ROI in CMMS : how to calculate it ?

Investing in a CMMS is done in several stages : with start-up costs and recurring costs. ROI is therefore an important step in estimating the relevance of your strategy.

According to one report, predictive analytics can, for example, increase the return on investment tenfold and save an average of 30 to 40%. (Source)
And what about you ? What will be your ROI ?

ROI CMMS calculate industrial maintenance
ROI CMMS calculate industrial maintenance

Calculating ROI In CMMS: The Magic Formula

The formula for calculating a return on investment is almost always the same:

What are the costs of a CMMS solution ?

Now, you need to measure the costs associated with using computer-aided maintenance management software.

To do this, take into account:

  • The initial cost of the software.
  • The cost of its initial information (not negligible!).
  • The necessary equipment.
  • Implementation costs : user training, support and upgrade, license renewal.
ROI CMMS calculate industrial maintenance

How to know the value of your CMMS ?

To estimate the full value of your CMMS given its many features, there are several measurements to perform.

1- Equipment and service life of assets

Estimate how much repairing and replacing equipment has cost your organization each year and how automating preventive maintenance tasks could extend the life of equipment.

2- Overtime

Calculate the average hourly cost in terms of labor, including overtime wasted, due to inefficient work order management.

3- Inventory

On average, CMMS reduce spare parts expenses by 17.8%*. In particular, you can estimate the time lost and the unavailability generated due to insufficient stocks and purchases made in an emergency.

4- Downtime

Calculate how much unplanned downtime costs you. On average, there is no less than a 20% reduction in these downtimes, thanks to the CMMS*.

5- Utilities

Find the total amount your organization spends on utilities each year.
Then, compare it to the cost of these services, if your equipment was operating at maximum efficiency – which is possible with a CMMS.
This should allow you to use 15 to 20% less resources (gas, water, electricity).

6- Buying

Here, we look for the number of hours employees spend creating purchase orders or performing other procurement tasks and its cost implications.

7- Productivity

On average, with CMMS, there is an increase of nearly 30% in maintenance productivity*.
Then, determine the time spent on time-consuming administrative tasks, such as generating work orders and scheduling.

8- Document management

Determine how long it takes to file, search, and retrieve documents. With the CMMS, it will be counted in seconds.

Conclusion : Calculating ROI in CMMS for industrial maintenance

Thanks to its multiple functionalities, the CMMS generates a very high ROI.

Still hesitating ? Consult our article on the 5 essential benefits of CMMS (lien).

ROI CMMS calculate industrial maintenance conclusion

*Source : A.T. Kearney’s et Industry Week study, conducted on 558 companies