Cloud Computing – The Growth Molecule for the Global Chemical Industry

Published On January 27, 2017
In Global, Others, Technology, Blog Archives

One of the primary goals of digitization is a movement toward a seamless integration of planning and production. It has improved visibility and has helped numerous businesses come closer to their consumers. Digitization is something of a cliché, but today’s businesses are truly in the age of information, and among many digitization trends, cloud computing has transformed from being a niche IT scheme into a core strategy of businesses. The end result of deploying cloud has always accompanied more responsive, agile and faster processes. Hence, key players have readily adapted to a host of industry-wide variables by integrating cloud computing.

The brief ‘big picture’ of chemical industry

The chemical industry is well-positioned to leverage significant advantages from emerging technologies, such as IIoT and cloud computing. The industry is valued at around USD 3 trillion globally and is identified as one of the prominent sectors for having contributed to every nation’s economic growth. Owing to its size, complexity and increased cost pressures, it has become important to externalize non-core activities. Outsourcing may dilute associated costs and facilitate better bandwidth for core activities. We are at an inflection point where digitization is fueling businesses to thrive. Large-scale digitization may be less understood within the chemical industry, but cloud computing is no less important.

Factors driving cloud computing in chemical industry

The biggest challenge that the chemical industry is facing is timely access to information which is invaluable for business decisions. The industry is complex due to rising customer expectations and increasing competition. Stringent compliance requirements are also turning into a barrier to business agility.

A breakthrough approach of leveraging cloud computing is imperative to tackle radical challenges and open up new possibilities. Monitoring assets in remote locations, round-the-clock surveillance, and remote access to operational data are some of the key factors that have led the chemical industry to rethink about the adoption of cloud technology. Following are some of the aspects driving the application of cloud computing in the chemical industry:

  1. Integration of cloud facilitates access to almost real-time data and reduces response time for prompt decision making in complicated global supply chains.
  2. Cloud infrastructure is easily scalable and does not involve huge capital investment as its foundation is a ‘pay-as-you-use’ concept.
  3. Increased commoditization of products offered in the chemical industry is driving the need for differentiation through product innovation.
  4. Increased consumption of chemical products in emerging markets has made it imperative to penetrate them quickly and effectively.
  5. Cloud-connected drones for asset surveillance can control accidents across manufacturing facilities by issuing early failure warnings.

Adoption of cloud across different functions of chemical companies

The chemical sector is asset intensive, and monitoring asset health can be a key to return on asset investments. Therefore, to counter the challenges in maintaining asset health, adoption of cloud computing is becoming crucial. However, achievement of a measurable impact on the effectiveness, demands optimization of implementation processes.

Cloud Computing - adoption across different functions of chemical companies-s

Clear strategy and robust platforms are key factors that chemical industry players must consider to adopt cloud computing for impressive results. Cloud services can be implemented across different stack levels involving SaaS, IaaS, PaaS and BPaaS.

SaaS

According to a report by Accenture, SaaS is the most widely used cloud service model, with more than 92% of employees using SaaS across multiple functions of the chemical industry. It is an entry point for using cloud services across chemical companies.

Higher penetration of cloud deployment has been observed across non-critical functions, which include human resource management and marketing. On the other side of the equation, adoption of cloud computing is less in functions such as business operations, product development, and supply chain.


IaaS & BPaaS

According to a study of the chemical industry conducted by Accenture, close to 48 percent of respondents were using IaaS. However, adoption of BPaaS is less, with just 8% of the respondents using it. Chemical companies need to have a proper formulation of public and private cloud deployment models to optimize financial benefits.

The cost effective process of adopting cloud

Finding the perfect fit and mix of cloud solutions, as well as configuring them can be a daunting task for businesses in the chemical sector.  Although, making a wise move with proper planning and execution strategy can be game changing. Consequently, a comprehensive strategy for implementing cloud computing in chemical industry is to adopt it in stages. As cloud adoption entails complex execution process, the wisest move is to have a short, medium, and long-term execution plan.

Nascent stage: Organizations need to prepare for the change by restructuring existing datasets. The preparation would entail establishing a program for standardizing data to allow flexibility. It is imperative to undertake a consultative approach for mapping and updating all processes related to operations and IT. Companies should fix unstructured business processes and interface issues for accelerating production.

Transitional stage: Organizations at this stage should share a common understanding of processes with the cloud platform provider, prior to data migration. It involves moving non-core applications to the cloud (email, Customer Relationship Management, Procurement and Human Resources), setting up security systems, and tweaking mitigation strategies.

Going live: In this stage, the organization can initiate the data transfer of small divisions, including assets equipped with monitoring sensors. This step involves the deployment of applications and support services, and building interfaces between public and private clouds. Manufacturing and operations are the most critical segments; hence, migration of operational data to cloud happens at the final stage.

Don’t miss the catalyst of your chemical composition

Organizational complexity is a challenge for workforce engagement. For simplified operations, chemical companies are in need of integrating innovative cloud platforms to connect their workforce with operational data. The entire value chain will benefit by engaging the workforce to address information and knowledge gaps. However, many chemical companies haven’t yet seen the urgency of moving forward to a cloud-deployed model. With time, chemical companies will fail to maintain spare parts, and recovery will turn into a challenge.

Basis Core Functions of Chemical Businesses with key potential for improvement from Cloud Computing

Limited capability of the existing IT infrastructure will lead to slower processes, making it prone to increased gradation costs. In due course of time, most of the packaged software applications will be modeled according to cloud computing. Investors in the software industry are also showing interest in building applications specifically for cloud platforms. Hence, organizations without cloud deployed business models may find themselves struggling to keep pace with the constantly evolving competition. This will make the companies lose their competitive edge, posing serious challenges to their growth.

What comes next

A mindset to see past the risks and willingness to disrupt the industry are key factors to unlock operational excellence. In today’s era, faster and simplified processes matter more than ever. Chemical companies that want to emerge as winners must adopt cloud computing to reimagine their businesses. Early adopters of cloud stand a chance to reap the maximum share of benefits. However, proper delivery models should support cloud computing initiatives in order to match operational flexibility. By deploying cloud computing, what stands in the future of the chemical industry is a horizon of possibilities.

If you have any further questions related to sector-specific trends in the chemical industry, please feel free to contact us to discuss your query.


About the author

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Abhibroto Bose
Abhibroto Bose
About the Author

Abhibroto is an Associate Project Manager in SGA’s Business Consulting practice. He has over 8 years of experience in conducting competitive intelligence studies across diverse industries including Chemicals, Energy and FMCG. His expertise includes the areas of declining market share, loss of key customers as well as rising cost of production and raw materials.

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