July 11, 2019 Does It Pay to Invest in a CMMS?

Automated maintenance management systems pay for themselves by cost-optimizing plant downtime, labor, equipment life and inventory.

July 10, 2019

By Nathan Eichelberger, Senior Vice President Manufacturing Solutions, Accruent

Automated maintenance systems are very useful technologies, but they often face tough funding scrutiny. Known as computerized maintenance management systems, or CMMS, they manage the people, processes and assets that keep facilities operational. The diversity of assets managed include everything from lights and elevators to boilers and critical process equipment.

General managers and CFOs want to know that a CMMS will provide an adequate return-on-investment (ROI). Many question the significance of facility maintenance costs and how much benefit would accrue from maintenance running more smoothly. This can be a tough conversation when organizations can’t quantify equipment utilization, where facilities resources are allocated, or the productivity of their maintenance labor.

The good news is that determining the payback of a CMMS investment is relatively straightforward. The key is knowing the areas of major financial benefits. For most enterprises, the benefits come from one or more of the following four areas:

• Less downtime
• Longer equipment life
• Increased labor productivity
• Reduced inventory with fewer stockouts

While the list above provides a nice structure, there can be significant variation in the benefits, depending on whether you have a production-oriented environment or a facility in education, retail or government operations. But any of these can realize quantifiable benefits from a CMMS. Let’s look at each of these four cost-savings categories:

SAVINGS AREA #1: LESS DOWNTIME

You need to keep your facilities maintained so their production activity can proceed without interruption. The value of productivity lost when there’s a maintenance-related shutdown can be quantified into an hourly rate of value. Then, simply multiply that hourly cost of lost productivity times the number of downtime hours that can be prevented with a solid CMMS. How much downtime can be avoided? In a 2018 survey we conducted of over 1,500 customers, enterprises that manage general facilities reported saving between 10 and 20 hours per month of downtime due to their CMMS. For manufacturers the downtime savings are much more dramatic – with approximately 600 hours per month saved across the average reporting manufacturer.

SAVINGS AREA #2: LONGER EQUIPMENT LIFE

The next area of CMMS value pertains to the equipment that maintenance departments look after. By using the systems to automate preventative maintenance, they achieve significant savings by keeping their equipment tuned and cared for properly, so they spend less on repairs and replacement. They don’t need to be as reactive to failing equipment, they save cost and realize longer lifespans from their equipment. Those costs savings include reduced parts usage, fewer reactive maintenance tasks, reduced capital budgets due to less frequent equipment purchases, and better productivity and output. The same 2018 survey referenced earlier revealed that customers have been able to shave an average of 18% off their equipment budgets by getting longer life from the equipment they already have.

SAVINGS AREA #3: INCREASED LABOR PRODUCTIVITY

The third element of CMMS return comes by simply getting more done with fewer people. That might mean that the same staff can keep facilities in better shape. Or maintenance people can be redeployed to other important tasks. Or, if necessary, headcount can be reduced altogether. The labor savings come from the CMMS’s ability to plan for the more efficient and effective use of the maintenance workers time. A CMMS provides field accessibility to work orders, associated documents and manuals, related parts lists, etc. so that the maintenance technician can spend their time doing the actual work rather than making multiple trips to gather the required information or seek approvals. Since preventative maintenance tasks will get reliably scheduled, workers waste less time on emergency work orders. The CMMS can plan and route their work so that the workers spend less time driving from task to task and they spend less time on administration. Companies that use mobile-enabled CMMS’s find the greatest labor savings, with reductions of maintenance labor of 20% to 30%.

SAVINGS AREA #4: REDUCED INVENTORY

Not to be missed in a CMMS justification is the opportunity to save on inventory of spare units, parts and supplies. We found this to be one of the most significant opportunities for organizations participating in our survey. Roughly 61% of responding companies weren’t adequately managing inventory and parts before automating maintenance management. A CMMS can manage inventory in real time, holding the optimal inventory in stock, and ensuring availability while saving cost. The savings come from discounts due to greater ability to order in bulk, less part usage due to the higher equipment mentioned in the first bullet, and the need to keep less actual inventory on hand. Our survey respondents claimed to have saved 25% to 35% due to better inventory management, and another 10% to 30% due to reductions in emergency purchase orders.

USE INDUSTRY BENCHMARKS

With the knowledge of what savings categories to draw upon in your CMMS justification, the other trick is to connect your business to benchmarks from organizations like yours. Ask the vendors you’re considering if they have a tool, or feel free to use the ROI calculator we have on the Accruent website.

The bottom line is that it’s possible to make a strong business case for CMMS. Automating maintenance management can deliver significant benefits across industries, solving major maintenance challenges and saving companies money.

About Nathan Eichelberger
Nathan Eichelberger is a Senior Vice President responsible for Accruent’s client relationships across multiple industry sectors, including discrete and process manufacturing, distribution and utilities. He has 24 years of experience in technology leadership, and built his career developing collaborative relationships to achieve innovative solutions for his teams and customers. Prior to joining Accruent, his career encompassed executive roles at Gateway Computers, LANDESK Software, and Ivanti Software.

Subscribe to Industry Today