How to set the right budget for your PLM system
Knowing that it is not always easy to convince the company’s leadership to approve new projects and investments, implementing a PLM software solution can be a challenging task. In order to get everyone on board, you should first be able to set the right budget for your PLM system. Having enough relevant data is the key to resolving many threats and objectives. That is why we recommend talking to our Frontech Solutions EU PLM software experts and finding out all the ways this system will improve your daily business operations. With that information, it will be much easier to speak with leadership and get the proper budget.
Where to start?
For the company executives to accept the application of PLM solutions, they need to know the size of the budget and the scope of PLM implementation. Not only can you apply PLM solutions to different industries, but there is also plenty of ways this software can affect the company’s processes in each case. Whether you wish to decrease time to market in the fashion industry by using PLM solutions for footwear and apparel or improve workflow in the service industry, PLM software can bring you desired results.
Firstly, you need to make a decision on which area to invest in and demonstrate ROI. And to do that you should make sure to implement the software properly depending on specifications of each area or department of the enterprise. You need to determine the scope of data changes and processes that need to happen.
In order to set the right budget for your PLM system, track the ROI and justify the cost, you need to pay attention and:
- generate minimally viable product,
- establish time costs across the company, specific to each process,
- reallocate costs to areas that have higher productivity.
Defining the scope of an initial PLM project is critical
There are numerous areas in which you can apply the PLM system. It will most certainly lead to new efficiencies, and that will satisfy all interested parties and stakeholders. However, in order to achieve that, you should first decide what is the most suitable area to implement this software and reach the preferred results. Good data classification control and setting clear parameters will help your executives determine how much to spend on customization of the process.
A good way to set the right budget for your PLM system is to initiate a debate among departments that are affected by the product classification. The department representatives should be able to define how their process operates within the given parameters. If they are not able to do that, it means that the specific department should be excluded from the initial PLM project budget. That will enable you to produce a minimally viable PLM system while staying synced with formulation, regulatory compliance, and product development process in a single launch.
By going through this process, you will manage to avoid expensive customizations which will affect your budget positively as well. If you save money on customizing fixed data parameters, you will be able to establish a staging database among all systems. The staging database will provide you with the possibility to conduct data migration and harmonization across systems. Also, you will reduce downtime while the migration is in process. So, the key to staying on budget is selective customization of the PLM system. If you can’t afford to apply custom-made software solutions to every department or process, start with the ones that will quickly bring tangible results and significant ROI. That will give you the opportunity to continue implementing PLM solutions across the departments of the enterprise.
Calculate the cost in ROI for one business process expanded across the company
Calculating the cost in ROI for one business process expanded across the company can help you justify the cost of a PLM software solution. It will also give you the opportunity to detect the financial impact of using PLM software for manufacturing collaboration.
If a company consists of multiple different operating units, it is very important to establish a unified nomenclature for describing products between departments. That way, data transfer between departments will be much easier and faster, which will lead to faster workflow and ultimately save costs.
The idea is to first measure the time and the headcount necessary for completing different data management processes. After the measuring and counting are over, it’s time to implement the PLM system. Once it replaces manual data researching, processing, and reporting, it will be pretty noticeable how much time and cost the system will have saved the company. Automatization of these standard and repeating processes will lead to an increased speed of collecting data and reporting, while also making the transfer of information from one sector to another much faster. This will make it possible for executives to find out exactly how long will it take to receive a financial payback on the cost of implementing a PLM system.
When having to set the right budget for your PLM system remember that savings can appear from reallocating budget in new or more productive operations
Return on investment for implementing PLM system doesn’t only come from cutting the costs within some process of the company. Once you standardize data structures and begin saving time and money, you will be able to reinvest what you have saved in more productive units. In practice, that means that the executives who had to deal with manually collecting, processing and reporting different sets of data, with the implementation of the PLM system and automation of these processes, now have more time to focus on more complex tasks.
From the company’s angle, there is more space to even bring new people with new ideas in order to improve general business operations, when they don’t have to waste time and resources on handling day-to-day, standardized operations. And if not bringing new people, the company has the opportunity to reinvest saved money into different departments and generate profit elsewhere.
There are many ways to set the right budget for your PLM system once you present to leadership how beneficial it would be for the company. Select the right business procedures that will prove to be the most efficient one to invest in the first and figure out a way to better allocate time and resources across the different units in the company. Get in touch with PLM software experts to determine the effective baseline data structure for your business and to help you stay on track with initial parameters. The system will show the areas to invest in that will be the most productive, so you can continue to establish where to reallocate resources and harvest your ROI in the best possible way.