How Cloud Solutions Accelerate Return on Investment (ROI)

Measuring ROI

Efficiency and Faster Approval Cycles Deliver Significant Paybacks

The sooner companies can get products to their customers, the quicker they can realize profits and first-mover advantages. Emerging technology companies require the ability to innovate rapidly with global teams to gain a competitive edge over established competitors. Their very success is measured by the speed it takes to invent and commercialize new solutions or products.

PLM and QMS solutions enable companies and their partners to design, test, develop, produce, and deliver high-quality products that work as designed. Paybacks achieved through efficiency and faster approval cycles are common and relatively easy to measure. The ability to track business process improvements for review and release cycles for engineering change orders (ECOs), closed-loop quality management, NPD, and/or overall time to market (TTM) illustrates the types of benefits that can be benchmarked and measured.

KEY METRICS FOR ARENA PLM AND QMS

Over 1,400 Arena customers worldwide have evaluated and implemented our PLM and QMS solutions. We’ve captured key metrics of efficiencies gained by these customers through regular quarterly business reviews (QBRs) and customer case studies. Observed metrics include reduced costs stemming from operational efficiency gains as well as cost of goods sold (COGS). Additional business process improvements have been identified by accelerating regulatory compliance, reducing scrap and rework, and improving time to market.

CIMdata analyzed PLM benefits and ROI metrics and explained how businesses can realize key benefits.^vi Their analysis stemmed from studies for Hewlett Packard, FMC, and other manufacturers. Given their examples and analysis, CIMdata cited a range of ROI metrics and benefits that could be attributed to the following areas:

• Time to manufacturing—10% to 50% reduction
• Engineering change process—10% to 70% reduction
• Design review process—50% to 80% reduction
• Increased productivity—10% to 20% increase
• Product development costs—25% to 40% reduction
• Time to find information—75% to 90% reduction
• Design errors—10% to 25% reduction
• Time to design—15% to 70% reduction
• Travel cost for design—20% to 35% reduction

“Affirmed Networks reduced engineering change cycle times by 90%.”

– Ron Garron, Director Operations

CIMdata also provided common investment measurements to consider when evaluating ROI:

• Discounted cash flow (DCF): allows investment comparisons over time
• Net present value (NPV): > 0
• Internal rate of return (IRR): > your cost of capital
• Payback period: the shorter, the better
• Return on investment (ROI): > 100%

Likewise, Arena has considered key metrics and case studies across many customers and industries. Benefits can vary based on prior tools and solutions used, size of company, outsourcing model, product complexity, and added regulatory compliance requirements. We’ve focused the ROI metrics among four areas of product development and present averages based on our experience:

1. Engineering change review and new product development (NPD)
2. Productivity
3. Design and manufacturing processes
4. Quality assurance and compliance