of
sensors into the assembly lines, machine tools,
factory controls and quality testing monitors of the
“smart factory”. Cloud can provide the
computational glue that enables data to be
collected and analysed to support the IoT. This will
likely result in the following developments in the
production process:
1.	 Cost reduction through operating efficiencies:
For example, equipment-based sensors will tell
a central dashboard when the machine
needs maintenance, is operating at sub-
performance, or is about to fail. By alerting the
operator to the need for preventive
maintenance, these cloud-based reports can
optimise the unit’s performance, and prevent
the breakdowns that result in the dreaded
“shutting down the line.”
2.	 Boosting manufacturing flexibility: Traditionally,
a washing machine factory did just that—it
was only capable of manufacturing washing
machines. But cloud can enable factories to
become “programmable”—enabling a rapid
re-setting of production lines for new products,
or customised versions for current ones.
3.	 Greener manufacturing: A simple
manufacturing maxim is that greater
manufacturing efficiencies mean lower fuel
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
What will be the importance of cloud in
manufacturing production in one year’s
time?
(% respondents)
4 6
30
60
Very
unimportant
Somewhat
unimportant
Somewhat
important
Very
important
© The Economist Intelligence Unit Limited 201613
Ascending cloud
The adoption of cloud computing in five industries
consumption. For example, cloud–based
building controls can regulate power (typically
the second-highest operating costs for
manufacturers) to when and where it is
needed. Furthermore, sensors can be used to
track sub-performance operations and their
impact on CO2
emissions.
Salvo points out that cost is not the only driver of
greener manufacturing: “Why now is there this big
push for sustainability and environmental
consciousness?” he asks. “Once you go back to a
local production paradigm, you want to be able
to site your production anywhere the customers
are. If you are going to do that you have to build
trust and creditability with the customers so your
systems must be transparent. And they have to be
sustainable.”
A sadder consequence to cloud based-
manufacturing may be the further decline in
skilled manufacturing jobs. Cloud computing can
provide the digital backbone that supports
robotics and automated assembly. These
technology-intensive solutions will continue the
displacement of skilled blue collar workers with
highly-paid but much fewer digital specialists.
iv. Cloud and the manufacturing
customer
The traditional manufacturer-customer
relationship has been: 1) A product is sold to the
customer and then 2) The supplier disappears until
a new product is to be sold. Cloud has the
potential to revolutionise this arm’s length
relationship.
Just as cloud enables upstream collaboration
with suppliers, it can support downstream
collaboration with customers. The ability to flexibly
source parts, to dynamically design products and
to switch out one production run for another will
create a new test of competitiveness—how
closely you can collaborate with your customer.
Now, when you buy a car, you pick out
whatever is in the showroom. In the near future, it
may be possible to order the “configured car”
with your choice of engine size, transmission,
interior colour and number of cup holders. The
successful manufacturer won’t just make the best
product—they will make the best product for
each customer.
Cloud’s impact on customers won’t just be in
the relationship. It could also be in the product
itself.
“Now the secret is who can innovate into that
vast market and find the market niches that they
can outperform and create the value,” Mr Salvo
says. “It’s going to be more about creating value
stories for the individual customers and creating
those network relationships versus brute force
competition against the guy next door. That is a
mind shift that I see happening, although it’s
going to take some time.”
Manufactured products are increasingly
carrying a digital capability—be it smart clothing,
telematics in a truck, or fuel sensors in a jet
engine—that have the potential to restructure the
customer relationship.
Take for example a commercial heating,
ventilation and air conditioning (HVAC)
manufacturer. Five years ago, they might sell a $5
million unit to a building manager and—unless it
failed—not see them again for the life of the unit.
Now that HVAC system is equipped with
temperature, humidity, fuel consumption,
maintenance, performance and other sensors.
This cloud based system enables the manager,
among other things, to monitor and purchase
Source: EIU Survey “Cloud Computing and
Economic Development”, October 2015
What will be the importance of cloud in
manufacturing distribution and customer
relationships in one year’s time?
(% respondents)
1 10
40
48
Very
unimportant
Somewhat
unimportant
Somewhat
important
Very
important
© The Economist Intelligence Unit Limited 201614
Ascending cloud
The adoption of cloud computing in five industries
utility power at its lowest rates (eg in the middle of
the night).
The result is that the manufacturer is no longer
a supplier, but has become an energy manager
for the building. Instead of selling a product, the
HVAC manufacturer leases it, and earns revenue
on joint energy savings. This collaborative,
cloud-enabled relationship can be found in
consumer wearables (Fitbit), building controls
(Siemens), or air turbines (General Electric).
The challenges to digital
manufacturing
Cloud-based manufacturing will open up a brave
new world—but not all of it will be simple or easy.
Front and centre is the risk that challenges the
deployment of cloud and other technologies in all
industries—cyber-risk, or increased vulnerability to
cyber-attack and digital espionage.
The historical manufacturing plant was a pretty
autonomous facility—no digital connectivity at all
was the ultimate firewall. But by embedding
sensors in machines, storing digital designs and
creating a smart factory network, the digital
manufacturer assumes a new vulnerability to
cyber-attack.
Embedding proprietary designs into digitised
workflows allows them to be more easily
penetrated and stolen. A cyber-savvy competitor
could conceivably tap into reporting applications
and get a clear picture of your manufacturing
methods, cost position and new product line. A
really unscrupulous competitor or cyber-terrorist
could make data disappear, or reset a
manufacturing line to come to a grinding (that is
literally grinding) halt. As in all emerging
technology, cyber-risk emerges as the most
serious challenge.
Another challenge is that, at present, there are
no commonly-accepted standards that enable
seamless connections from machine-to-machine,
manufacturer to supplier, or manufacturer to
customer. We are only just beginning to see
software that is capable of handling the massive
data deluge of digital manufacturing. Digital
manufacturing has many technical hurdles to
leap before it delivers on the many promises
being made.
Dreischmeier points out that regulations
concerning access to data can also be an
obstacle to cloud adoption in some industries.
“When we talk about manufacturing, clearly it’s
pretty diverse,” he says, “it goes from aerospace
to drugs to automobiles. Adoption rates can be
significantly influenced by regulatory requirements
that ultimately influence a company’s philosophy
around security and risk. Regulations do limit what
companies can and can’t do quite a lot.”
The final challenge is a human one. The
digitisation of the manufacturing line (including
the installation of robotics) will clearly disrupt the
blue-collar workforce that has built the modern
world. At best, it will force a wrenching reset in the
skills needed in manufacturing—a wrenching
evolution that will leave many traditional blue
collar workers behind. At worst, the digitisation of
manufacturing will drive to a net loss in highly-paid
manufacturing positions, increasing income
inequality and concentration of wealth.
© The Economist Intelligence Unit Limited 201615
Ascending cloud
The adoption of cloud computing in five industries
Cloud computing—the long
view
Major technology transformation seems to follow
three waves of adoption. The first is cost reduction.
The second is doing-what-you-are-doing-now-but
doing-it-better. The third is the most fascinating—
the creation of unforeseen, wholly new
opportunities that no one planned for or
expected.
What is happening to manufacturing’s suppliers
can be applied to the suppliers of any industry.
Transparency in digital bidding may drive down
supplier costs. Advanced digital design will
shorten and cheapen the iterative cycle of almost
any product’s design. The digital factory may
operate more efficiently, with less down time and
using less energy.
In a million little ways, digitisation can make
many industries more efficient and flexible.
Supplier collaboration can be enhanced. Design
changes will come faster. Production lines can be
reconfigured and switched out faster. A key
outcome will be a speeding up of the creation
cycle, including the iterative process of design/
test based on changing customer demands.
Even experts in the field are amazed at the
potential for sweeping change. “Every day I can
hardly wait to get up to work in this space,” says
Mr Salvo. “This is a once in a lifetime moment in
history where we are literally connecting all the
machines and minds of the world and we are
going to improve our environment and our ability
to deliver value to everyone that’s connected to
the network. It’s just totally exciting and
transformational in my opinion.”
© The Economist Intelligence Unit Limited 201616
Ascending cloud
The adoption of cloud computing in five industries
Whilst every effort has been taken to verify the accuracy
of this information, neither The Economist Intelligence
Unit Ltd. nor the sponsor of this report can accept any
responsibility or liability for reliance by any person on this
report or any of the information, opinions or conclusions
set out in the report.
Cover:Shutterstock
London
20 Cabot Square
London
E14 4QW
United Kingdom
Tel: (44.20) 7576 8000
Fax: (44.20) 7576 8476
E-mail: london@eiu.com
New York
750 Third Avenue
5th Floor
New York, NY 10017
United States
Tel: (1.212) 554 0600
Fax: (1.212) 586 0248
E-mail: newyork@eiu.com
Hong Kong
1301 Cityplaza Four
12 Taikoo Wan Road
Taikoo Shing
Hong Kong
Tel: (852) 2585 3888
Fax: (852) 2802 7638
E-mail: hongkong@eiu.com
Geneva
Boulevard des
Tranchées 16
1206 Geneva
Switzerland
Tel: (41) 22 566 2470
Fax: (41) 22 346 93 47
E-mail: geneva@eiu.com

