Assessment: What's Your Efficiency Ranking? Take a few minutes to see

Your Industry:
Blog

How Investing in a CMMS Saves You Money

Paul Lachance
  • Apr 28, 2021
  • 7 minutes

math equations

I was never good at math. Tough for a person who started my career as a computer programmer! But I survived. Once thing I learned about math is it often takes the emotion out of things. I have participated in the following conversation countless times:

Potential CMMS user: “How much will your CMMS cost me?”

CMMS salesperson: “$417 per month or $5,000 per year.” 

Potential CMMS user: “My management won’t approve that cost.” (emotional response)

CMMS salesperson: “How many hours of unplanned downtime did you have last year?”

Potential CMMS user: “I am not really sure, but I’ll take an educated guess at 50 hours.”

CMMS salesperson: “Even if we use a conservative estimate of $1,500 per hour for combination of maintenance costs and lost production, that means you lost at least $75,000 to downtime last year. With a well-implemented CMMS, you could conservatively cut that by at least 20%. I have already saved you $14,000 – and that’s just the start.”

Potential CMMS user: “My management will like that!” (ok, another emotional response)

Doing the math

A “do the math” approach allow us to look at the many numbers, metrics and other data that proves how a well-implemented CMMS can help us run more efficient, cost-controlling and effective maintenance operations that improve profitability. It shows us the return on investment (ROI) that justifies the costs of using this technology. It takes the “we can’t afford this” emotional aspect when looking to improve our maintenance operations.

Quality data is key – it is easier to fix what you are properly measuring

We have all heard the phrase “garbage in/garbage out.” If we do not have good quality information to evaluate how our maintenance operations are going, then it’s very difficult to show progress, identify risks and ultimately improve our operations. I would take no data over bad data – at least we can call back on our experience and hunch versus poor inputs clouding our evaluation of a situation.

Where do we get good data? In the maintenance operations world, there are many sources, but probably one of the most important is with our work orders. We think of a work order often as a simple piece of paper (or better yet a screen on our mobile device) telling us what we need to do around a preventive or corrective maintenance activity.

Yes, it is essential that our work orders have solid detailed step-by-step instructions (including pictures and videos, if possible). It should be easy to identify where the work is being performed, who you will be working with, etc. Eventually, as more data is available, filling out all key fields becomes essential as it helps build context to the work you are doing, ultimately helping with the math.

Tracking downtime is a great example. With poor data input, it is very hard to show you critical trends on how your team is doing. Below is a work order report showing the source of downtime. As you can see, it doesn’t show you much.

downtime example

  • If technicians and administrators take the time to properly fill out the work order screen with the key fields, it will really help with the data and resulting analytics (aka math). This is especially important when tracking profit-killing downtime. If the person fills out the fields, the analysis is so much clearer.

work order detail

  • Now, the analytics show a much better story: Wear and tear is the leading cause of our downtime. This tells me we probably need to look at our preventive maintenance/inspections and make sure we are catching the problems sooner.

downtime example

Different people, different math

Depending on your role in the organization, different math may be used. Clearly your finance people will want to see how investing in your CMMS will help reduce costs and, if appropriate, improve profitability. In all cases, continuous improvement will help improve your operations, often easily measured with financial and operational metrics.Let’s walk through a few examples.

The Maintenance Technician

Technicians may not be as concerned with financial numbers and math as say the finance people, but there are metrics important to them, nonetheless. 

“Time” is an import metric where efficiency is critical, and as “lean” progress is made, it eventually translates to positive cost control.

A CMMS will allow you to easily track how long each technician spends on a work order. Tracking how long it takes for you complete a work order is essential, as you need this baseline to show improvements. 

Shortening your work order completion time can come from a variety of process improvements:

  • More preventive maintenance as opposed to reactive – PMs in the long run will free up technicians by reducing the number and severity of a corrective work order
  • Having the right person for the job – If you are able to automatically dispatch the best tech/contractor, with the right tools, that work order will take less time and likely be better quality work
  • Having the right parts – Knowing in advance that you have the parts you need and ready for that work order will shorten the overall completion time

For example, this client saw a significant decrease in the amount of time spent on each average work order. There is a huge difference – operationally and financially – of taking 3.13 hours per work order vs. .95. This will free up those techs to work on other projects (PMs, backlog, etc.).

