KING OF THE CMMS :
a quick investment
The CMMS is a tool generally considered essential in large industries, but often underestimated in SMEs, because the return on investment is not always clearly perceived.The product is then considered out of reach …
And yet, its profitability – even for small companies – is a tangible reality and quite simple to estimate, as we will show you.
To calculate the return on investment (ROI) of the CMMS, simply link the costs and the net gains (gains-costs), according to the following equation:
Cost of a CMMS
This cost is quite variable, depending on the number of users, the functional needs, the options and the initial support (configuration, training or even specific developments). Based on ordinary projects and for a 5 year amortization period, we will generally be around a cost per user ranging from 500 to 1500 euros per year.
Ex: The Dupont company has an estimate for the installation of a CMMS for its 3 technicians. For the deployment of a CMMS for 2 simultaneous connections, with configuration, training and support, the overall cost of the project over 5 years, including annual support, is estimated at 12,500 euros.
Annual cost: 2500 euros per year.
The gains brought by the CMMS
1. OPTIMIZATION OF HUMAN RESOURCES
The first reason for the CMMS is to allow the technician to focus on his job.
The first interest of a CMMS can be guessed in the acronym itself: to assist the maintenance management … and therefore spend less time managing … and more time to maintain! The average real cost (“super-gross”) of a maintenance technician for a company is around 5000 € per month. Each hour of productivity saved therefore represents nearly 35 euros of savings for the company.
A 2002 study by the AFIM (French Association of Engineers and Maintenance Managers) reports a 20 to 30% reduction in preparation time and 10 to 40% reduction in response time.
Ex: The Dupont company employs 3 maintenance technicians. Each technician spends an average of one hour per day preparing their interventions, taking care of the exits and replenishment of parts, to grasp their reports in a traditional way. Thanks to the automation provided by the CMMS (output, reappro of stock, related ranges …), the company Dupont hopes to save 25% on preparation time and 5% on intervention time, or 33 minutes per agent and by day. Over the year, she can therefore expect to make 390 hours of work a year.
Expected savings: 13500 euros per year.
2. INCREASE IN LONGEVITY OF EQUIPMENT
The technical park constitutes the bulk of the material capital of most companies, with a depreciation specific to each sector.
A better managed maintenance increases the service life of the equipment, which increases their depreciation period, delays their replacement and therefore generates ROI. AFIM’s statistics put forward a potential extension of equipment life of between 20% and 50%.
Ex: Dupont owns 1 million euros in equipment assets, with an average life of 20 years. Its annual cost of equipment excluding new construction is therefore 50 k €. Assuming that the CMMS allows the average life of its equipment to be extended by 10%, the average duration of depreciation will then increase from 20 to 22 years. The annual cost of the technical park will then move mechanically from 50 k € to 45.5 k €,
Expected savings: 4500 euros per year.
3. BETTER AVAILABILITY OF PRODUCTION TOOLS
A global point of availability and more, it is a percent of turnover earned!
Depending on the activity of your company, a simple machine down can immobilize a whole production line, and you lose every minute a few cents as a few thousand euros in turnover.
The CMMS allows better preventive maintenance and increased reactivity during curative operations and reduces the frequency and duration of these failures significantly.
Ex: The Dupont company recorded last year about 10 hours of production shutdown due to breakdowns. The shortfall between unrealized production, repairs and the wage cost lost during these cuts was estimated at 30,000 euros. Technicians estimate that at least 2 hours out of 10 could have been avoided through the use of a CMMS.
Expected savings: 6000 euros per year.
4. SAVINGS OF ENERGIES AND CONSUMPTION
A CMMS optimizes preventative maintenance to maximize the efficiency of your technical park.
For most mechanical equipment, from the automobile to the hydraulic press, good maintenance (parts replacement, lubrication, etc.) reduces the energy required for its operation, with an improvement in efficiency commonly reaching 5 to 10 %.
A CMMS managing the preventive maintenance sheet allows to automatically plan the maintenance operations, in order to stick as closely as possible to the needs of each equipment.
Ex: The company Dupont has a monthly electricity bill of about 350000 euros (~ 4 MWh / month). A good preventive maintenance of the equipment is already realized, but an optimization of this maintenance would allow a further reduction of 0.25% of the overall electrical consumption of the site.
Expected savings: 11000 euros per year.
5. A STOCK OF SPARE PARTS BETTER VALORIZED
Difficult to have an overview of a store without a computer tool.
Imperfect inventory management can lead to various inconveniences, such as having to order and wait for a part to be able to repair equipment, or to have stocks of parts that will never be used.
AFIM’s official statistics estimate that a CMMS can reduce the value of the stock from 10% to 20%, and its supply costs from 5% to 10%.
Ex: In the company Dupont, the choice was made to have spare parts in quantity, to guarantee quick repairs whatever the cost. However, during the last annual inventory of the store, it was reported the existence of a stock of parts and obsolete items for a value of 5000 euros, on 90000 euros of total stock value. So there is almost 6% savings on this lever.
Expected economy: 5000 euros per year.
6, 7, 8…
Other levers are not discussed in detail here, but deserve to be cited and can bring significant savings, even considerable for certain activities:
The implementation of an HSE module, to tackle more efficiently the consumption and rejects, while improving the safety of the site.
The use of mobile CMMS applications, greatly increasing the working time saved by the CMMS.
Maintenance contract management tools make the best use of external service providers.
Analysis and reporting tools that allow additional optimization of medium and long-term processes.
Review of our simulation
The Dupont company was able to estimate a priori the savings it can expect following the deployment of a CMMS. The sum of its annual savings target amounts to € 40000, to be compared with a cost of € 2500 per year. To calculate his ROI, Dupont will apply the formula, ie: ROI = (40000-2500) / 2500.
The CMO’s ROI for Dupont will therefore be 15
the CMMS should therefore report almost 15 times what it costs
A negative ROI would mean that the CMMS costs more than it pays. In practice, all the cases encountered in the literature show a positive ROI, generally between 0.5 and 20.
The results can therefore vary very strongly between two companies, even seemingly similar, depending on the quality of management implemented.
The project is therefore for Dupont a project largely profitable in theory. In practice, the CMMS’s analysis and reporting tools will make it possible to monitor this ROI and measure it in the field.
We can help you estimate the ROI of your project … contact us!
The expertise of DSDSystem
Since 2003, DSDSystem has been supporting companies in all sectors of activity in their SAV, CMMS and QHSE software deployment projects. With more than 200 client references and projects followed for more than ten years, the company has been able to put its expertise to the test of the simplest and most complex projects.
DSDSystem is your partner of choice in your service package deployment project, system optimization, staff training and long-term technical support.