More Related Content

What's hot

Cloud Journey Roadmap: Capgemini's Cloud Readiness Assessment
Cloud Journey Roadmap: Capgemini's Cloud Readiness AssessmentCloud Journey Roadmap: Capgemini's Cloud Readiness Assessment
Cloud Journey Roadmap: Capgemini's Cloud Readiness AssessmentCapgemini
 
Accelerating Innovation in Energy
Accelerating Innovation in EnergyAccelerating Innovation in Energy
Accelerating Innovation in Energyaccenture
 
Digital Transformation From Strategy To Implementation
Digital Transformation From Strategy To ImplementationDigital Transformation From Strategy To Implementation
Digital Transformation From Strategy To ImplementationScopernia
 
Journey to Cloud - Enabling the Digital Enterprise - Accenture
Journey to Cloud - Enabling the Digital Enterprise - AccentureJourney to Cloud - Enabling the Digital Enterprise - Accenture
Journey to Cloud - Enabling the Digital Enterprise - AccentureAmazon Web Services
 
Technology Trends 2021 | Tech Vision | Accenture
Technology Trends 2021 | Tech Vision | AccentureTechnology Trends 2021 | Tech Vision | Accenture
Technology Trends 2021 | Tech Vision | Accentureaccenture
 
Building Digital Strategy Roadmap For Digital Transformation Complete Deck
Building Digital Strategy Roadmap For Digital Transformation Complete DeckBuilding Digital Strategy Roadmap For Digital Transformation Complete Deck
Building Digital Strategy Roadmap For Digital Transformation Complete DeckSlideTeam
 
Journey To Cloud – Arrive First with ServiceNow and Accenture
Journey To Cloud – Arrive First with ServiceNow and AccentureJourney To Cloud – Arrive First with ServiceNow and Accenture
Journey To Cloud – Arrive First with ServiceNow and AccentureAccenture Operations
 
The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018
The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018
The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018accenture
 
Pitch for a digital transformation
Pitch for a digital transformationPitch for a digital transformation
Pitch for a digital transformationSoumava Chakraborty
 
Equinix Partner Customer Presentation
Equinix Partner Customer PresentationEquinix Partner Customer Presentation
Equinix Partner Customer PresentationScott Walker
 
Introduction to business architecture
Introduction to business architectureIntroduction to business architecture
Introduction to business architectureAniekan Okono
 
Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...
Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...
Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...Smart City
 
EY Megatrends: Resourceful planet, Digital future, Future of work
EY Megatrends: Resourceful planet, Digital future, Future of workEY Megatrends: Resourceful planet, Digital future, Future of work
EY Megatrends: Resourceful planet, Digital future, Future of workEY
 
Poland 2025 McKinsey & Company
Poland 2025 McKinsey & CompanyPoland 2025 McKinsey & Company
Poland 2025 McKinsey & CompanyFRACTAL GROUP
 
Building a Solid Business Case for Cloud Migration
Building a Solid Business Case for Cloud MigrationBuilding a Solid Business Case for Cloud Migration
Building a Solid Business Case for Cloud MigrationAmazon Web Services
 
Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...
Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...
Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...Niall McKeown
 
Introduction to AWS Services and Cloud Computing
Introduction to AWS Services and Cloud ComputingIntroduction to AWS Services and Cloud Computing
Introduction to AWS Services and Cloud ComputingAmazon Web Services
 

What's hot (20)

Cloud Journey Roadmap: Capgemini's Cloud Readiness Assessment
Cloud Journey Roadmap: Capgemini's Cloud Readiness AssessmentCloud Journey Roadmap: Capgemini's Cloud Readiness Assessment
Cloud Journey Roadmap: Capgemini's Cloud Readiness Assessment
 
Accelerating Innovation in Energy
Accelerating Innovation in EnergyAccelerating Innovation in Energy
Accelerating Innovation in Energy
 
Digital Transformation From Strategy To Implementation
Digital Transformation From Strategy To ImplementationDigital Transformation From Strategy To Implementation
Digital Transformation From Strategy To Implementation
 
Journey to Cloud - Enabling the Digital Enterprise - Accenture
Journey to Cloud - Enabling the Digital Enterprise - AccentureJourney to Cloud - Enabling the Digital Enterprise - Accenture
Journey to Cloud - Enabling the Digital Enterprise - Accenture
 
Decoding Transformation
Decoding TransformationDecoding Transformation
Decoding Transformation
 
Technology Trends 2021 | Tech Vision | Accenture
Technology Trends 2021 | Tech Vision | AccentureTechnology Trends 2021 | Tech Vision | Accenture
Technology Trends 2021 | Tech Vision | Accenture
 
Building Digital Strategy Roadmap For Digital Transformation Complete Deck
Building Digital Strategy Roadmap For Digital Transformation Complete DeckBuilding Digital Strategy Roadmap For Digital Transformation Complete Deck
Building Digital Strategy Roadmap For Digital Transformation Complete Deck
 
Journey To Cloud – Arrive First with ServiceNow and Accenture
Journey To Cloud – Arrive First with ServiceNow and AccentureJourney To Cloud – Arrive First with ServiceNow and Accenture
Journey To Cloud – Arrive First with ServiceNow and Accenture
 
The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018
The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018
The Bottom Line on Trust | Accenture Strategy Competitive Agility Index 2018
 
Pitch for a digital transformation
Pitch for a digital transformationPitch for a digital transformation
Pitch for a digital transformation
 
Archimate Viewpoints
Archimate ViewpointsArchimate Viewpoints
Archimate Viewpoints
 
Equinix Partner Customer Presentation
Equinix Partner Customer PresentationEquinix Partner Customer Presentation
Equinix Partner Customer Presentation
 
Introduction to business architecture
Introduction to business architectureIntroduction to business architecture
Introduction to business architecture
 
Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...
Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...
Digital and Innovation Strategies for the Infrastructure Industry: Tim McManu...
 
Digital Workplace
Digital WorkplaceDigital Workplace
Digital Workplace
 
EY Megatrends: Resourceful planet, Digital future, Future of work
EY Megatrends: Resourceful planet, Digital future, Future of workEY Megatrends: Resourceful planet, Digital future, Future of work
EY Megatrends: Resourceful planet, Digital future, Future of work
 
Poland 2025 McKinsey & Company
Poland 2025 McKinsey & CompanyPoland 2025 McKinsey & Company
Poland 2025 McKinsey & Company
 
Building a Solid Business Case for Cloud Migration
Building a Solid Business Case for Cloud MigrationBuilding a Solid Business Case for Cloud Migration
Building a Solid Business Case for Cloud Migration
 
Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...
Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...
Strategy for the Thinking Leader (Digital Transformation) - Digital DNA Armag...
 
Introduction to AWS Services and Cloud Computing
Introduction to AWS Services and Cloud ComputingIntroduction to AWS Services and Cloud Computing
Introduction to AWS Services and Cloud Computing
 

Viewers also liked

Caso clínico 2
Caso clínico 2Caso clínico 2
Caso clínico 2Mauri San
 
01 nuclear energy_overview
01 nuclear energy_overview01 nuclear energy_overview
01 nuclear energy_overviewHossam Zein
 
Hpc1 election for head prefect 2015 (troy)
Hpc1 election for head prefect 2015 (troy)Hpc1 election for head prefect 2015 (troy)
Hpc1 election for head prefect 2015 (troy)RuthNg82
 
сушеница тамара+Real estate+клиенты
сушеница тамара+Real estate+клиентысушеница тамара+Real estate+клиенты
сушеница тамара+Real estate+клиентыТамара Сушеница
 
42 BABSKY - presentation and evaluation of the lesson
42 BABSKY - presentation and evaluation of the lesson42 BABSKY - presentation and evaluation of the lesson
42 BABSKY - presentation and evaluation of the lessonHolasová Alena
 
Circular da PRE sobre pré-campanha
Circular da PRE sobre pré-campanhaCircular da PRE sobre pré-campanha
Circular da PRE sobre pré-campanhaPaulo Veras
 
Representação de Antônio Campos contra Lupércio
Representação de Antônio Campos contra LupércioRepresentação de Antônio Campos contra Lupércio
Representação de Antônio Campos contra LupércioPaulo Veras
 
Lectura 1º de Primaria
Lectura 1º de PrimariaLectura 1º de Primaria
Lectura 1º de PrimariaManuel B.S.
 
