How To Estimate a ROI For Your CMMS / EAM Project- Cryotos
How To Estimate a ROI For Your CMMS / EAM Project- Cryotos
Like any other software implementation, a Computerized Maintenance Management System (CMMS) needs to demonstrate a positive return on investment (ROI) to be justified. When it comes to investing in a Computerized Maintenance Management System (CMMS) or Enterprise Asset Management software (EAM), one of the first questions asked is usually “What’s the return on investment (ROI)?”
It’s a valid question, particularly for organizations that are struggling to maintain their equipment and may be considering CMMS to improve maintenance operations. In this article, we’ll show you how to calculate the ROI for a CMMS implementation and offer some tips on how to improve the value you get from your investment.
Importance of ROI:
Any business decision should be made with a clear understanding of the return on investment (ROI). When it comes to enterprise infrastructure and maintenance, a Computerized Maintenance Management System (CMMS) is no different. In fact, the ROI for a CMMS can be quite substantial.
There are several factors that contribute to the ROI of a CMMS. First, a CMMS can help to optimize maintenance protocols and workflows. By automating and streamlining maintenance tasks, a CMMS can help a business to improve its overall efficiency. This can lead to reduced labour costs, as well as reduced downtime due to maintenance-related issues.
In addition, a CMMS can help to improve the quality of maintenance data. This data can then be used to make informed decisions about future maintenance needs. As a result, a CMMS can help to reduce the number of unplanned downtime events.
Finally, a CMMS can help to improve communication between maintenance staff and other departments within a company. By automating maintenance tasks and workflows, a CMMS can help to ensure that all stakeholders are kept up to date on the status of maintenance activities. This can help to avoid potential conflicts and improve overall collaboration.
The ROI of a CMMS can vary depending on the type of system implemented and the size of the company. However, the potential benefits of a CMMS are clear. When considering a CMMS, it is important to consider the potential return on investment.
How do you Calculate Return On Investment for a CMMS System?
ROI is determined by taking the present value of benefits and subtracting the present value of costs.
The first step in calculating the ROI for a CMMS implementation is to quantify the direct and indirect benefits in terms of cost savings. Direct benefits are those that are quantifiable and can be attributed directly to the CMMS, such as time savings from improved maintenance scheduling. Indirect benefits are those that are more difficult to quantify, such as improved morale among maintenance staff.
Some of the most common direct benefits of a CMMS include:
– Reduced downtime
– Reduced labor costs
– Reduced inventory costs
– Reduced repair and replacement costs
– Increased equipment lifespan
Direct benefits can be quantified using data from the CMMS itself, as well as other sources such as downtime records and invoices for repairs and replacements.
Indirect benefits are more difficult to quantify but should not be ignored when calculating the ROI for a CMMS implementation. Some of the most common indirect benefits of a CMMS include:
– Improved morale among maintenance staff
– Improved communication between maintenance staff and other departments
– Increased safety Indirect benefits can be quantified using data from surveys and other research, as well as anecdotal evidence.
The cost of a CMMS implementation must also be considered when calculating the ROI. This includes the cost of the software, as well as any other costs associated with the implementation, such as training and support.
The ROI for a CMMS implementation can be calculated using the following formula:
ROI = (Gain from CMMS – Cost of Investment) / Cost of Investment
where Gain from Investment is the total monetary value of the direct and indirect benefits of the CMMS implementation, and Cost of Investment is the total cost of the CMMS implementation.
For example, if the total cost of a CMMS implementation is $10,000 and the total monetary value of the direct and indirect benefits is $15,000, the ROI would be 50%.
Factors that affect the Return On Investment for a CMMS System
Some of the key factors that will affect the return on investment (ROI) for a computerized maintenance management software (CMMS) system can be divided into 2 parts – organizational and the systems.
The organizational factors include:
-The size and complexity of the facility or facilities being managed
-The number and skills of the maintenance staff
-The age and condition of the equipment being maintained
-The type of maintenance tasks being performed (preventive, predictive, or corrective)
-The availability of historical maintenance data
-The degree to which the CMMS system is integrated with other business systems
Each of these factors can have a significant impact on the cost and benefits of a CMMS system and should be carefully considered when deciding whether to implement a CMMS.
The system’s factors include:
– The price. The initial investment in a CMMS system can be significant, so it is important to consider its price carefully.
– System’s features. A CMMS system with more features will generally have a higher return on investment than one with fewer features.
– Ease of use. A system that is easy to use will generally be used more often, which will increase its return on investment.
– System support. A system with good support will be easier to use and will have a higher return on investment. The fifth factor is the system’s reputation.
The benefits of a high Return On Investment
A CMMS software implementation can bring significant benefits to a company in terms of return on investment. A well-designed and executed cloud CMMS software implementation can improve asset utilization, equipment reliability, and workforce productivity while reducing maintenance costs. In turn, these improvements can lead to increased profitability and competitiveness. Additionally, a CMMS software implementation can also help a company to improve its environmental performance by reducing energy consumption and waste generation.
For more information about CMMS ROI, contact the Cryotos team or sign up for a free trial of our software.