Investing in your CMMS will show you the math of a more efficient technician team.

The Director of Maintenance

Downtime – the archenemy of operations –is a budget and profit killer. Most of us understand this and try to avoid with varying levels of success. But, have you ever done the math to see how much?

For our profit-oriented operational friends, measuring the cost of downtime and, more importantly, trimming those costs make the math be a “no-brainer” conversation.

Let’s use an example where an organization needs to increase production because business is good. They need to produce 10% more of their product over the next year due to sales forecasts – a good problem to have.

  • Option 1 – They could increase production by running extra second, third or weekend shifts or by adding more production capacity (adding production assets, people, etc.). 
  • Option 2 – Reduce the downtime from current levels, which automatically increases production capacity. 

The inverse of downtime is uptime. Increasing uptime is the same as increasing capacity. Can we increase capacity to match the 10% growth needs? Maybe yes, maybe no.But if you do the math, it is a far less disruptive and much less expensive route to take. 

The capital and operational costs of option #1 are significant. Reducing downtime is not only great math, it also is a smoother, safer, more predictable operating environment.

If you are not a profit-oriented organization, this math still works with asset classes like HVAC. Downtime puts undue operating stress on the whole system, driving up costs and prematurely aging those assets. Do the math and your CMMS will help.

The IT Manager

Fortunately, the vast majority of organizations trust the cloud as a mechanism to deliver software. Cloud software, technology that has been absolutely essential during the COVID-19 pandemic given its accessibility, is safe, secure, reliable and the math shows more affordable than legacy on-premise solutions.

As businesses retool their IT departments in this modern era, the math shows that old-school, heavy server farms, expensive up-front software purchases (versus subscriptions), annual support renewals and a team of people who have to keep this all up and running can be much more expensive then modern software as a service. This is measured in the total cost of ownership (or TCO). The subscription-oriented (monthly/quarterly or annual) billing is easier on cash flow vs. legacy capital-expensed software.

It has become extremely rare for organizations to say: “I don’t trust the cloud” or even “I don’t want a reoccurring bill.”Not only is the cloud safe, if you “do the math,” this is yet another way to save costs and drive profitability.

The Chief Financial Officer

Your financial teammates will love the math from each of the above examples. They live and breathe math every day and are always looking at return on investment opportunities.

A well-implemented CMMS will help:

  • Drive continuous operational improvements
  • Drive team efficiencies
  • Equate to happier customers
  • Save the organization a lot of money

The client in this example below shaved more than $1 million off their maintenance budget in a 3-year period with these optimizations. 

Would you enjoy cutting that part of your budget in half while enjoying the accompanying benefits of smoother operations?

Math is great, but improved operations with solid ROI is better

Quality data providing optics into your operations is key to improvement. Eventually the numbers and formulas (“the math”) has to take a backseat to the continuous improvement/lean operational optimization. 

Have the math showing you have to much downtime on a specific asset? Analyze this and apply best practices, possibly such as Six Sigma, TPM, 5S, Kaizen, etc. to improve. And as those continuous improvements take hold, use your CMMS to provide more metrics and data to prove your efforts are working.

Harnessing math that matters

What is the best math? The results of your CMMS and continued operational improvements controlling costs and increasing profitability are your strongest equation.

See what you could save with the math of your CMMS.

Earlier, we talked about how some organizations have a hard time stomaching the cost of a CMMS. “My management won’t approve that!” is again the most common objection I have heard in my CMMS career. 

When you change the conversation from cost to value and use the math to show that positive ROI, these conversations should be much more compelling.

Remember, continuous improvement is just that: continuous. Depending on your current state, optimizing your maintenance operations may feel like a daunting task. Babysteps at first can be essential as those small victories are contagious, allowing your organization to continually improve and see the fruits of these efforts.

ACMMS designed for your operations is key to this process, and what is equally important is a partner that can help you on your journey toward optimization and ultimately the profitability that accompanies.

Attend this session and others like it at our upcoming Virtual Dude University conference.

Interested in learning about how our software works for you?

Or want to ask a question?

Contact Us
  • prev
    4 minutes

    Guest Blog: How to Prepare a Focused Plan to Secure Stimulus Funds for Your School

  • next
    6 minutes

    How to Promote Uptime & Mitigate Risks on Your Shop Floor

Share