Clandestino
ClandestinoClandestino
Clandestinohome
 
2013 Future of Cloud Computing - 3rd Annual Survey Results
2013 Future of Cloud Computing - 3rd Annual Survey Results2013 Future of Cloud Computing - 3rd Annual Survey Results
2013 Future of Cloud Computing - 3rd Annual Survey ResultsMichael Skok
 
Trends in Cloud Computing 2016
Trends in Cloud Computing 2016Trends in Cloud Computing 2016
Trends in Cloud Computing 2016CompTIA
 

Viewers also liked (18)

Caso clínico 2
Caso clínico 2Caso clínico 2
Caso clínico 2
 
01 nuclear energy_overview
01 nuclear energy_overview01 nuclear energy_overview
01 nuclear energy_overview
 
Hpc1 election for head prefect 2015 (troy)
Hpc1 election for head prefect 2015 (troy)Hpc1 election for head prefect 2015 (troy)
Hpc1 election for head prefect 2015 (troy)
 
Sobre
SobreSobre
Sobre
 
MV-CV
MV-CVMV-CV
MV-CV
 
Slide3
Slide3Slide3
Slide3
 
Consumer health: time for a regulatory re-think?
Consumer health: time for a regulatory re-think?Consumer health: time for a regulatory re-think?
Consumer health: time for a regulatory re-think?
 
сушеница тамара+Real estate+клиенты
сушеница тамара+Real estate+клиентысушеница тамара+Real estate+клиенты
сушеница тамара+Real estate+клиенты
 
Evolución de la web
Evolución de la webEvolución de la web
Evolución de la web
 
42 BABSKY - presentation and evaluation of the lesson
42 BABSKY - presentation and evaluation of the lesson42 BABSKY - presentation and evaluation of the lesson
42 BABSKY - presentation and evaluation of the lesson
 
Circular da PRE sobre pré-campanha
Circular da PRE sobre pré-campanhaCircular da PRE sobre pré-campanha
Circular da PRE sobre pré-campanha
 
Representação de Antônio Campos contra Lupércio
Representação de Antônio Campos contra LupércioRepresentação de Antônio Campos contra Lupércio
Representação de Antônio Campos contra Lupércio
 
Briefing ARDA
Briefing ARDABriefing ARDA
Briefing ARDA
 
Apostila siconv
Apostila siconvApostila siconv
Apostila siconv
 
Lectura 1º de Primaria
Lectura 1º de PrimariaLectura 1º de Primaria
Lectura 1º de Primaria
 
Clandestino
ClandestinoClandestino
Clandestino
 
2013 Future of Cloud Computing - 3rd Annual Survey Results
2013 Future of Cloud Computing - 3rd Annual Survey Results2013 Future of Cloud Computing - 3rd Annual Survey Results
2013 Future of Cloud Computing - 3rd Annual Survey Results
 
Trends in Cloud Computing 2016
Trends in Cloud Computing 2016Trends in Cloud Computing 2016
Trends in Cloud Computing 2016
 

Similar to Ascending cloud: The adoption of cloud computing in five industries

Preparing for next-generation cloud: Lessons learned and insights shared
Preparing for next-generation cloud: Lessons learned and insights sharedPreparing for next-generation cloud: Lessons learned and insights shared
Preparing for next-generation cloud: Lessons learned and insights sharedThe Economist Media Businesses
 
Economist Intelligence Unit: Preparing for Next-Generation Cloud
Economist Intelligence Unit: Preparing for Next-Generation CloudEconomist Intelligence Unit: Preparing for Next-Generation Cloud
Economist Intelligence Unit: Preparing for Next-Generation CloudHitachi Vantara
 
Keynote address channel middle east 2013
Keynote address channel middle east 2013Keynote address channel middle east 2013
Keynote address channel middle east 2013Meera Kaul
 
Top 5 trends impacting multicloud management.pptx
Top 5 trends impacting multicloud management.pptxTop 5 trends impacting multicloud management.pptx
Top 5 trends impacting multicloud management.pptxDianaRAICU2
 
Employing cloud ian moyse - workbooks - whitepaper
Employing cloud   ian moyse - workbooks - whitepaperEmploying cloud   ian moyse - workbooks - whitepaper
Employing cloud ian moyse - workbooks - whitepaperITpreneurs
 
Cloud Reality Check 2015 - NTT Communications
Cloud Reality Check 2015 - NTT CommunicationsCloud Reality Check 2015 - NTT Communications
Cloud Reality Check 2015 - NTT CommunicationsRob Steggles
 
The economist intelligence_unit_
The economist intelligence_unit_The economist intelligence_unit_
The economist intelligence_unit_Ali Reza Bakhshi
 
Software Market Trends 2012 2.0
Software Market Trends 2012 2.0Software Market Trends 2012 2.0
Software Market Trends 2012 2.0allaboutsyed
 
Private Sector Digital Value at Stake
Private Sector Digital Value at StakePrivate Sector Digital Value at Stake
Private Sector Digital Value at StakeBridget Lindsay
 
Private Sector Digital Value at Stake
Private Sector Digital Value at StakePrivate Sector Digital Value at Stake
Private Sector Digital Value at StakeDarren Scott
 
New Opportunities for Technology-Driven Business Transformation
New Opportunities for Technology-Driven Business TransformationNew Opportunities for Technology-Driven Business Transformation
New Opportunities for Technology-Driven Business TransformationJoseph M Bradley
 
Cloud computing insights from110 implementation projects
Cloud computing insights from110 implementation projectsCloud computing insights from110 implementation projects
Cloud computing insights from110 implementation projectsIBM India Smarter Computing
 
The 2012 ibm tech trends report
The 2012 ibm tech trends reportThe 2012 ibm tech trends report
The 2012 ibm tech trends reportCasey Lucas
 
The natural fit of cloud with telecommunications
The natural fit of cloud with telecommunicationsThe natural fit of cloud with telecommunications
The natural fit of cloud with telecommunicationsIBM Software India
 
Le rapport publie_par_pwc_luxembourg_0
Le rapport publie_par_pwc_luxembourg_0Le rapport publie_par_pwc_luxembourg_0
Le rapport publie_par_pwc_luxembourg_0Marie-Astrid Heyde
 
115,992 views Feb 22, 2012, 1143amI am an author, indep.docx
115,992 views  Feb 22, 2012, 1143amI am an author, indep.docx115,992 views  Feb 22, 2012, 1143amI am an author, indep.docx
115,992 views Feb 22, 2012, 1143amI am an author, indep.docxaulasnilda
 

Similar to Ascending cloud: The adoption of cloud computing in five industries (20)

Ascending cloud
Ascending cloudAscending cloud
Ascending cloud
 
Preparing for next-generation cloud: Lessons learned and insights shared
Preparing for next-generation cloud: Lessons learned and insights sharedPreparing for next-generation cloud: Lessons learned and insights shared
Preparing for next-generation cloud: Lessons learned and insights shared
 
Economist Intelligence Unit: Preparing for Next-Generation Cloud
Economist Intelligence Unit: Preparing for Next-Generation CloudEconomist Intelligence Unit: Preparing for Next-Generation Cloud
Economist Intelligence Unit: Preparing for Next-Generation Cloud
 
Keynote address channel middle east 2013
Keynote address channel middle east 2013Keynote address channel middle east 2013
Keynote address channel middle east 2013
 
Top 5 trends impacting multicloud management.pptx
Top 5 trends impacting multicloud management.pptxTop 5 trends impacting multicloud management.pptx
Top 5 trends impacting multicloud management.pptx
 
Employing cloud ian moyse - workbooks - whitepaper
Employing cloud   ian moyse - workbooks - whitepaperEmploying cloud   ian moyse - workbooks - whitepaper
Employing cloud ian moyse - workbooks - whitepaper
 
Cloud Reality Check 2015 - NTT Communications
Cloud Reality Check 2015 - NTT CommunicationsCloud Reality Check 2015 - NTT Communications
Cloud Reality Check 2015 - NTT Communications
 
Cloud complexity: the need for resilience
Cloud complexity: the need for resilienceCloud complexity: the need for resilience
Cloud complexity: the need for resilience
 
The economist intelligence_unit_
The economist intelligence_unit_The economist intelligence_unit_
The economist intelligence_unit_
 
Software Market Trends 2012 2.0
Software Market Trends 2012 2.0Software Market Trends 2012 2.0
Software Market Trends 2012 2.0
 
Private Sector Digital Value at Stake
Private Sector Digital Value at StakePrivate Sector Digital Value at Stake
Private Sector Digital Value at Stake
 
Private Sector Digital Value at Stake
Private Sector Digital Value at StakePrivate Sector Digital Value at Stake
Private Sector Digital Value at Stake
 
