You are considering investing in a PLM [product lifecycle management] solution. How do you determine the value of the solution for your company?
If you are like most companies, you need the CFO to approve the spending. In other words, you need a budget to spend the money. Not all companies are the same – how do you go about getting a budget at your company? Typically, you will need to build a business case for spending the money and then you need to present your business case to the CFO and get him/her to agree with it.
Building a Case
There are many ingredients to building a case. There are hard dollars and soft dollars. An example of hard dollars includes increasing revenues and/or reducing costs. Soft dollars are much harder to quantify.
Where will you find hard dollars? An analysis of the ‘before’ state versus the ‘after’ state should identify the hard dollars. Some examples include:
- Searching for information [paper vs. software]
- Collaboration [paper vs. software]
- Passing designs etc. to another person for them to perform their task [manual vs. electronic]
- Managing versions of documents, bills of materials, etc manually vs. electronically
- Labor needed for document management vs. doing it electronically
- Engineering change management [paper vs. software][manual vs. electronic]
Where will you find soft dollars? The analysis is still comparing ‘before’ vs. ‘after’. Some examples include:
- Company morale – Making it easier for engineers to do their jobs should improve morale.
- Managing risk
- What is it worth to you to have confidence that you have removed the chance of the wrong documentation moving to the next engineer?
- What is it worth to you to have confidence that you have removed the chance of the wrong documentation moving to the factory floor?
- What is it worth to you to have confidence that you have an accurate bill of materials?
- What is it worth to you to have confidence that you have a single version of the truth?
- What is it worth to you to get the right information to the right person at the right time?
I have performed many ‘return on investment’ analysis projects over the years and only one of them didn’t cost justify. Contact me if you would like some help…