Explore unfolding managed IT services for manufacturing
MSPs are exploring opportunities to help manufacturers navigate digital transformation challenges, including integrating legacy systems and staying competitive.
Analyzing data from one of its manufacturing clients, managed service provider Logicalis could see that the company had some costly quality control issues along its production line.
So Logicalis reps approached their client counterparts asking if the manufacturer would be "interested in diving a little deeper," said Logicalis COO Mike McClain.
That analysis revealed that manual inspections of product labels were missing problems with the pricing bar codes, McClain said, explaining that the manufacturer incurred a financial penalty for every item with a faulty label that got moved along the supply chain.
So Logicalis, which provides managed IT services for manufacturing, worked with the client, a large U.S.-based food processing company, to implement automation and intelligent technologies -- including optical character recognition software -- to both speed and improve its quality control process, McClain said.
The move yielded a seven-figure ROI, he added.
"That's a significant win for them and us," McClain said.
This collaboration also illustrates the evolving relationship between MSPs and their manufacturer clients, McClain and other vendor executives said. Like companies in other industry verticals, manufacturers are facing pressure to digitalize and transform as well as to streamline operations, deliver better user experiences and develop new services. And both manufacturing and other industries are turning to MSPs to guide them in those tasks. MSP executives say their manufacturer customers are looking for engagements that can move from mere keep-the-lights-on contracts to transformative partnerships. In other words, they said, it's now about them as MSPs helping their manufacturing clients be better.
"It's about looking for opportunities for optimization in the business," McClain said.
State of managed IT services for manufacturing
Economic indicators point to a good year ahead for the manufacturing sector, with professional services firm Deloitte in its 2022 manufacturing industry outlook projecting GDP growth in manufacturing of 4.1% for 2022.
At the same time, Deloitte also said in its report that manufacturers face labor shortages and supply chain challenges -- as are many other industries.
To contend with those issues, as well as to boost their opportunities, agility and resiliency, many manufacturers seek to transform their operations and advance their digital maturity, according to the Deloitte report. The report noted that 45% of surveyed manufacturing executives said they're looking to industrial IoT (IIoT) investments to boost operational efficiency, while half are investing in robotics to achieve that objective. Manufacturers are also expanding their use of intelligent technologies such as AI and industrial 5G while investing more in security. In fact, Deloitte found that 82% of the manufacturers it surveyed anticipated increased spending on cybersecurity in 2022.
Jeff DeVerter, chief technology evangelist at Rackspace Technology, an MSP that also serves the manufacturing sector, made similar observations. He said an increasing number of manufacturers have been moving systems to the cloud as advancements have reduced latency issues. They've adopted more IIoT as well as edge computing devices as those technologies have advanced, coming down in price and becoming more powerful. They've also invested in more advanced analytics capabilities, such as predictive modeling, putting IIoT-generated and other data to use in optimizing manufacturing operations and even bringing new products and services to market.
"Manufacturers are going through their next industrial revolution. They're going into the digitalization of manufacturing services," added Michelle Accardi, CEO of Logically, another MSP working with manufacturers.
Top opportunities for MSPs in manufacturing
In its report, Deloitte said manufacturers consider smart factories "as one of the keys to driving competitiveness."
Executives with managed service providers said they see helping clients build smart factories as a growth opportunity for them.
They explained that manufacturers are struggling to find -- and afford -- the technical talent they need for transformation initiatives, so they're relying on MSPs and their larger pool of tech talent as well as their broader breadth of expertise for both utility IT services as well as strategic technology advice and delivery.
"We're certainly seeing manufacturers come to us to help them streamline, help better manage their IT, deliver efficiencies and improve productivity," Accardi said. "They're looking for help to bridge the gap between what they've done to digitalize and their legacy investments -- what they've built over the past 20, 30 and 40 years."
That work often entails integrating the legacy systems that they still have on their factory floors with newer technologies, MSP executives said. It can require strategic planning and plotting their future moves as well as providing solid security services.
"We sell them on being able to put together a strategy that lets them focus on their core differentiated services," DeVerter said, explaining that MSPs can bring the cloud, IIoT, data management, analytics, automation and hybrid architecture expertise that most manufacturers can't afford to have all together on in-house IT teams.
"They're now looking to us to help them in those areas, and it's opening up an entire market to MSPs that [manufacturers] said no to in the past. That's because they now see the value in those services," he added.
Manufacturers in particular are also looking for help in bridging and integrating their IT and operational technology (OT) environments, said Kevin Rhone, a senior partnering consultant with ESG, an IT research and strategy firm and a division of TechTarget.
"What we see is tremendous opportunities for managed service providers at the intersection of IT and OT," he said, noting that MSPs who can deliver on that as well as in data, security, integration and optimization services would be well positioned in today's market.
"These were roles that were once for large-scale consultants and systems integrators but now can be played by MSPs," he added.
What do MSPs need to know to develop managed IT services for manufacturing?
Not all MSPs can deliver on those points, Rhone said. In fact, for many MSPs, the ability to provide such services is "aspirational at this point."
"I think a number of partners in this space are still transforming from utilities to complete subscription-based managed services," he added, noting that the ability to work at the intersection of IT and OT requires even more expertise and investment on the part of MSPs. As he explained, "That's a longer putt" or long-term goal.
Vendor executives acknowledged that they face challenges in meeting the expanding demands being made by manufacturers.
"Cloud changed what manufacturers needed," DeVerter said. "They don't need someone who can just operate [back-office systems]. They need someone who can envision and help them transform and then manage them in that new state."
For MSPs, that means hiring a variety of tech talent, including hardware and software engineers, data scientists, those with experience in AI, machine learning and predictive data modeling, as well as IoT and automation.
To meet manufacturers' expectations, MSPs also need workers who understand some of the industry's unique needs -- for example, getting technology to work in challenging environments such as the high heat that exists on a metal smelting floor.
However, DeVerter and others said MSPs are facing the same challenges in recruiting and retaining tech talent that most companies report having.
Still, MSP executives said despite such challenges they see their services for the manufacturing space as a growth opportunity.
"Dealing with complexity and digitalization as well as aging IT and floor infrastructure is driving additional need for IT spend in manufacturing," Accardi said. "And manufacturers are looking for someone who can think strategically around helping them with those things, so it's a good place for MSPs to focus."