New Opportunities for Technology-Driven Business Transformation
New Opportunities for Technology-Driven Business TransformationNew Opportunities for Technology-Driven Business Transformation
New Opportunities for Technology-Driven Business Transformation
 
Cloud computing insights from110 implementation projects
Cloud computing insights from110 implementation projectsCloud computing insights from110 implementation projects
Cloud computing insights from110 implementation projects
 
The 2012 ibm tech trends report
The 2012 ibm tech trends reportThe 2012 ibm tech trends report
The 2012 ibm tech trends report
 
The natural fit of cloud with telecommunications
The natural fit of cloud with telecommunicationsThe natural fit of cloud with telecommunications
The natural fit of cloud with telecommunications
 
Cii-PwC Cloud Summit Report 2016
Cii-PwC Cloud Summit Report 2016Cii-PwC Cloud Summit Report 2016
Cii-PwC Cloud Summit Report 2016
 
Le rapport publie_par_pwc_luxembourg_0
Le rapport publie_par_pwc_luxembourg_0Le rapport publie_par_pwc_luxembourg_0
Le rapport publie_par_pwc_luxembourg_0
 
115,992 views Feb 22, 2012, 1143amI am an author, indep.docx
115,992 views  Feb 22, 2012, 1143amI am an author, indep.docx115,992 views  Feb 22, 2012, 1143amI am an author, indep.docx
115,992 views Feb 22, 2012, 1143amI am an author, indep.docx
 
Cloud for Business
Cloud for BusinessCloud for Business
Cloud for Business
 

More from The Economist Media Businesses

Digital platforms and services: A development opportunity for ASEAN
Digital platforms and services: A development opportunity for ASEANDigital platforms and services: A development opportunity for ASEAN
Digital platforms and services: A development opportunity for ASEANThe Economist Media Businesses
 
Sustainable and actionable: A study of asset-owner priorities for ESG investi...
Sustainable and actionable: A study of asset-owner priorities for ESG investi...Sustainable and actionable: A study of asset-owner priorities for ESG investi...
Sustainable and actionable: A study of asset-owner priorities for ESG investi...The Economist Media Businesses
 
Lung cancer in Latin America: Time to stop looking away
Lung cancer in Latin America: Time to stop looking awayLung cancer in Latin America: Time to stop looking away
Lung cancer in Latin America: Time to stop looking awayThe Economist Media Businesses
 
Intelligent Economies: AI's transformation of industries and society
Intelligent Economies: AI's transformation of industries and societyIntelligent Economies: AI's transformation of industries and society
Intelligent Economies: AI's transformation of industries and societyThe Economist Media Businesses
 
Eiu collibra transforming data into action-the business outlook for data gove...
Eiu collibra transforming data into action-the business outlook for data gove...Eiu collibra transforming data into action-the business outlook for data gove...
Eiu collibra transforming data into action-the business outlook for data gove...The Economist Media Businesses
 
An entrepreneur’s perspective: Today’s world through the eyes of the young in...
An entrepreneur’s perspective: Today’s world through the eyes of the young in...An entrepreneur’s perspective: Today’s world through the eyes of the young in...
An entrepreneur’s perspective: Today’s world through the eyes of the young in...The Economist Media Businesses
 
EIU - Fostering exploration and excellence in 21st century schools
EIU - Fostering exploration and excellence in 21st century schoolsEIU - Fostering exploration and excellence in 21st century schools
EIU - Fostering exploration and excellence in 21st century schoolsThe Economist Media Businesses
 
Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...
Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...
Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...The Economist Media Businesses
 
M&A in a changing world: Opportunities amidst disruption
M&A in a changing world: Opportunities amidst disruptionM&A in a changing world: Opportunities amidst disruption
M&A in a changing world: Opportunities amidst disruptionThe Economist Media Businesses
 
Briefing paper: Third-Party Risks: The cyber dimension
Briefing paper: Third-Party Risks: The cyber dimensionBriefing paper: Third-Party Risks: The cyber dimension
Briefing paper: Third-Party Risks: The cyber dimensionThe Economist Media Businesses
 
In Asia-Pacific, low-yields and regulations drive new asset allocations
In Asia-Pacific, low-yields and regulations drive new asset allocationsIn Asia-Pacific, low-yields and regulations drive new asset allocations
In Asia-Pacific, low-yields and regulations drive new asset allocationsThe Economist Media Businesses
 
Asia-pacific Investors Seek Balance Between Risk and Responsibility
Asia-pacific Investors Seek Balance Between Risk and ResponsibilityAsia-pacific Investors Seek Balance Between Risk and Responsibility
Asia-pacific Investors Seek Balance Between Risk and ResponsibilityThe Economist Media Businesses
 
Risks Drive Noth American Investors to Equities, For Now
Risks Drive Noth American Investors to Equities, For NowRisks Drive Noth American Investors to Equities, For Now
Risks Drive Noth American Investors to Equities, For NowThe Economist Media Businesses
 
In North America, Risks Drive Reallocation to Equities
In North America, Risks Drive Reallocation to EquitiesIn North America, Risks Drive Reallocation to Equities
In North America, Risks Drive Reallocation to EquitiesThe Economist Media Businesses
 
Balancing Long-term Liabilities with Market Opportunities in EMEA
Balancing Long-term Liabilities with Market Opportunities in EMEABalancing Long-term Liabilities with Market Opportunities in EMEA
Balancing Long-term Liabilities with Market Opportunities in EMEAThe Economist Media Businesses
 

More from The Economist Media Businesses (20)

Food for thought: Eating better
Food for thought: Eating betterFood for thought: Eating better
Food for thought: Eating better
 
Digital platforms and services: A development opportunity for ASEAN
Digital platforms and services: A development opportunity for ASEANDigital platforms and services: A development opportunity for ASEAN
Digital platforms and services: A development opportunity for ASEAN
 
Sustainable and actionable: A study of asset-owner priorities for ESG investi...
Sustainable and actionable: A study of asset-owner priorities for ESG investi...Sustainable and actionable: A study of asset-owner priorities for ESG investi...
Sustainable and actionable: A study of asset-owner priorities for ESG investi...
 
Next-Generation Connectivity
Next-Generation ConnectivityNext-Generation Connectivity
Next-Generation Connectivity
 
Lung cancer in Latin America: Time to stop looking away
Lung cancer in Latin America: Time to stop looking awayLung cancer in Latin America: Time to stop looking away
Lung cancer in Latin America: Time to stop looking away
 
How boards can lead the cyber-resilient organisation
How boards can lead the cyber-resilient organisation How boards can lead the cyber-resilient organisation
How boards can lead the cyber-resilient organisation
 
Intelligent Economies: AI's transformation of industries and society
Intelligent Economies: AI's transformation of industries and societyIntelligent Economies: AI's transformation of industries and society
Intelligent Economies: AI's transformation of industries and society
 
Eiu collibra transforming data into action-the business outlook for data gove...
Eiu collibra transforming data into action-the business outlook for data gove...Eiu collibra transforming data into action-the business outlook for data gove...
Eiu collibra transforming data into action-the business outlook for data gove...
 
Communication barriers in the modern workplace
Communication barriers in the modern workplaceCommunication barriers in the modern workplace
Communication barriers in the modern workplace
 
An entrepreneur’s perspective: Today’s world through the eyes of the young in...
An entrepreneur’s perspective: Today’s world through the eyes of the young in...An entrepreneur’s perspective: Today’s world through the eyes of the young in...
An entrepreneur’s perspective: Today’s world through the eyes of the young in...
 
EIU - Fostering exploration and excellence in 21st century schools
EIU - Fostering exploration and excellence in 21st century schoolsEIU - Fostering exploration and excellence in 21st century schools
EIU - Fostering exploration and excellence in 21st century schools
 
Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...
Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...
Accountability in Marketing - Linking Tactics to Strategy, Customer Focus and...
 
