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18 Apr 2013      |      by admin

    


How to Estimate the ROI of a CMMS

Computerized maintenance management software (CMMS) maintains a database of information about an organization’s maintenance operations and helps maintenance workers do their jobs more efficiently. As a maintenance manager, you probably understand the value that maintenance software provides, but upper management at your organization will surely ask you to justify the expense before giving you the green light.cmms maintenance

One of the driving factors that will likely determine your organization’s decision is the return on investment (ROI) that CMMS software provides. As long as it is implemented properly, maintenance control software has a strong ROI. In addition to extending the life of equipment and increasing its reliability, a preventative maintenance system could reduce costs by as much as 12% to 18%, according to the U.S. Department of Energy.

 

The ROI of a CMMS or enterprise asset management (EAM) system is typically assessed for intervals of one year, three years, and five years. A one-year assessment will have a reduced ROI since the cost of the initial software purchase, implementation, and any hardware purchases are also taken into consideration.

Data You Need to Calculate CMMS ROI

Some data you’ll need to calculate the potential ROI of maintenance management software includes the following:

  • Equipment  – CMMS systems generate preventative maintenance tasks that extend the life of equipment and ensure that it produces at optimal levels. Estimate how much equipment repair and replacement has cost your organization annually and how the automation of preventative maintenance tasks could extend the life of equipment.
  • Overtime – Maintenance software allows you to forecast labor hours more accurately, thus preventing unexpected overtime. Furthermore, when you do a better job of maintaining your assets, the need for emergency maintenance is reduced. Determine how much unexpected overtime your organization schedules and then estimate how much of it could be avoided with preventative maintenance software.
  • Inventory – A CMMS can help you manage inventory and avoid being under-stocked or overstocked. Estimate how much over- or under-ordering, stock going stale, carrying costs, depreciation, etc. have cost your organization.
  • Downtime – Downtime can have a direct impact on your profits because there is a cost associated with unforeseen equipment failures. Determine how much unscheduled downtime occurs in your organization annually and then figure out how much revenue is lost due to downtime.
  • Utilities – Calculate how much your organization spends on utilities over the course of a year and how much your annual utility costs would be if your equipment were operating at peak efficiency. If your assets are properly maintained with the help of a CMMS, your organization will use less water, gas, and electricity.
  • Purchasing – Calculate how many hours your employees spend creating purchase orders and carrying out other parts procurement tasks. Maintenance control software can automate purchase order generation and reduce purchasing overhead.
  • Productivity – By automating work order generation and optimizing the scheduling of tasks, maintenance management software reduces the time it takes to perform preventative maintenance. Calculate how many labor hours your organization could save with a CMMS system.
  • Documents Storage and Handling – Determine how much your maintenance department spends storing, copying, filing, searching for, and retrieving documents and how much you’d save by eliminating paperwork and manual tracking activities with a CMMS.

 

Investigate each of the categories above to determine how much maintenance inefficiencies have cost your organization and estimate the savings potential of maintenance control software.

Speak with CMMS vendors and examine industry case studies for help in making estimates. Input the total benefits and costs of a CMMS into a standard ROI formula to determine what kind of ROI you can expect from a CMMS investment.

 

Conclusion

 

A good CMMS system can dramatically increase the efficiency of your maintenance department while contributing significantly to your bottom line. Many organizations have saved tens of thousands of dollars in repair and downtime costs after implementing preventative maintenance software, and the average payback period is approximately 14.5 months. For more information about CMMS ROI, contact DPSI or sign up for a 30-day free trial of our system.

 

 

 



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