How will Managed Service models give greater resilience, promote digital innovation, and secure future growth in manufacturing?
Author: Tom Langton, Head of Service Delivery at Cimlogic
2020 has been a year of uncertainty and speculation. Businesses across all industries have had to make tough decisions and plan for an uncertain future, often making shorter term plans to ensure survival. Manufacturers have experienced a reduction in head count, skills shortages, and a shift in customer demands; all potentially leaving key production systems at risk of stagnation, reduced efficiency, or even failure – a very costly thought indeed.
How can manufacturers mitigate the risks?
Managed Services is an effective way of keeping up to date with technology, getting access to subject matter expertise and resolving service, quality, and risk-related issues. The global Managed Services Market size is projected to grow from USD 178.5 billion in 2019 to USD 309.4 billion by 2025, at a CAGR (compound annual growth rate) of 9.6% over the forecast period.1
Traditional business models are under immense pressure, which is why an increasing number of businesses are considering moving to a Managed Service operating model. In fact, 84% of organisations are addressing failures in their current operating models2. Managed Services can help businesses adapt to change and invest in cost-effective technology to make their key functions operate more efficiently, all while leveraging the providers’ core expertise.
Why is Managed Service adoption on the rise?
Key drivers are influencing the rise in Managed Service adoption, some of which include:
- Increased reliability – there is a growing need for systems and equipment to be fully supported, to run efficiently and effectively to maintain production output
- Reduced operating costs – legacy equipment and systems are increasing the frequency of breakdowns, causing more quality issues, and resulting in higher operating costs
- Increased productivity – businesses are adopting Managed Services to help increase the productivity of processes and operating efficiency by tackling issues such as skills shortages, technological change and market/regulatory change
- Organisational restructure - in a post-pandemic world, organisations look to adopt flexible operations and streamline resources, encouraging them to seek out external providers to free up existing resources
What value can be gained from a Managed Services agreement?
A good Managed Service agreement goes a long way to achieving a lower risk, more structured outlook for key processes and systems. It ensures that an investment continues to evolve with the changing needs of the business and is protected against failure. Key offerings such as remote management, cloud services, support, and software development via the provider ensure peace of mind in these uncertain times.
Manufacturers can gain tangible business value from the adoption of a Managed Service agreement:
- Focus on core business strategies - transferring the routine work to a trusted service partner will free up time to deal with core business activities and current challenges such as increased health and safety, supply chain shifts, changing customer demands and labour shortages
- Fuels greater innovation – utilising the industrial expertise of a Managed Service provider promotes strategic decisions and smarter innovation needed to drive the business forward
- Ability to adapt to change – recent disruption means businesses must adapt quickly to change to survive. Developing flexible operations ensures that companies will focus on forming new ecosystems with partners, including Managed Service providers
- Faster route to digital transformation – COVID-19 has highlighted the growing importance of digital technology adoption. Managed Services will give manufacturers access to the tools, talent and insight into digital technology solutions and systems, as well as the technical expertise needed to achieve maximum business value
Throughout 2020 there has been a dramatic growth in the demand for Cimlogic’s comprehensive range of Managed Services. Multiple Global service agreements are underway with blue-chip manufacturing clients covering 100 locations across 20+ countries, ranging from full MES systems to SaaS (software-as-a-service). Each agreement is tailored to ensure the ongoing growth, resilience and return on investment. Demand is set to continue in the future, with the ongoing need for key system security from third-party providers, giving businesses the bandwidth to tackle strategic decisions needed in the current climate.
To find out more about Cimlogic’s Managed Services please visit our Support web page https://www.cimlogic.co.uk/services/support/
2 EY Tax and Finance Operate Survey 2020