M&A in a changing world: Opportunities amidst disruption
M&A in a changing world: Opportunities amidst disruptionM&A in a changing world: Opportunities amidst disruption
M&A in a changing world: Opportunities amidst disruption
 
Infographic: Third-Party Risks: The cyber dimension
Infographic: Third-Party Risks: The cyber dimensionInfographic: Third-Party Risks: The cyber dimension
Infographic: Third-Party Risks: The cyber dimension
 
Briefing paper: Third-Party Risks: The cyber dimension
Briefing paper: Third-Party Risks: The cyber dimensionBriefing paper: Third-Party Risks: The cyber dimension
Briefing paper: Third-Party Risks: The cyber dimension
 
In Asia-Pacific, low-yields and regulations drive new asset allocations
In Asia-Pacific, low-yields and regulations drive new asset allocationsIn Asia-Pacific, low-yields and regulations drive new asset allocations
In Asia-Pacific, low-yields and regulations drive new asset allocations
 
Asia-pacific Investors Seek Balance Between Risk and Responsibility
Asia-pacific Investors Seek Balance Between Risk and ResponsibilityAsia-pacific Investors Seek Balance Between Risk and Responsibility
Asia-pacific Investors Seek Balance Between Risk and Responsibility
 
Risks Drive Noth American Investors to Equities, For Now
Risks Drive Noth American Investors to Equities, For NowRisks Drive Noth American Investors to Equities, For Now
Risks Drive Noth American Investors to Equities, For Now
 
In North America, Risks Drive Reallocation to Equities
In North America, Risks Drive Reallocation to EquitiesIn North America, Risks Drive Reallocation to Equities
In North America, Risks Drive Reallocation to Equities
 
Balancing Long-term Liabilities with Market Opportunities in EMEA
Balancing Long-term Liabilities with Market Opportunities in EMEABalancing Long-term Liabilities with Market Opportunities in EMEA
Balancing Long-term Liabilities with Market Opportunities in EMEA
 

Recently uploaded

SQL Database Design For Developers at php[tek] 2024
SQL Database Design For Developers at php[tek] 2024SQL Database Design For Developers at php[tek] 2024
SQL Database Design For Developers at php[tek] 2024Scott Keck-Warren
 
Unblocking The Main Thread Solving ANRs and Frozen Frames
Unblocking The Main Thread Solving ANRs and Frozen FramesUnblocking The Main Thread Solving ANRs and Frozen Frames
Unblocking The Main Thread Solving ANRs and Frozen FramesSinan KOZAK
 
AI as an Interface for Commercial Buildings
AI as an Interface for Commercial BuildingsAI as an Interface for Commercial Buildings
AI as an Interface for Commercial BuildingsMemoori
 
Handwritten Text Recognition for manuscripts and early printed texts
Handwritten Text Recognition for manuscripts and early printed textsHandwritten Text Recognition for manuscripts and early printed texts
Handwritten Text Recognition for manuscripts and early printed textsMaria Levchenko
 
Slack Application Development 101 Slides
Slack Application Development 101 SlidesSlack Application Development 101 Slides
Slack Application Development 101 Slidespraypatel2
 
A Domino Admins Adventures (Engage 2024)
A Domino Admins Adventures (Engage 2024)A Domino Admins Adventures (Engage 2024)
A Domino Admins Adventures (Engage 2024)Gabriella Davis
 
Enhancing Worker Digital Experience: A Hands-on Workshop for Partners
Enhancing Worker Digital Experience: A Hands-on Workshop for PartnersEnhancing Worker Digital Experience: A Hands-on Workshop for Partners
Enhancing Worker Digital Experience: A Hands-on Workshop for PartnersThousandEyes
 
My Hashitalk Indonesia April 2024 Presentation
My Hashitalk Indonesia April 2024 PresentationMy Hashitalk Indonesia April 2024 Presentation
My Hashitalk Indonesia April 2024 PresentationRidwan Fadjar
 
Key Features Of Token Development (1).pptx
Key  Features Of Token  Development (1).pptxKey  Features Of Token  Development (1).pptx
Key Features Of Token Development (1).pptxLBM Solutions
 
FULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | Delhi
FULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | DelhiFULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | Delhi
FULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | Delhisoniya singh
 
Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024
Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024
Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024BookNet Canada
 
Maximizing Board Effectiveness 2024 Webinar.pptx
Maximizing Board Effectiveness 2024 Webinar.pptxMaximizing Board Effectiveness 2024 Webinar.pptx
Maximizing Board Effectiveness 2024 Webinar.pptxOnBoard
 
Scaling API-first – The story of a global engineering organization
Scaling API-first – The story of a global engineering organizationScaling API-first – The story of a global engineering organization
Scaling API-first – The story of a global engineering organizationRadu Cotescu
 
Human Factors of XR: Using Human Factors to Design XR Systems
Human Factors of XR: Using Human Factors to Design XR SystemsHuman Factors of XR: Using Human Factors to Design XR Systems
Human Factors of XR: Using Human Factors to Design XR SystemsMark Billinghurst
 
IAC 2024 - IA Fast Track to Search Focused AI Solutions
IAC 2024 - IA Fast Track to Search Focused AI SolutionsIAC 2024 - IA Fast Track to Search Focused AI Solutions
IAC 2024 - IA Fast Track to Search Focused AI SolutionsEnterprise Knowledge
 
Breaking the Kubernetes Kill Chain: Host Path Mount
Breaking the Kubernetes Kill Chain: Host Path MountBreaking the Kubernetes Kill Chain: Host Path Mount
Breaking the Kubernetes Kill Chain: Host Path MountPuma Security, LLC
 
Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...
Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...
Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...HostedbyConfluent
 
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
08448380779 Call Girls In Diplomatic Enclave Women Seeking MenDelhi Call girls
 
Swan(sea) Song – personal research during my six years at Swansea ... and bey...
Swan(sea) Song – personal research during my six years at Swansea ... and bey...Swan(sea) Song – personal research during my six years at Swansea ... and bey...
Swan(sea) Song – personal research during my six years at Swansea ... and bey...Alan Dix
 
Azure Monitor & Application Insight to monitor Infrastructure & Application
Azure Monitor & Application Insight to monitor Infrastructure & ApplicationAzure Monitor & Application Insight to monitor Infrastructure & Application
Azure Monitor & Application Insight to monitor Infrastructure & ApplicationAndikSusilo4
 

Recently uploaded (20)

SQL Database Design For Developers at php[tek] 2024
SQL Database Design For Developers at php[tek] 2024SQL Database Design For Developers at php[tek] 2024
SQL Database Design For Developers at php[tek] 2024
 
Unblocking The Main Thread Solving ANRs and Frozen Frames
Unblocking The Main Thread Solving ANRs and Frozen FramesUnblocking The Main Thread Solving ANRs and Frozen Frames
Unblocking The Main Thread Solving ANRs and Frozen Frames
 
AI as an Interface for Commercial Buildings
AI as an Interface for Commercial BuildingsAI as an Interface for Commercial Buildings
AI as an Interface for Commercial Buildings
 
Handwritten Text Recognition for manuscripts and early printed texts
Handwritten Text Recognition for manuscripts and early printed textsHandwritten Text Recognition for manuscripts and early printed texts
Handwritten Text Recognition for manuscripts and early printed texts
 
Slack Application Development 101 Slides
Slack Application Development 101 SlidesSlack Application Development 101 Slides
Slack Application Development 101 Slides
 
A Domino Admins Adventures (Engage 2024)
A Domino Admins Adventures (Engage 2024)A Domino Admins Adventures (Engage 2024)
A Domino Admins Adventures (Engage 2024)
 
Enhancing Worker Digital Experience: A Hands-on Workshop for Partners
Enhancing Worker Digital Experience: A Hands-on Workshop for PartnersEnhancing Worker Digital Experience: A Hands-on Workshop for Partners
Enhancing Worker Digital Experience: A Hands-on Workshop for Partners
 
My Hashitalk Indonesia April 2024 Presentation
My Hashitalk Indonesia April 2024 PresentationMy Hashitalk Indonesia April 2024 Presentation
My Hashitalk Indonesia April 2024 Presentation
 
Key Features Of Token Development (1).pptx
Key  Features Of Token  Development (1).pptxKey  Features Of Token  Development (1).pptx
Key Features Of Token Development (1).pptx
 
FULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | Delhi
FULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | DelhiFULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | Delhi
FULL ENJOY 🔝 8264348440 🔝 Call Girls in Diplomatic Enclave | Delhi
 
Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024
Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024
Transcript: #StandardsGoals for 2024: What’s new for BISAC - Tech Forum 2024
 
Maximizing Board Effectiveness 2024 Webinar.pptx
Maximizing Board Effectiveness 2024 Webinar.pptxMaximizing Board Effectiveness 2024 Webinar.pptx
Maximizing Board Effectiveness 2024 Webinar.pptx
 
Scaling API-first – The story of a global engineering organization
Scaling API-first – The story of a global engineering organizationScaling API-first – The story of a global engineering organization
Scaling API-first – The story of a global engineering organization
 
Human Factors of XR: Using Human Factors to Design XR Systems
Human Factors of XR: Using Human Factors to Design XR SystemsHuman Factors of XR: Using Human Factors to Design XR Systems
Human Factors of XR: Using Human Factors to Design XR Systems
 
IAC 2024 - IA Fast Track to Search Focused AI Solutions
IAC 2024 - IA Fast Track to Search Focused AI SolutionsIAC 2024 - IA Fast Track to Search Focused AI Solutions
IAC 2024 - IA Fast Track to Search Focused AI Solutions
 
Breaking the Kubernetes Kill Chain: Host Path Mount
Breaking the Kubernetes Kill Chain: Host Path MountBreaking the Kubernetes Kill Chain: Host Path Mount
Breaking the Kubernetes Kill Chain: Host Path Mount
 
Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...
Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...
Transforming Data Streams with Kafka Connect: An Introduction to Single Messa...
 
