PDM ROI: Myths or Reality?

In personal life, the justification of your buying decision is simple. You want to have the next cool device, period. In business, it is different. The magic acronym ROI (Return on Investment) will be the first question you need to answer. Cost is real thing. Benefits must be real too. Last year, I posted about PDM ROI Calculator for SolidWorks. It generated interesting discussion about how possible to create a calculator to measure investment in PDM.

Few days ago, I bumped into another SolidWorks article – Top Five Return on Investment Areas for EPDM. According to Eric van Essen is a Product Group Manager atJavelin Technologies, the areas include – productivity, error reduction, team growth management and training, sales and distribution. The picture from the article is convincing that cumulative benefits of CAD 1.5M after 3 years.

One of the key areas of saving according to PDM ROI calculator is risk reduction saving. I assume it translates into error reduction described by article. The following passage presents 4 questions that can lead us to the right measurement of error reduction.

1. How often do we accidentally manufacture to the incorrect revision?

2. What is the potential cost if we do manufacture to the wrong revision?

3. How many change orders are created a year and how many of them could have been avoided if proper collaboration processes were in place?

4. What is the cost of processing a change order?

The questions represent problems in a very clear way. To have answers to the question is the key. To spot industry numbers providing answers on the question above can be an interesting exercise.

What is my conclusion? The question of ROI and PDM is fascinating. It is well-know fact that 60-70% of MCAD seats in the industry is not managed by PDM and use files or alternative solutions (excel, etc.) to manage data. If ROI is obvious as we can see from examples, why 60-70% of MCAD customers are still not running to buy PDM solutions. Just my thoughts. YMMV.

Best, Oleg

3 Responses to PDM ROI: Myths or Reality?

  1. Jos Voskuil says:

    Oleg I am somehow surpised by you conclusion. Of course there is a huge ROI when implementing PDM and PLM. The reason these 60-70 % of MCAD customers exist without PDM is because of political or emotional reasons.

    People at the end do not make decissions on logical parameters, but use their emotions to decide. And implementing PDM/PLM means making a change – it requires a management vision and guidance.

    If people would only decide on logical decisions, why people are still smoking knowing there is no ROI (the opposite)

    It is sad to see that every generation still questions the lessons learned and wants to discover the truth again. The good news is that at the end the competion will decide who used ROI. Where are currently the most jobs lost in manufacturing ?

  2. Jos, thanks for the comment. I’m glad my conclusion surprised you. My guess (and that’s why I wanted to discuss it) that there is a problem with PDM ROI. It might be a question of scale or hidden costs or anything else (like your hypotheses about political reasons).

    I’m not sure your comment about smoking is valid. However, I’m not smoker, so my opinion is probably cannot be considered here :).
    Just my thoughts. Oleg

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