At AutomateIT, we often hear, “What does a DMS cost?” and “What’s the ROI of DMS software?” These questions are complex due to various factors affecting DMS software pricing and value. There’s no one-size-fits-all answer.
So, we built this calculator. It’s not a definitive answer, but it will give you a good idea of the potential payback. Simply add your numbers and percentage savings and we’ll crunch the numbers to help show your potential ROI on a DMS software solution.
Got questions? We’ve listed definitions for the fields shown in the input fields under this calculator. You can also contact us at sales@automateit.net if you’d like a hand crunching the numbers or to discuss our DMS implementation solution.
Maintenance Labor Cost
$
%
Industry Averages (based on customer stats and industry data) 10% – 30%
Parts & MRO Inventory
$
%
Industry Averages (based on customer stats and industry data) 10% – 30%
Unplanned Downtime
$
%
Industry Averages (based on customer stats and industry data) 10% – 30%
Investment
Price
License per month: $110.00
One time Service:
1-25 licenses: $30000
25-75 licenses: $50000
75-200 licenses: $80000
200 licenses+: $100000
Your potential ROI on a DMS software solution
Investment
Initial Software Fee
$ 132,000.00
One Time Service Fee
$ 80,000.00
Initial Total Investment
$ 212,000.00
Savings with DMS
Maintenance Labor Cost Savings
$ 1,000,000.00
Parts & MRO Inventory Savings
$ 100,000.00
Downtime Reduction Savings
$ 200,000.00
Initial Total Savings
$ 1,300,000.00
Rates
Cost of Capital as for NPV
10 %
Rate of diminishing returns
20 %
Results
Year 1
Year 2
Year 3
Year 4
Yearly Savings with Diminishing Returns
$ 1,300,000.00
$ 1,040,000.00
$ 832,000.00
$ 665,600.00
Yearly Software Investment
$ 212,000.00
$ 138,600.00
$ 145,530.00
$ 152,806.50
Yearly Net Savings
$ 1,088,000.00
$ 901,400.00
$ 686,470.00
$ 512,793.50
Yearly Net Present Value
$ 989,090.91
$ 744,958.68
$ 515,755.07
$ 350,244.86
NPV over 4 years with diminishing returns
$ 2,600,049.52
ROI over 4 years with diminishing returns
391.37 %
Labor hours
This refers to the time it takes to complete tasks in terms of labor hours and pay rates. We suggest that you use a best-guess average or ask your financial controller to give you the annual number. The amount you can save on labor depends on the factors listed below. Our recommendation range based on past implementations is between 10% – 30%.
Questions to ask include:
Will time be saved on data entry thanks to easier, digital report building?
Will work get identified and done faster thanks to automated notifications?
Will facets like productive time, quality of work and the total value of labor hours increase as a result of DMS?
Parts and MRO Inventory
Parts and MRO inventory refers to supplies, spare parts and other materials needed for routine maintenance, repair and operations (MRO). Careful parts and MRO inventory management can lead to fewer costs and unneeded parts sitting on shelves. We suggest a DMS can typically reduce the amount you need to spend on parts and inventory between 10% – 30% by helping you to:
Spend less on emergency parts purchasing by scheduling maintenance and establishing condition-based monitoring
Track inventory and set minimum quantities so you’re not overstocking
Locate inventory easier to decreases downtime and labour costs
Unplanned Downtime
Unplanned downtime refers to unexpected periods during which a system or equipment becomes unavailable in your manufacturing process, disrupting the normal workflow and production processes. For this field, base your calculations on lost revenue dollars. Here’s a useful formula to help with the calculation.
Production rate per hour
Production rate is calculated simply by dividing your weekly output by the number of hours used to produce them. If a standard 50-hour week produces 10,000 units, then this would mean your production rate is 200 units per hour (10,000 / 50), including a few faulty units.
Gross Profit Per Unit
The profit per unit formula is the profit from a single unit of a product or service. You need to subtract the total cost of producing one unit from the selling price. For example, if you sell a product for $50 and it costs you $30 to produce, your profit per unit would be $20
Net Present Value?
Net Present Value (NPV) is the value of all future cash flows (positive and negative) over the entire life of an investment discounted to the present. It can provide valuable insight into whether or not to make certain investments over others. It can offer clarity on whether an investment’s estimated rate of return is enough to make the future result of the investment worthwhile. For this reason, Net Present Value is used extensively in accounting to determine the value of a future capital project or cost reduction program.
Law of Diminishing Returns
This law states that profits or benefits gained from something will represent a proportionally smaller gain as more money or energy is invested in it. Yearly Savings with Diminishing Returns refers to the decrease in the amount of savings achieved each year from an investment or initiative. Initially, the savings might be substantial, but as time progresses, the benefits gradually reduce due to factors like efficiency improvements reaching their limits, market saturation, or other constraints. This concept is crucial when evaluating long-term investments, as it impacts the overall return on investment (ROI) and the net present value (NPV) of future cash flows, ensuring that projections are realistic and account for the natural decline in returns over time.
We can help.
AutomateIT has decades of experience in delivering DMS to drive tangible, maintenance improvements. Visit our website DMS page to learn more about our capabilities and to set up a free DMS demo and business case evaluation.