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
 
Swan(sea) Song – personal research during my six years at Swansea ... and bey...
Swan(sea) Song – personal research during my six years at Swansea ... and bey...Swan(sea) Song – personal research during my six years at Swansea ... and bey...
Swan(sea) Song – personal research during my six years at Swansea ... and bey...
 
Azure Monitor & Application Insight to monitor Infrastructure & Application
Azure Monitor & Application Insight to monitor Infrastructure & ApplicationAzure Monitor & Application Insight to monitor Infrastructure & Application
Azure Monitor & Application Insight to monitor Infrastructure & Application
 

Ascending cloud: The adoption of cloud computing in five industries

  • 1. A report from The Economist Intelligence Unit Sponsored by Ascending cloud The adoption of cloud computing in five industries
  • 2. © The Economist Intelligence Unit Limited 20161 Ascending cloud The adoption of cloud computing in five industries Introduction 2 Cloud computing—what does it mean for key industries? 3 Banking—disruption of a legacy business 4 Retail—the growth of parallel businesses 5 The rise of digital manufacturing 6 Cloud, technology and education 7 Cloud and healthcare—changing the relationship between patient and doctor 8 Manufacturing—a special case of cloud adoption 9 Enter cloud computing—the rise of digital manufacturing 10 Cloud and the value chain of manufacturing 10   i. Cloud and the manufacturing supply chain 10   ii. Cloud and design and prototyping 11   iii. Cloud and the production process 12   iv. Cloud and the manufacturing customer 13 The challenges to digital manufacturing 14 Cloud computing—the long view 15 Contents
  • 3. © The Economist Intelligence Unit Limited 20162 Ascending cloud The adoption of cloud computing in five industries Cloud computing has clearly become a driving force in the information technology world. Over 90% of global enterprises report using cloud as part of their business.1 With over $33 billion in projected 2015 spend, cloud is now the largest category in IT infrastructure budgets.2 But every industry has its unique technology dynamics. Therefore, to understand the future of cloud computing you need to understand its dynamics in key industries. In September-October 2015, The Economist Intelligence Unit, sponsored by VMware, asked a panel of 360 senior executives and thought leaders their views on the future of cloud computing. These were decision-makers—all directors or above, including half from the C-Suite or board of directors of their companies or non-profit organisations and approximately one-third with an IT background. Collectively they present a strong global perspective, and were drawn equally from developed and developing nations. 1 RightScale State of the Cloud Report, 2015 2 IDC, World IT Infrastructure Spending Forecast, 2015 Finally, these respondents were equally representative of five key industries—financial services, retailing, healthcare, education and manufacturing—that are being impacted by cloud. Questions that required deeper industry expertise were directed to sub-panels of experts from each industry. In this report, we will first present some brief observations on the role of cloud across these verticals. The focus will be on the pace of cloud adoption and its subsequent impact on key sectors within each industry. In addition, our research showed that manufacturing plays a special role in global development—and so the report will take a deeper dive into that unique sector. In doing so, the report will highlight digital trends that have a broader impact as cloud moves from the digital to the “cyber-physical”. For reports on the impact of cloud on healthcare and education, please click on these links. Introduction
  • 4. © The Economist Intelligence Unit Limited 20163 Ascending cloud The adoption of cloud computing in five industries There is certainly a great deal of dialogue about the growth of cloud—but where does it actually stand? We asked each industry sub-panel to assess the current presence in their own industry. The first observation is significant differences in the rate of cloud adoption. The first movers appear to be those that can generate a digital “pure play” side-by-side with the legacy industry— for example, digital banking emerging from branch networks, or e-commerce competing with high street retailers and shopping centres. Manufacturing, as we shall see, presents a more complex problem—the integration of cloud into physical structures such as factories, machines and assembly lines. Finally, as discussed in our review of these industries, adoption in Education and Healthcare is slowed by regulatory constraints and less intense competitive environments. The second observation is that, as far as cloud has come, it has a long way to go. “Pervasive presence”—ready access and widespread deployment—averages out to only 7% across industries. The following industry analysis illustrates just how that rate of growth is expected to be. Cloud computing—what does it mean for key industries? Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Banking Retail Manu- facturing Education Healthcare Industry average Pervasive presence Significant presence How would you characterise the current presence of cloud in the following industries? % of respondents reporting a significant or pervasive presence 52 7 57 1 42 7 34 10 31 8 43 7
  • 5. © The Economist Intelligence Unit Limited 20164 Ascending cloud The adoption of cloud computing in five industries Banking—disruption of a legacy business Two trends are driving cloud adoption in banking. The first is the adoption of cloud for back-office and selected customer operations by traditional banking institutions. The second is Fintech—digital insurgents who are regularly using cloud-based services to compete in key banking products. According to our banking sub-panel, these forces will drive a rapid rate of adoption—almost three out of four predict cloud will be a major factor in banking in five years. Analysis of banking products and new markets shows a more nuanced picture of cloud coexisting with non- cloud systems. This may indicate the growth of cloud alongside existing legacy systems, coupled with concerns about security. Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Major factor Moderate factor Future cloud penetration of the banking industry % saying cloud will be a moderate or major factor In one year In three years In five years 52 19 53 36 15 74 Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Very important Somewhat important How important is cloud in supporting sectors of the banking industry? % saying cloud will be somewhat or very important New ways to make payments Lowering banking costs Banking for remote populations New ways of saving Banking for poor populations New ways of lending 68 21 60 32 57 34 50 45 43 42 42 47
  • 6. © The Economist Intelligence Unit Limited 20165 Ascending cloud The adoption of cloud computing in five industries Retail—the growth of parallel businesses Our retail experts predict a similar pattern of cloud penetration in the retail business. From a relatively modest base, the expectation is that cloud will grow five-fold as a major factor in retailing. One of the impacts of cloud appears to be making retailing more consumer-friendly, as a technology being used to increase access, lower prices and reducing costs for the customer. Another result appears to be enabling the growth of new products and the start of new businesses— indicating cloud’s place as a central technology of e-commerce. Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Major factor Moderate factor Future cloud penetration of the retail industry % saying cloud will be a moderate or major factor In one year In three years In five years 57 14 43 41 23 70 Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Very important Somewhat important How important is cloud in supporting sectors of the retail industry? % saying cloud will be somewhat or very important Reducing costs of goods and services Helping new companies grow Increasing access to retail Making goods more available Making shopping more convenient 58 33 49 45 48 41 43 44 40 51
  • 7. © The Economist Intelligence Unit Limited 20166 Ascending cloud The adoption of cloud computing in five industries The rise of digital manufacturing As noted before, manufacturing appears to have something of a late start in cloud. One reason is that unlike digital “pure plays” such as financial services, manufacturing requires embedding of cloud into physical equipment—for example sensors into a machine tool, or GPS-markers into an order of parts. However, with extensive investment in the internet of things by manufacturers (which is largely cloud dependent), cloud penetration is expected to increase significantly and rapidly. Cloud is also expected to play a significant role in every step of the manufacturing process (from supplier to customer)—more detail in the analysis that follows. Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Major factor Moderate factor Future cloud penetration of the manufacturing industry % saying cloud will be a moderate or major factor In one year In three years In five years 46 15 43 43 21 71 Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Very important Somewhat important How important is cloud in supporting sectors of the manufacturing industry? % saying cloud will be somewhat or very important Supporting production processes Better supply chain management Enabling design and prototyping Inventory, orders and distribution 60 30 54 35 52 39 48 40
  • 8. © The Economist Intelligence Unit Limited 20167 Ascending cloud The adoption of cloud computing in five industries Cloud, technology and education Education shows a somewhat slower adoption rate than other industries. Possible reasons include a less competitive environment and traditionally slower rates of technology adoption by government.3 But after much initial hype, online education has also suffered a series of disappointments as “MOOCs” (massive open online courses) found that large numbers of enrolled students did not pursue their studies. Nonetheless, adoption looks set to pick up speed in the 3-5 year timeframe, and cloud looks set to impact the entire spectrum of education. 3 Information Week, Public Sector Slow to Adopt Cloud Computing, June 2012 Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Major factor Moderate factor Future cloud penetration of the education industry % saying cloud will be a moderate or major factor In one year In three years In five years 55 20 29 47 18 67 Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Very important Somewhat important How important is cloud in supporting sectors of the education industry? % saying cloud will be somewhat or very important Higher education (university) Education for remote areas Continuing/adult education Mid-level students (ages 11-17) Education for low-income Educating young students (ages 3-10) 51 34 42 38 40 44 40 46 34 42 25 48
