How to Calculate the Value of Your CMMS Software

CMMS software is an investment for your organization. Like any investment, therefore, you want to see a return on your money.

Successful CMMS implementations typically return 3 to 5 times the initial investment in less than three years. The average gross savings on maintenance expenditures range from 10% to 40%.

Those numbers are impressive, but where do they come from?

Value of CMMS Software

CMMS software helps you capture key data and turn it into reliable information. So, you can make cost-effective choices about asset management. You can improve maintenance processes and reduce costs through these five major areas:

  1. Labor costs through improved efficiencies
  2. Parts and inventory management
  3. Reduced equipment downtime and emergency repairs
  4. Equipment life cycle and replacement forecasting
  5. Manufacturing scrap and rework

Like most successful investments, CMMS benefits compound over time. As your data becomes more comprehensive, your organization becomes more efficient and the return on investment (ROI) climbs.

Return on Investment

ROI measures the amount of return on an investment relative to the investment’s cost. ROI is expressed as a percentage to compare the efficiency of the investment.

The formula is: ROI = (Net Profit / Cost of Investment) x 100

For example, let’s use #3 from our list above. Based on research by Information Technology Intelligence Consulting Research, 98% of organizations say a single hour of downtime costs over $100,000.

Let’s very conservatively estimate that your organization experiences 20 hours/year of preventable downtime.

So, if you invest $35,000 in CMMS software, implementation services, and training, and you reduce that downtime by just 5%—one single hour—you’ve already paid for your CMMS software.

Even better, when you calculate the RO!:

($100,000 / 35,000) x 100 = 285.7%

And that savings compounds year after year after year.

The Bigger Picture

The value of CMMS software is part of a bigger picture—data-driven management. So, that simply means making management decisions backed by reliable data.

And with that increased capability comes increased opportunity to improve organizational performance—a great way to find the value of your new technology and tools.

Have questions? Or want to talk about the ROI of MPulse Software? We’re here. Give us a call.