Test case proves worth of corporate licence

In today's challenging business environment, corporate organisations are looking to manage their resources better - including the costs associated with them.

In today's challenging business environment, corporate organisations are looking to manage their resources better - including the costs associated with them.

The goal is to get greater value from their resources, in other words, increased cost-efficiency.

Corporations need to increase the cost-efficiency of their design and development process if they are to remain, or challenge to be, leaders in their markets.

So an engineering manager is likely to have a number of imperatives: to reduce time to market for new products; to achieve more and/or better output for the same cost; or to maintain output but at a reduced cost.

In all of these, they will be trying to eliminate, or at least reduce, non-value-adding costs: the proportion of their engineering team's time that is not directly converted into saleable product.

The type of efficiency savings they are looking for will be achieved by many of the benefits that the Mathcad Enterprise solution offers, such as: re-use of existing code; reduction of errors; reduction of time spent auditing and checking completed documents; better use of their licence count; and better communication of ideas and principles (knowledge transfer).

The advantages of using Mathcad for engineering projects are well known, for example: its self-documenting capability; its integration of text, annotations, tables, graphs and design sketches within a single, easily formatted worksheet; the ease with which errors can be traced and data verified and validated; its collaborative workgroup capabilities; and its reliability and strong security features.

Where Mathcad is used widely across an organisation, Mathcad Enterprise captures key engineering, design and research knowledge in a secure, easily retrieved form and stores them in a repository such as Microsoft SharePoint so that the audited, quality-assured documentation of each project is readily available to everyone.

That means that work done before, and the assumptions and methods used, can easily be traced and re-used.

However, in spite of the overriding need for better cost-efficiency - often driven by six sigma initiatives - companies are not prepared to write out large cheques for software licences without a lot more evidence.

Every purchase that they make must be justified in terms of return on investment (ROI) calculations.

All organisations use some form of ROI calculation.

They are measuring their payback in a number of ways to justify expenditure.

Criteria include the payback to be gained in increased productivity, output and quality (with the end result of increased sales against overall costs); and cost savings such as reduced manpower.

These different criteria are considered along with more traditional financial methods such as net present value (NPV), which projects the current value in real terms of the savings to be made in future years.

Adept Scientific recently developed an ROI model for a multinational engine manufacturer, based on costing information provided by a senior engineering manager.

Estimating the annual cost of an engineer to be GBP 35,400 (including salary, National Insurance and benefits), and adding a per engineer overhead cost of 160% (in line with the average multiplier used by large corporations), we reach a per person-hour cost of GBP 58.

Assuming that a project lasts 10 weeks and involves five engineers full time, the personnel cost of the project is GBP 101,500.

How much of this time is spent actually furthering the project, and how much is "non-value-adding" time, as defined earlier? Adept reckons that the estimate provided by the test-case customer is a pretty fair approximation of the situation in most large engineering-based corporates.

In a 175 person-hour week, Adept estimated that 35h (20% of the time) is spent in retrieving and communicating information; 26h is spent reworking designs that have been done before; 9h is taken up with training, learning and familiarisation with systems; and another 13h can be allocated to administrative work, staff turnover and other nonproductive time.

In total, that means 47% of the time spent on the project, or 822.5h (costing GBP 47,705) is non-value-adding.

In this scenario, Adept calculates that implementing Mathcad Enterprise can reduce the time spent finding and communicating information by almost half: 17h.

The time spent on rework is reduced by 8h, and the learning time is reduced by 2h.

That translates into a saving in person-hour costs of GBP 15,660 over the project.

Using Mathcad Enterprise therefore saves around GBP 16,000 of the design engineering costs of the project, almost 19%.

Assuming around 25 projects per year, and balancing this against the capital cost of a 25-user Mathcad Enterprise licence, plus software training and maintenance costs and IT support calculated at 20% of capital costs, Adept found that the payback time is less than 6 months.

The savings, purely based on payback, are very impressive, especially as the test case engineering manager felt that the figures used in the calculations were very reasonable and in some cases below the values that he normally used.

Adept plans to make the ROI model, both in Excel and Mathcad format, available to corporate Mathcad users in the near future.

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