  • 9. © The Economist Intelligence Unit Limited 20168 Ascending cloud The adoption of cloud computing in five industries Cloud and healthcare— changing the relationship between patient and doctor As in all of the industries analysed, cloud is expected to grow to become a major factor in delivering services. One area that the research indicates cloud will have an impact on is the actual delivery of health services—and the doctor-patient relationship. Specifically, cloud is geared to support remote diagnostics and treatment—helping to empower the patient with knowledge of their own condition. It may also support the extensive data requirements of preventative care, supporting a long-term industry goal of holistic medicine. Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Major factor Moderate factor Future cloud penetration of the healthcare industry % saying cloud will be a moderate or major factor In one year In three years In five years 26 25 32 49 27 61 Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Very important Somewhat important How important is cloud in supporting sectors of the healthcare industry? % saying cloud will be somewhat or very important Centralisation of health records Supporting preventative care Care for low-income populations Supporting remote diagnosis Supporting remote treatment 57 27 53 32 45 35 44 32 43 37
  • 10. © The Economist Intelligence Unit Limited 20169 Ascending cloud The adoption of cloud computing in five industries Manufacturing—a special case of cloud adoption Different industries can be expected to make different contributions to economic growth. The EIU therefore asked our panel which sector— irrespective of its penetration by cloud—will have the greatest impact on economic prosperity. By a clear majority the panel identified manufacturing as the leading driver of economic growth. Why is manufacturing so important to economic growth? An obvious reason is its sheer scale—manufacturing currently employs one in eight of all workers around the globe, and accounts for 16% of global GNP. Any changes in this massive sector cannot help but impact the larger economy. Manufacturing also makes a disproportionate contribution to R&D and innovation. It is responsible for 20% of global innovation, and funds 77% of global research and development. Given the above, it is no surprise that manufacturing accounts for 37% of increases in global productivity.4 This briefing will therefore focus on the impact of cloud on the key manufacturing sector. 4 McKinsey, Manufacturing the future, November 2012 Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 Which sectors will drive economic growth? Which of the following do you feel will have the greatest impact on your country’s overall economic prosperity in the next three years? (% respondents) New forms of manufacturing through new technologies New forms of education through new technologies New forms of retailing through new technologies New forms of banking through new technologies New forms of healthcare through new technologies 29 21 19 18 14
  • 11. © The Economist Intelligence Unit Limited 201610 Ascending cloud The adoption of cloud computing in five industries Enter cloud computing—the rise of digital manufacturing Cloud has a relatively small current presence in manufacturing—only 7% of respondents believe that cloud has a pervasive presence in the industry. Accordingly, it lags behind more readily digitised industries such as banking and retailing, while leading traditionally slow-moving, regulated industries such as education and healthcare. The primary obstacle is the physical element of digital manufacturing. Creating cloud applications in banking and other services, for example, is a relatively simple matter of proper coding. But embedding cloud into a factory requires the design of new sensors, ensuring common standards across machines, communications protocols—and a host of other “cyber-physical” challenges to be met. That said, firms are currently investing billions to overcome these hurdles. Indeed, our survey panel expects an extremely rapid penetration of cloud into manufacturing—with over 90% projecting cloud will be a significant factor in only three years’ time. Moreover, this high adoption rate is expected for all major manufacturing regions across the globe. Interviews with experts in cloud computing support these findings. “The first initiatives we’ve seen around cloud and manufacturing were very much driven by a single dimension in terms of value creation and that was cost” says Ralf Dreischmeier, global leader, Technology Advantage Practice at the Boston Consulting Group. “Looking at the value of cloud today we hear more about agility, quality and innovation. I think that the more sophisticated parts of the business, like design and R&D, are much more likely now to adopt cloud because those benefits are there. This is a very clear trend that we have observed.” In sum, cloud-based manufacturing is starting from a low base, but is expected to be widely deployed in a few short years. When “digital manufacturing” arises, what will its benefits and challenges be? Cloud and the value chain of manufacturing Manufacturing can be understood as a linear progression—supply chain, design, production and the shipment to customers. The impact of cloud is best understood as a transformation of each of these steps. i. Cloud and the manufacturing supply chain A modern television is built from 2,000 components, a car from 30,000 and an Airbus A380 from over 4 million. These raw materials and parts must flow in from thousands of locations to arrive across the globe on-time, on-spec and in-budget. This complex chain requires huge scalability, access by multiple devices with different operating systems and the ability to manage large pools of data, all done cost-effectively—it is difficult to imagine building this outside of a cloud network.         Supply Chain Design and Prototyping Production Distribution/ Customer The manufacturing value chain Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 What will be the importance of cloud in manufacturing supply chain in one year’s time? (% respondents) 1 10 3554 Very unimportant Somewhat unimportant Somewhat important Very important
  • 12. © The Economist Intelligence Unit Limited 201611 Ascending cloud The adoption of cloud computing in five industries For example, cloud-based solutions allow the dissemination of designs, specifications and contract terms to thousands of suppliers instantaneously. When coupled with radio-frequency identification (RFID), cloud enables inbound parts to be tracked by multiple devices across the globe. Finally, cloud provides the scalable computing power and software-as-a-service applications that enables a procurement officer to closely manage delivery, inventory and pricing. But this effect goes beyond simply tracking parts: 1. Cloud can reduce supply chain costs: The ability to source qualified bids from more suppliers can increase competition, driving down the cost of goods sold. 2. Cloud can connect, expand and diffuse the global base of suppliers: There is a reason why parts manufacturers are clustered around Detroit, Wolfsburg and Nagoya—their automotive customers want to be sure of close collaboration and no shipping problems. Cloud, by providing connectivity to inventory counts and shipments, can enable original equipment manufacturers to reach out to more distant, smaller-scale suppliers with confidence. 3. Cloud supports partnerships between customers and suppliers: An attribute of ubiquitous cloud is that it supports collaboration on a global scale—in design, in testing and in quality assurance. This can insert a new agility into supply chain relationships— where parts are co-designed and tested for quality. In the longer term, these attributes can force a radical revision of the global supply chain. Suppliers can become more dispersed, more cost-competitive and compete based on their ability to collaborate with their manufacturing customers. Joseph Salvo, manager, Complex Systems Engineering at GE Global Research, sees this trend as a broad social force. “As we connect the machines of the world to the people of the world in the industrial sector, the free flow of data and the free flow of information is going to be the force of democratisation,” he says. “That increases GDP more than anything else. It’s the ability to get access to ideas and knowledge. That’s what transforms society and culture and leads to a better living standard for the average person.” ii. Cloud and design and prototyping Traditional manufacturing design has been driven by a painful iterative process—design, test, fail, redesign, test, fail, redesign, etc. Cloud-based design and its cousin, 3D printing, will likely enable manufacturers to shorten or even bypass this painful process. Cloud computing provides the immense data capacity and virtualised computing power that enables dynamic, digitally-based design. Imagine a working hologram of a part that can be constantly refined for wind shear, heat expansion, conductivity, fit with adjacent parts, component cost and a dozen other variables. Pre-modelling of these and other properties can allow the cloud- enabled designer to accelerate the product into the prototyping stage for physical testing. This cloud-driven flexibility in design and prototyping will likely result in: 1. Reducing costs: Traditional manufacturing Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 What will be the importance of cloud in manufacturing design and prototyping in one year’s time? (% respondents) 4 6 3951 Very unimportant Somewhat unimportant Somewhat important Very important
