Improvement projects, such as paperless manufacturing, are necessary for growth and send a clear message of success. What message is your company sending?
By Kristin McLane, President of CIMx Software
A church I pass daily has an LCD display along the highway’s edge. This week, it read, “We are debt free!”
Why advertise the lack of debt? They are in the business of saving souls and changing lives, not financial planning. The truth is, you can tell a lot about the strength and foresight of an organization by how it handles debt.
An organization uses debt to support growth. In the case of that church, it was a new assembly hall for a growing member base. An organization averse to taking on risk is afraid to grow. But debt and risk must be managed. It’s important to measure the amount of risk against the projected growth and expected return. Organizations need to find a balance between risk and return. How much money will support the measurable return?
Our customers implement electronic systems for a number of reasons. Each business must address how much money will support the measurable return. Most businesses do this by calculating how long it will take to achieve an ROI (Return On Investment).
Unfortunately, many businesses miss the mark, when planning a project and calculating ROI, with easily avoided mistakes, such as:
- Lost time.
Businesses that spend months, even years, researching before purchasing a system are wasting potential ROI before the project has really started. Your time investment must be factored into the cost. The key to achieving ROI is a rapid return. We target no more than 9 months for ROI, allowing customers to quickly justify the investment.
- Functionality inflation.
Many businesses begin researching software with a specific challenge to be solved. During the process, the functionality list inevitably grows. An ROI will be calculated with one set of functionality, and additional “nice to have” functionality requirements may make achieving the ROI almost impossible.
- Unnecessary complexity.
Many software companies offer “modules” of software that must be integrated, or an off-the-shelf system that doesn’t integrate with current production processes. A product that adds complexity will be resisted on the shop floor when the old system is more comforting and easier to use.
- Poor implementation.
When calculating ROI, look at how long it will take to implement the new software. Get an accurate estimate and find a software vendor you can trust. A project that takes several years to implement, or that never really integrates with existing systems, adds to the Total Cost of Ownership (TCO) and inhibits the ROI.
Think back to the church, and what was required of the building committee to make the claim, “we are debt free.” They needed an accurate estimate of donations. They needed a timely procurement process, a project focused on meeting church and growth needs that people would use (and not ignore), and a builder who could complete the project on time and on budget. Failing to meet any of those requirements would have a significant impact on the ROI, and make the goal of “debt free” difficult.
A successful improvement project starts in the planning and research phase. An improvement process is a sign of growth, and sends a clear message (like an LCD sign on the side of the highway) that your business is a success. Success doesn’t have to be difficult to achieve. Contact us today to learn more, we’re happy to help!