Determine the Real Costs of Not Using PDM at Your Company

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If you are an engineer working at a small or mid-sized company, there’s a good chance that you might be working without a product data management (PDM) system in place. Many believe that implementing a data management solution would be time-consuming and just add additional work to the current ways of doing things.

There is also the misconception that PDM is too expensive to implement. The reality, however, is quite the opposite. In fact, the cost of NOT using PDM is costly indeed. The costs associated with having to recreate lost files, poor BOM management, slow engineering change orders (ECOs), and ineffective search methods all add up to monetary losses to the company.

If you’re currently managing your design data on a shared drive, you’re probably already wasting valuable time and losing critical information—problems a simple data management strategy would eliminate. All of this might be easy to say, but what if there was a way to prove to yourself—and to your boss—that implementing a quality PDM system, such as SOLIDWORKS PDM, could actually save you both money and time?

The good news is that there is an easy way. Using the PDM ROI calculator you can apply your own company’s specific data to determine exactly how long it would take to get a return on your investment in PDM. To illustrate how it works, here’s an example ROI report from a real SOLIDWORKS customer. This company uses SOLIDWORKS CAD but does not have SOLIDWORKS PDM.


In this particular example, the company has $50 million in annual revenue, 25 members on the design team, and 30 active design projects. Top challenges (chart below) as ranked by this company were: streamlining Engineering Change Orders (ECOs) processing (49%), accelerating time to market (47%), better management of BOMs (40%), and reducing scrap and rework (34%).

 

Based on the specific data provided by the company, the potential annual savings derived from using SOLIDWORKS PDM would be $689,059. Breaking that down per each area of potential savings we see that search productivity improvements alone would save the company $320,625 annually. The ability to avoid having to spend their time recreating lost files would account for another $171,000 annually, and better management of BOMs would save another $96,188 a year.

When we expand the picture to look out three years, we see that the cumulative annual benefits (three years) amount to $1,644,759, averaging out to $548,253 per year. When we look at benefit realization (accounting for time to implement, adopt and optimize), 50% of the benefits were reaped in the first year, 75% by the end of year two, and all of them fully realized by the end of the third year post-implementation.

When projecting the total investment in SOLIDWORKS PDM, for this sized company, the cumulative annual investment would be $245,750 though most of this is allocated in the first year. This figure includes the software and subscription, implementation services and labor, infrastructure, and training (both formal and independent).

So the question ultimately is how soon would we recoup our investment? For this particular company, as you can see below the answer is less than eight months with a total Return of Investment (ROI) of 569%.

 

 

 

 

Barb Schmitz

Barb Schmitz

Senior Marketing Communications Manager at SolidWorks
Barb Schmitz is a Senior Manager in Marketing Communications with BA in Journalism and over 30 years of experience in the CAD software industry. She started her career as a journalist covering technology and served as an editor for several leading industry publications for over 20 years. Besides being a sleuth of tech, she is a loyal dog owner, travel bum, mom, lover of hoppy IPAs, red wine, and alternative music lover living in the great city of Chicago.