  • 13. © The Economist Intelligence Unit Limited 201612 Ascending cloud The adoption of cloud computing in five industries design requires extensive rework, engineering time and production resources. Cloud based can certainly reduce costs associated to those. 2. Accelerating time to market: It takes only a half day to assemble a car, but it takes seven years to design a new one. Dynamic design and testing of parts can take years off of this cycle. 3. Increasing customisation of manufactured products: Flexibility in the design phase will enable manufacturers to “design on spec”— creating products that fit the individual needs of the customer. Similarly, a change in a component’s design can be rapidly disseminated to thousands of suppliers, enabling them to retool and bring their product into specification with the new design. As usual, the unforeseen benefits of technology may be most interesting. The greatest impact of digital design may be in the intangible field of innovation—where a late-night engineer has the freedom to tinker, test and experiment rapidly at low cost. In this sense the greatest impact of cloud on design may well be the innovative development of unforeseen products. “We have definitely seen that cloud allows you to realise simplification and productivity improvement where you didn’t expect it,” Mr Dreischmeier says. “In discussions with clients we started off saying that the cloud is a more efficient way to store your data, so you save IT operating costs. The discussion we’re having now is that it enables highly distributed technical data to come together in one place where it can be accessed by next-generation devices. So with all these additional benefits now coming through, cost saving is still a lever, but now there are other levers that are becoming more and more important.” iii. Cloud and the production process The production process describes the physical creation of the products—the measuring, cutting, stamping, welding, assembly and testing of the finished product—be it a child’s toy, a smart phone, or the airframe of a commercial airliner. Cloud is the network platform for the internet of things (IoT)—which includes the embedding of sensors into the assembly lines, machine tools, factory controls and quality testing monitors of the “smart factory”. Cloud can provide the computational glue that enables data to be collected and analysed to support the IoT. This will likely result in the following developments in the production process: 1. Cost reduction through operating efficiencies: For example, equipment-based sensors will tell a central dashboard when the machine needs maintenance, is operating at sub- performance, or is about to fail. By alerting the operator to the need for preventive maintenance, these cloud-based reports can optimise the unit’s performance, and prevent the breakdowns that result in the dreaded “shutting down the line.” 2. Boosting manufacturing flexibility: Traditionally, a washing machine factory did just that—it was only capable of manufacturing washing machines. But cloud can enable factories to become “programmable”—enabling a rapid re-setting of production lines for new products, or customised versions for current ones. 3. Greener manufacturing: A simple manufacturing maxim is that greater manufacturing efficiencies mean lower fuel Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 What will be the importance of cloud in manufacturing production in one year’s time? (% respondents) 4 6 30 60 Very unimportant Somewhat unimportant Somewhat important Very important
  • 14. © The Economist Intelligence Unit Limited 201613 Ascending cloud The adoption of cloud computing in five industries consumption. For example, cloud–based building controls can regulate power (typically the second-highest operating costs for manufacturers) to when and where it is needed. Furthermore, sensors can be used to track sub-performance operations and their impact on CO2 emissions. Salvo points out that cost is not the only driver of greener manufacturing: “Why now is there this big push for sustainability and environmental consciousness?” he asks. “Once you go back to a local production paradigm, you want to be able to site your production anywhere the customers are. If you are going to do that you have to build trust and creditability with the customers so your systems must be transparent. And they have to be sustainable.” A sadder consequence to cloud based- manufacturing may be the further decline in skilled manufacturing jobs. Cloud computing can provide the digital backbone that supports robotics and automated assembly. These technology-intensive solutions will continue the displacement of skilled blue collar workers with highly-paid but much fewer digital specialists. iv. Cloud and the manufacturing customer The traditional manufacturer-customer relationship has been: 1) A product is sold to the customer and then 2) The supplier disappears until a new product is to be sold. Cloud has the potential to revolutionise this arm’s length relationship. Just as cloud enables upstream collaboration with suppliers, it can support downstream collaboration with customers. The ability to flexibly source parts, to dynamically design products and to switch out one production run for another will create a new test of competitiveness—how closely you can collaborate with your customer. Now, when you buy a car, you pick out whatever is in the showroom. In the near future, it may be possible to order the “configured car” with your choice of engine size, transmission, interior colour and number of cup holders. The successful manufacturer won’t just make the best product—they will make the best product for each customer. Cloud’s impact on customers won’t just be in the relationship. It could also be in the product itself. “Now the secret is who can innovate into that vast market and find the market niches that they can outperform and create the value,” Mr Salvo says. “It’s going to be more about creating value stories for the individual customers and creating those network relationships versus brute force competition against the guy next door. That is a mind shift that I see happening, although it’s going to take some time.” Manufactured products are increasingly carrying a digital capability—be it smart clothing, telematics in a truck, or fuel sensors in a jet engine—that have the potential to restructure the customer relationship. Take for example a commercial heating, ventilation and air conditioning (HVAC) manufacturer. Five years ago, they might sell a $5 million unit to a building manager and—unless it failed—not see them again for the life of the unit. Now that HVAC system is equipped with temperature, humidity, fuel consumption, maintenance, performance and other sensors. This cloud based system enables the manager, among other things, to monitor and purchase Source: EIU Survey “Cloud Computing and Economic Development”, October 2015 What will be the importance of cloud in manufacturing distribution and customer relationships in one year’s time? (% respondents) 1 10 40 48 Very unimportant Somewhat unimportant Somewhat important Very important
  • 15. © The Economist Intelligence Unit Limited 201614 Ascending cloud The adoption of cloud computing in five industries utility power at its lowest rates (eg in the middle of the night). The result is that the manufacturer is no longer a supplier, but has become an energy manager for the building. Instead of selling a product, the HVAC manufacturer leases it, and earns revenue on joint energy savings. This collaborative, cloud-enabled relationship can be found in consumer wearables (Fitbit), building controls (Siemens), or air turbines (General Electric). The challenges to digital manufacturing Cloud-based manufacturing will open up a brave new world—but not all of it will be simple or easy. Front and centre is the risk that challenges the deployment of cloud and other technologies in all industries—cyber-risk, or increased vulnerability to cyber-attack and digital espionage. The historical manufacturing plant was a pretty autonomous facility—no digital connectivity at all was the ultimate firewall. But by embedding sensors in machines, storing digital designs and creating a smart factory network, the digital manufacturer assumes a new vulnerability to cyber-attack. Embedding proprietary designs into digitised workflows allows them to be more easily penetrated and stolen. A cyber-savvy competitor could conceivably tap into reporting applications and get a clear picture of your manufacturing methods, cost position and new product line. A really unscrupulous competitor or cyber-terrorist could make data disappear, or reset a manufacturing line to come to a grinding (that is literally grinding) halt. As in all emerging technology, cyber-risk emerges as the most serious challenge. Another challenge is that, at present, there are no commonly-accepted standards that enable seamless connections from machine-to-machine, manufacturer to supplier, or manufacturer to customer. We are only just beginning to see software that is capable of handling the massive data deluge of digital manufacturing. Digital manufacturing has many technical hurdles to leap before it delivers on the many promises being made. Dreischmeier points out that regulations concerning access to data can also be an obstacle to cloud adoption in some industries. “When we talk about manufacturing, clearly it’s pretty diverse,” he says, “it goes from aerospace to drugs to automobiles. Adoption rates can be significantly influenced by regulatory requirements that ultimately influence a company’s philosophy around security and risk. Regulations do limit what companies can and can’t do quite a lot.” The final challenge is a human one. The digitisation of the manufacturing line (including the installation of robotics) will clearly disrupt the blue-collar workforce that has built the modern world. At best, it will force a wrenching reset in the skills needed in manufacturing—a wrenching evolution that will leave many traditional blue collar workers behind. At worst, the digitisation of manufacturing will drive to a net loss in highly-paid manufacturing positions, increasing income inequality and concentration of wealth.
  • 16. © The Economist Intelligence Unit Limited 201615 Ascending cloud The adoption of cloud computing in five industries Cloud computing—the long view Major technology transformation seems to follow three waves of adoption. The first is cost reduction. The second is doing-what-you-are-doing-now-but doing-it-better. The third is the most fascinating— the creation of unforeseen, wholly new opportunities that no one planned for or expected. What is happening to manufacturing’s suppliers can be applied to the suppliers of any industry. Transparency in digital bidding may drive down supplier costs. Advanced digital design will shorten and cheapen the iterative cycle of almost any product’s design. The digital factory may operate more efficiently, with less down time and using less energy. In a million little ways, digitisation can make many industries more efficient and flexible. Supplier collaboration can be enhanced. Design changes will come faster. Production lines can be reconfigured and switched out faster. A key outcome will be a speeding up of the creation cycle, including the iterative process of design/ test based on changing customer demands. Even experts in the field are amazed at the potential for sweeping change. “Every day I can hardly wait to get up to work in this space,” says Mr Salvo. “This is a once in a lifetime moment in history where we are literally connecting all the machines and minds of the world and we are going to improve our environment and our ability to deliver value to everyone that’s connected to the network. It’s just totally exciting and transformational in my opinion.”
  • 17. © The Economist Intelligence Unit Limited 201616 Ascending cloud The adoption of cloud computing in five industries Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in the report. Cover:Shutterstock
  • 18. London 20 Cabot Square London E14 4QW United Kingdom Tel: (44.20) 7576 8000 Fax: (44.20) 7576 8476 E-mail: london@eiu.com New York 750 Third Avenue 5th Floor New York, NY 10017 United States Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 E-mail: newyork@eiu.com Hong Kong 1301 Cityplaza Four 12 Taikoo Wan Road Taikoo Shing Hong Kong Tel: (852) 2585 3888 Fax: (852) 2802 7638 E-mail: hongkong@eiu.com Geneva Boulevard des Tranchées 16 1206 Geneva Switzerland Tel: (41) 22 566 2470 Fax: (41) 22 346 93 47 E-mail: geneva@eiu.com