By Steve Huster, VP-IT Shared Services, TenCate
TenCate is a multinational material manufacturing company, with textile processes as a significant part of its core competencies. TenCate operates with a regional IT shared services model. We provide a portfolio of IT infrastructure and application services to the operating companies in each of three global regions. The move to shared services several years ago allowed TenCate to leverage IT assets, people, and resources much more effectively than when IT was managed separately in each of the businesses.
TenCate began the transition to cloud computing a couple of years ago. Cloud computing is not unique to the textile industry by any means, but certainly an important and growing part of our company’s IT portfolio. The textile industry operates in fairly thin margins, so every dollar spent on SG and A, including IT, must get more than a dollar in value. When we started looking at and benchmarking our internal costs against some of the cloud models, we quickly realized that there were opportunities for us to either save costs, expand services, or both. We also had a mandate to begin limiting future capex investments, replacing it with OpEx, while optimizing the existing assets.
We are undergoing that transition now. First from virtualizing the data center and then remote sites and then moving DR from the data center to the cloud. We are still working through fully rationalizing our DR infrastructure in the cloud, and then will begin the transition of production applications from on-prem to the cloud.
What are the Benefits of Cloud Computing?
Elasticity: Pay for what you need. Scale it up or down as you need it. No large step investments. It has on-prem purchased capacity the tendency is to buy it before you need it, and then later, not enough on-prem capacity because demand exceeded your planning.
Economies of scale: Most businesses can’t purchase IT cheap enough, or operate it at a low enough cost compared with cloud providers which have a much larger X factor of scale.
We provide a portfolio of IT infrastructure and application services to the operating companies in each of three global regions
Flexibility: Cloud allows the business to add capabilities to the IT portfolio without huge up-front costs. For example, if the business wants an MRO solution for its manufacturing operation, find and sign up an MRO cloud provider. A sales team wants CRM to better manage their opportunity pipeline, find and sign up a CRM cloud provider.
Focus: The IT organization should have a larger part of their resources devoted to focusing on the business and ideally be more engaged with enabling the strategic initiatives and operational excellence of the business rather than managing the IT assets.
Responsiveness: Cloud helps IT address one of its biggest frustrations, and that is the frustration of too many needs and not enough resources or budget. With cloud computing, IT can now bring solutions to the table much quicker and with a lower threshold of upfront investment.
• Our first major cloud initiative was leveraging the cloud version of the payroll or HRIM software we were running on-prem. It was a low risk, low cost transition and took the headache of monthly updates off our plate.
• The second major initiative was using someone else for managing email. We did not have a unique use of email, and we could not deliver it as cost effectively as was available through the cloud. And we could not deliver as rich a set of features available as standard with the cloud subscription.
Things to Consider
• Don’t wait on the perfect plan to begin the move to cloud. Start with something, prove it out, and then move it into production, or drop it and find another opportunity.
• Get your team and outside partners engaged in finding and delivering cloud services to the business. If your existing partners are more interested in selling hardware, then start looking for new partners.
• Pick off the low hanging fruit for cloud opportunities. What services are in your IT portfolio today that does not bring unique value to the business and are easily moved to the cloud?
• Don’t get hung up on picking the right “cloud”. The options have changed so much just in the last 12 months, and the cycle of change is still ramping up. Do your due diligence, pick a cloud provider and then get started. You may learn that there was a better choice, but in all likelihood, the better choice is still to come.
• Be flexible and be prepared to change. This is not like the old days where you made a decision to choose a couple of primary vendors for your technology, purchased it and then rode it for five, seven or ten years. We’re now operating on a one to three-year cycle and it’s more likely to get shorter than that.
• Manage the risks. The move to cloud doesn’t eliminate risks. it changes the risks you have to manage. Look out for changes in network, availability, and security risks, and then make sure you have either transferred or mitigated those risks.
For existing companies with a large IT infrastructure, the transition will likely be multiyear to avoid spikes in IT costs or investments as well as to manage risks. There will be some bubble expense as you work through the transition from on-prem to cloud, Capex to OpEx. You may take on subscription costs while still working off depreciation and maintenance expense.
• Some skills and staff will likely have to transition, either into different roles or outside of the organization. As the “T” side of IT is transitioned to cloud, you will likely have less demand for those staff resources.
• Cloud services have to be managed, monitored and optimized, and that still requires trained IT professionals.
At one time in the past the textile industry may have had a reputation for operating on the back side of the IT maturity curve. But over the past ten years, as globalization has rationalized much of this industry, the textile companies today are doing a better job of leveraging IT and cloud computing is and will be a key element for this industry in the years to come.
TenCate is a multinational company which develops and produces solutions which are sold worldwide for the protection of people and their working and living environment. With its headquarters in The Netherlands and manufacturing and sales on six continents, it has secured leading positions in several worldwide niche markets.