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What's in it for me? ROI Matters

The number one question a fabricator asks when considering an MIS such as Tekla Powerfab is “What’s in it for me?!”  That is laymen’s terms for Return on Investment (aka ROI)! That is a great question, but the answer can get deep very quickly.  No one ever buys anything without considering whether it will be worth trading a certain amount of cash for it. 

Consider the last restaurant you ate in.  Knowingly or not, you made a determination that eating in the restaurant was worth the money you were about to spend.  “Worth” may have been determined by a number of factors such as the quality of the food, the atmosphere, the service, or even just a recommendation.  In any case, what was in it for you was deemed to be worth more than the money you were about to hand over to the restaurant.  

Every fabricator needs to know that what they get out of the system is worth more than what they are going to pay.

Considering an MIS such as Tekla PowerFab is no different.  Every fabricator needs to know that what they get out of the system is worth more than what they are going to pay.  In my former days, I would put on my bean counter hat and calculate ROI for drills, saws, copers, robotic welding, and just about any other piece of equipment you can think of that is in a fab shop. 

The typical considerations were:

  • How much will it cost?
  • How much time will it save me?
  • How much will consumables cost?
  • How much will I save on repair costs as compared to my current machinery?
  • How much more will I make if it increases my capabilities?

And there are many more considerations.  I would calculate these costs or savings with reasonable data and figure out a return.  However, there were always several things that couldn’t be calculated:

  • What is it worth to be able to control production even better by bringing work in-house instead of buying from someone else?

  • What is the boost in morale worth that will happen after employees get a new “toy” out on the shop floor?  

  • What am I going to save by having a better-quality product?

I’m sure you’re thinking of plenty of other examples like this.  You can’t really put a “real” number on some of these considerations.  You can make a case for a number on some of them (such as quality), but it is still a guess unless you have a crystal ball.  

 

When considering the purchase of an MIS, there are some costs/benefits that you can calculate but there are also many costs/benefits that you just can’t put a number on.  In fact, I think I could make a case that there are more intangibles in the implementation of a new system than there are in machinery purchases.  Many of the benefits that I see with clients and that I saw in the past when I worked in a shop were simply unforeseen at the decision-making stage.  But you simply must do your due diligence and determine if what goes to your bottom line will be larger by purchasing this system!

Many of the benefits that I see with clients and that I saw in the past when I worked in a shop were simply unforeseen at the decision-making stage. 

In this series of articles, we’re going to cover some of the items that give the biggest return on investment in your purchase of Tekla PowerFab.  Some of these are unique to PowerFab while others are common among any MIS you implement.  In any case, we’re going to give you the tools you need to decide that it is…I mean….to decide if it is worth your time and money to take the plunge! 

sparks flying from steel fabrication

About the author

Ricky Horton is a full-time consultant specializing in the implementation and design of information systems surrounding the Tekla PowerFab suite of products. He has almost three decades of experience as an executive in the structural steel industry and over a decade in utilizing Tekla Powerfab.

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