Assessing the potential ROI for an MES is difficult, but you can improve results by recognizing risk factors that will negatively impact the overall return.
By David Oeters, Corporate Communications with CIMx Software
Forecasting the ROI for an MES is a critical step for any company investigating manufacturing software. While identifying a nice, round number that will make the accountants feel good is the ultimate goal, its exceedingly difficult before the MES has been implemented. An MES potentially impacts all areas of the manufacturing value chain, and with so many factors any estimate becomes more conjecture than science.
A much easier, and many times more fruitful, exercise is to identify potential ROI detractors of an MES. Once you identify potential detractors (if there are any) you can better see how difficult it will be to reach your ROI goals. A project with many detractors will take much longer to reach an ROI than one without detractors.
MES Risk Factors
Here are 6 common risk factors we see in an MES project:
- Cost. The cost of the system is the biggest risk factor. How much are you going to pay? Consider more than the license fees – look at the service charges, the cost of integrations, consulting fees, hardware costs, and more. Many times, these added costs are significantly more than the initial fees.
- Customization. When it comes to any software system, the more changes or custom code you place on top of the initial software, the more expensive and risky the installation will be – decreasing the eventual return.
- Schedule. Once you decide to purchase a software system, the longer it takes to set-up, install, and start using the MES, the more difficult it is to achieve an ROI. Every week you wait is costing money.
- Flexibility. Software shouldn’t reflect the manufacturing needs at a single moment in time, because those needs will change. How quickly and easily will the system adapt? Do you need to go back to the supplier for each change, or can your team make the changes?
- Upgrades. New technology and market changes are impacting manufacturing at an increasing rate. Is there an upgrade path and plan? What is the cost for an upgrade? Software without a clear, and efficient, upgrade path will become inefficient as it ages.
Anyone that promises you an inclusive and comprehensive ROI for an MES is either lying or delusional. The cost of misunderstandings between the supplier and customer leads to upscoping and slipped schedules, increasing implementation service fees and frustration – ROI project-killers. Estimates, forecasts and guarantees should be the goal before an implementation, which is why risk factors such as these are so important. Each risk factor will significantly increase the time necessary to reach an ROI. Eliminating risk factors without loss of functionality will ensure a rapid ROI on the system.
Want to learn more, or receive a free shop floor analysis to see how an MES can benefit your company? Then contact CIMx today to learn more about paperless manufacturing. We’re always happy to help.