Datacom’s Fully-Integrated ERP solutions offer a larger Return on Investment (ROI) than you might expect.

There are the measurable hard dollar benefits, as well as, numerous intangible benefits which are more difficult to quantify.

On average, Datacom’s solutions pay for themselves within the first year and go on to generate thousands of dollars in cost savings each year thereafter.  The average Datacom client realizes a 2-5% increase in net income in the first 6 to 12 months upon or after go-live.

Datacom’s solutions regularly provide solid, measurable financial benefits within the first year after implementation.

• Customer satisfaction increases based upon improved on-time delivery, increased quality, shortened production cycle times, etc.
• Inventory carrying costs decrease due to better planning and tracking, and through greater accuracy in determining material requirements.
• Improved processes enable greater visibility to the shop floor, providing the right materials at the right time in the right location, thereby minimizing lost time.
• Vendor pricing decreases by taking better advantage of quantity breaks and tracking vendor performance
• Collections are turned faster due to better visibility into accounts and fewer billing and delivery errors

While the industry average cost for ERP implementation runs one to three times the cost of the software, Datacom’s implementation cost is currently included in the cost of the License Fees for the system. Upgrades and enhancements are also included! All of these factors ensure confidence in a rapid ROI on your investment.

Feature/Benefit Analysis

The first step in determining the ROI of a software solution involves a feature/benefit analysis. In other words, examining features of various ERP offerings to see what they do and if they generate a positive return on investment.

Datacom’s benefits drive your company's productivity and profitability.

The Hard Dollars

Purchasing Enterprise-wide software represents a significant financial commitment, especially for smaller companies. Datacom offers a solution that allows small and mid-sized manufacturers to realize the benefits of a complete Enterprise-wide package that is not only feature-rich, but affordable and easy to implement.

Datacom’s proprietary RapidStart Implementation allows companies to not only get started quickly with training, but to also transition their existing information as well as to learn and to implement improved business processes.  Datacom’s solutions are designed to generate annual cost savings of several thousands of dollars year after year for most manufacturers.

The average Datacom customer is a manufacturer with about 70 employees and $10 million a year in annual sales. Companies in this range will pay $60,000 to $70,000 to initially purchase the software, with annual licensing fees of around $12,000 each year afterwards.  However, our experience has been that these customers typically generate cost savings of more than $300,000 a year.

Even if it takes six to 12 months to begin experiencing the efficiency gains, Datacom’s software still pays for itself within the first year. Thereafter, the software continues to generate thousands of dollars in annual savings at a cost of only $12,000 a year, for a remarkable return on investment.

ERP Payback Calculator

The table below shows in detail how the typical Datacom customer obtains a first year cost savings of $55,275 and an on-going annual cost savings of $104,775.

What is the source of these cost savings?

It depends on the company, but in most cases indirect labor yields the greatest dollar savings. Why so much from one area? Because many firms have no idea how much indirect labor actually goes into their products.  As a result, they do a very poor job of managing these costs. Datacom’s ERP functionality enables these companies to monitor, measure and adjust indirect labor costs while work is still in progress, which leads to substantially improved indirect labor practices and significant reductions in cost.

When reviewing the table, keep in mind the following:

• The Indirect Labor fields represent the amount of time spent by direct labor employees engaged in doing something other than running parts. In other words, non-productive time. There are multiple causes of Indirect Labor that can include looking for tooling, checking with the shop manager on which job is to run next, and many more. Some of these activities, such as knowing which job to work on next, are automatically identified by the Datacom application. In most cases, the single most important factor is that each employee quickly learns that they are being measured each day on indirect labor and they seek to improve their performance.
• How about all the other people in the organization that support production? Sales, Purchasing, Accounting, and even administration personnel are another form of indirect labor.  How efficient are those people?  If they’re spending time looking for and retrieving information to do their job function, are they doing it efficiently
• Direct Labor represents the increase in efficiency realized from monitoring an employee’s time spent running a job (actual) against how long it should have taken them to do the work (estimated). Although typically less than the reduction in indirect time, direct labor savings for most companies can still be a significant figure.
• The Purchasing field will typically contain both materials and outside process purchases. Cost savings are realized through group or bulk purchase, shorter lead times, better inventory turns (due to tighter management of inventory levels), fewer physical inventories required, and an overall improvement in the efficiency and organizational level of the purchasing department.
• Other areas that contribute to the cost savings are on-time deliveries, shop floor tracking, quoting, and efficiency gains throughout the company.

Intangible Benefits

• Make better management decisions - Datacom’s powerful management tools allow the owner/CEO to get a daily snapshot of sales orders, work in progress, inventory, receivables and all the critical areas of the business. With timely and accurate information at their fingertips, the business owner/CEO can make better decisions.

• Do more with less – Reduce Redundancy -In medium to large companies, Datacom solutions enable one person to do the work of several, particularly in an area like purchasing. In smaller companies, individuals who perform several functions can do them in far less time and have more time to devote to other areas of the business.

• Enhance teamwork - Datacom solutions make every process in the system more visible. As people begin to see how all the different processes are interconnected and how their jobs affect each other, they become more open to sharing information and working together to resolve problems and improve processes.

• Improve morale - Datacom solutions raise the professionalism of a company. It also lessens the pressure and frustration employees feel when forced to work with outdated and inefficient processes. Datacom users feel more competent and professional, and they gain a real sense of accomplishment from learning new skills. When people feel good about themselves and the work they perform, they inevitably do better on the job.

The bottom line is that Datacom solutions will make a real difference in your bottom line, both in terms of hard dollars and in developing the people who run your business. The initial investment to purchase and implement Datacom may seem steep, but it’s a drop in the bucket compared to the return on investment the software will generate for years to come.