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Cost/Benefit Analysis
To further illustrate the value of Made2Manage ERP, please refer to the table below for a calculation of the total benefits, costs, and resulting ROI for our fictional $5 million company.
| Return on Made2Manage fictional $5 million company |
|
Year 1 |
Year 2 |
Year 3 |
Total |
| BENEFITS |
| Reduction in administrative costs (assumes 1 hire saved) |
$25,000 |
$25,000 |
$25,000 |
$75,000 |
| Better customer service, higher revenues (3% increase, 6% profit margin) |
$15,000 |
$15,000 |
$15,000 |
$45,000 |
| More efficient shop floor personnel (4% reduction in cost) |
$80,000 |
$80,000 |
$80,000 |
$240,000 |
| Lower material costs (3% reduction) |
$60,000 |
$60,000 |
$60,000 |
$180,000 |
| Improved pricing, higher resulting margins (3% improvement) |
$12,000 |
$12,000 |
$12,000 |
$36,000 |
| Total Benefits |
$192,000 |
$192,000 |
$192,000 |
$576,000 |
|
| COSTS |
| Software (Base system for 5 users including common options) |
$40,000 |
|
|
$40,000 |
| Future Software costs (additional users and optional modules) |
|
$10,000 |
$10,000 |
$20,000 |
| Initial Services (Consulting, Education, and Support/Maintenance) |
$25,000 |
|
|
$25,000 |
| Future Services (Support/Maintenance and Education Contracts, consulting) |
|
$10,000 |
$10,000 |
$20,000 |
| Initial Hardware and Misc (PC, Server, Upgrade, and other costs) |
$10,000 |
|
|
$10,000 |
| Ongoing Hardware and Misc (PC, Server, Upgrade, and other costs) |
|
$5,000 |
$5,000 |
$10,000 |
| Total Costs |
$75,000 |
$25,000 |
$25,000 |
$125,000 |
|
| NET RETURN ON MADE2MANAGE FOR FICTIONAL COMPANY |
$117,000 |
$167,000 |
$167,000 |
$451,000 |
This example assumes that the fictional company attains the minimum benefits for five areas of the business and nothing else. As you can see, the system is break even in less than six months, providing a positive $117,000 impact to the business in the first 12 months after the implementation. Over a three-year period, the net return to the business is more than $450,000, even after assuming total costs of $125,000.
To construct your own Return on Investment scenario, please contact Consona at (800) 626-0220.
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