No one can afford an outage.

Hardware and software malfunctions, operator error, or cyberattacks can all result in unplanned downtime. And when it comes to plant operations, unplanned downtime can impact a manufacturer’s bottom line by halting product development and production.

Every company is outage prone, but when you really dig into on-premises versus the cloud debate in this area, one mode is clearly more susceptible than the other.

The high cost of downtime

The financial impact of an IT downtime averages $5,600 per minute—or $2,688,000 per 8 hour day. But system outages have other consequences as well:

Lost sales revenue may be the greatest consequence of downtime. This includes the loss of customer loyalty and trust. Downtime may drive even long-standing customers to the competition—especially if it becomes a repeatable occurrence.

Production disruption is now of greater concern due to COVID-19. The pandemic has put more pressure on the CPG companies to maintain ongoing operations. Even a brief outage can result in lost inventory, lower quality, or unsellable products. A product run may need to be scrapped due to failure to meet production or compliance standards.

Partner and shareholder relationships may be damaged. Missed deadlines can drive trading partners elsewhere. Investors may lose confidence in the company.

Time to market is jeopardized. In a highly competitive market, time to market is critical to a product’s success. Downtime adversely impacts this area.

Employee productivity declines when network services are needed to communicate and complete projects. Time lost will impact an employee’s productivity, even extending beyond downtime due to a loss of concentration. Employee satisfaction and morale can and will be impacted by repeated work interruptions.

Disruption in supply chain. Delays in getting products to their intended locations can cause market uncertainty and unpredictability. These disruptions can lead to excess and imbalanced inventory, which can add up to millions of dollars in losses for large companies. Operational waste, such as overtime pay to make up for downtime, can also factor into financial burdens.

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Downtime risks for on-premises

If an on-premise PLM solution goes down, it could be hours, sometimes days, before the enterprise is fully productive. This also means IT teams are pulled away from other strategic projects to get their PLM system back online. Even worse, if an internal team is time constrained or can’t solve the problem, a team of very expensive, outsourced managed IT service providers will need to be engaged.

On-premise deployments are disaster prone. Disasters not only include system failures, but also natural events, including power outages and damage due to weather events.

On-premise software is more susceptible to ransomware. Kaseya and ConnectWise are two recent examples of ransomware infecting on-premises environments, resulting in thousands of servers being potentially exposed and taken down. In 2021, one global food company paid $11 Million for such an infection.

On-premises can be made reliable, but at a cost. On-premise software requires extensive backup systems and routines to avoid loss of critical data. The hardware costs to do this all adds up. They do not even include the spike in IT hours needed to service and maintain recovery systems.

Uptime guarantees for SaaS

SaaS services come with a comprehensive Service Level Agreement (SLA), which includes guarantees for maximum uptime, response time, performance and security. These agreements protect customers and users from several of the risks and disruptions an on-premises environment might face.

Automatic failover and redundancies mean systems stay backed up and live. Cloud-based environments benefit from built-in protections that keeps data available. If one data center goes down, the data is still available elsewhere. This protection similarly holds true for natural disasters or a system failure. System redundancy from back-up systems in SasS environments ensures uptime while the cloud provider works to bring the primary system back online.

The cloud is secure, so it stays up.  Cloud-based services benefit from major financial investments by cloud providers. This enhanced security, which includes robust protection of physical datacenters, typically outpaces the financial and technical capabilities of most companies.

There’s clearly a better option

When considering on-premises versus the cloud, think about the impact of downtime on operations, production and IT resources. Even infrequent downtime can have significant financial implications, extending well beyond the immediate disruptions.

Cloud-based solutions have the resources, infrastructure, and expertise to quickly bring systems back online. Cloud-based solutions also provide a security framework that few companies can match. For these reasons, Cloud PLM provides customers with a better uptime guarantee than an on-premise solution, as well as a more compelling value proposition.