Engineering and Manufacturing Transformation: Cloudification Approaches Critical Mass

November, 2022


Engineering and manufacturing functions are complex due to the requirements of product design and simulation and remote collaboration. Enterprises typically have customized, legacy engineering and manufacturing systems to maintain. And due to the inherent complexity and security concerns involved, organizations have been traditionally reluctant to host their engineering and manufacturing operations in the cloud. As the industry and technology landscape matures, this reluctance is gradually fading.

Enterprises have realized that engineering and manufacturing functions can be moved effectively to the cloud. The cloud-native applications available for these operations offer pay-per-use pricing, higher bandwidth, elastic computing, low maintenance costs, and advanced security protocols, making them more appealing than on-premises engineering and manufacturing applications. Further, the pandemic necessitated the need for remote collaboration between diverse design and production teams. This drove cloud adoption for engineering and manufacturing. As a result, the global cloud market for engineering and manufacturing operations continues to grow.

In this context, NASSCOM and Avasant release the Engineering and Manufacturing Transformation: Cloudification Approaches Critical Mass report. The report is developed in consultation with experts in the field across all stakeholder groups, including enterprises, ISVs, service providers, and cloud platform providers. It showcases the current state of cloud adoption across different engineering and manufacturing operations and industries. Further, it emphasizes the role of ecosystem players in driving this adoption. It also highlights the growth potential of this market in the next five to seven years and the recommendations to key stakeholder groups that can benefit from the underlying growth potential.

The full report provides a number of findings, including the following:

    • The global cloud market for engineering and manufacturing functions currently stands at around USD 14.5B–C5B. This market is expected to reach USD 106B–108B by 2030 due to the advancements in technology as well as the industry landscape.
    • Applications with higher computing and collaboration requirements, such as product life cycle management and design systems, are expected to move faster to the cloud in the short-term to midterm, while manufacturing and operations systems will pick up pace in the long-term.
    • Industries with high product innovation requirements, such as automotive, manufacturing, and healthcare and life sciences, are ahead in adopting the cloud for engineering and manufacturing operations.
    • Service providers attribute 27%–32% of the global cloud market for engineering and manufacturing. Service providers are set to play a critical role in driving this adoption owing to the pressing need for business innovation, faster product rollout, and cost containment.
    • Despite the willingness to adopt the cloud for engineering and manufacturing operations, enterprises struggle to source talent with the right mix of cloud and domain skills; engaging with service providers will be the way forward.