Which Software to Use?

Let
ROI Decide
By Robert Green
It’s a common question in all manner of design environments – software users and
decision makers ask which software tools are best for their company. Questions like “Is
AutoCAD better than LT” or “Is Revit really better than AutoCAD Architectural” pose two
possible scenarios that must be analyzed using questions like, “what do these tools cost
and are they really worth it?” Whether you’re a user, CAD manager or project manager
these questions can make your head spin.

But when you think about it all these questions are a variant on a single theme: Which
software tool is really right for your users and your company?

When you think about the questions from that single point of view the answer becomes
simple: Use the tools that make your users most efficient and yields the best return on
investment (ROI) for your company.

What is ROI?

Return on Investment (ROI) is simply a way to make complex CAD software purchasing
decisions using a data driven mathematical approach. By using ROI your company can
make software licensing decisions based on solid business logic, not desire or emotion.

The basic equation for ROI is simply:

So if we think about the equation in terms of software it becomes clear that in order to
justify the purchase/license cost of any software there must be a resulting savings from
its usage. And since the key ratio in this equation is savings divided by costs the way to
achieve the best ROI is to maximize savings while minimizing costs.
Let’s imagine a basic example scenario:

If your company could license a piece of software for $500 per year that would save
$2000 in labor costs, then you’d receive an astounding 400% return on your investment
as you can see in the figure below.

Why Should You Care?

No matter what role you serve in the organization doesn’t it stand to reason that if you
can help the company save time and lower costs via smart CAD software use that your
job is more secure? The way you think about CAD and ROI typically depends on your
role in the organization with most companies having the following breakdown:

CAD users and CAD managers. Both groups strive to look for savings opportunities
possible with new CAD software technology.

CAD managers and project managers. Both groups strive to control costs associated
with new CAD software implementation.

Senior management. Serves as a check to be sure savings and cost estimates are
reasonable so that high ROI’s can actually be achieved.

Based on your principle job function you can now see your principle role in finding high
ROI software work methods boils down to these key action items:

CAD users and CAD managers. Find new ways to use CAD software to get your job
done faster.

CAD managers and project managers. Make sure the new CAD software works and
can be implemented within budget.

Senior management. Question everything and validate everyone’s math.

Savings: Time = Money

In most design environments a CAD based task duration is measured in the hours it
takes for the CAD user to complete the task from start to final markups. The number of
hours is then multiplied by the CAD user’s labor rate to compute a total cost for the
project like this:

Project Cost = Time (hrs) x Labor Rate ($/hr)

Simply looking at this equation allows us to draw two conclusions:

• Time really does equal money since time is directly proportional to Project Cost
• The higher the Labor Rate is, the more the project costs
• If labor rates remain the same the only way to reduce Project Cost is to reduce
Time

Since most CAD users, from drafters to engineers, have high labor rates, saving them
time translates into real cost savings for a company. Therefore, if a higher power
software tool can be used to save time then it may pay for itself in reduced Project
Costs.

The question then logically becomes, “Where are the greatest savings opportunities in
your CAD environment?”

Finding and Quantifying Savings

To find the cost saving potential in your company’s CAD environment all users and CAD
managers should ask themselves the following questions:

What are my most redundant processes? If you find the tasks you repeat the most
often you’ll find the greatest potential for automation or smarter CAD software to help
you.

What causes me to make mistakes? Errors are often due to human input or math
errors which could be eliminated by intelligent design software. If you can utilize smarter
CAD software to perform typical civil, mechanical or architectural calculations you
should save time that would otherwise be spent fixing errors.

What problems do most other users have? If you can find CAD software that
eliminates problems that affect your colleagues as well as you then you’ve identified
ever greater savings potential.

What could I be doing better? Rather than thinking about only time think about how
you could improve the quality of your work product and think how smarter CAD software
could help you. Examples could be creating illustrations or renderings for marketing
more quickly, finding field clashes in architectural designs or better supporting
construction efforts via better land planning in civil designs.

As you perform your day to day CAD tasks keep a notepad handy and record all the
ideas you have for saving time, reducing problems and performing tasks with better
quality and you’ll be amazed how many great ideas you’ll come up with. And be aware
that it is sometimes the small tasks you do over and over that are the greatest time
wasters!

A Hypothetical Case

Let’s walk through a hypothetical – yet real world - example case so the entire process
of savings identification and ROI computation becomes more clear.

Example company: XYZ Steel Detailing provides custom design services to a variety
of clients. Their workflow uses steel detailers who must produce many sheets of
detailed fabrication drawings each week with a typical project load of 150 jobs per year
per detailer and these detailers earn an average total compensation of $25/hr.

The company is presently using AutoCAD LT because the cost of licensing it ($360 per
year) is lower than the cost of a full AutoCAD license ($1045 per year).

Savings idea: One of the steel detailers believes that using full featured AutoCAD
would be more productive than LT because they could use some public domain
AutoLISP programs (which aren’t supported in LT) to automate drudgerous tasks to
save time on each job.

To evaluate this case, the following steps were taken:

Benchmarking: By downloading a 30-day trial of AutoCAD the detailer is able to run

some of the AutoLISP programs on a cross section of projects and identifies the
following results:

• An average project takes 12 hours to complete using LT.

• Using AutoCAD and the AutoLISP programs the detailer is able to complete a
typical project in 10 hours – thus generating a 2 hour saving per project.

Savings computation: Since the detailer’s labor cost is $25/hour then a $50 savings
per project (2 hr x $25/hr) can be realized. But the math starts to look really huge when
considering that over a year this designer can save $7,500 ($50/project x 150 projects)
in costs.

Initial conclusion: Without doing any detailed computations it certainly seems like the
$7,500/year savings would more than justify licensing AutoCAD at $1045 per year
rather than LT’s $360 per year but let’s do the math just to be sure.

Compute ROI:
Do You See the Power of ROI?

Imagine how much more persuasive it is to ask for a software license with the above
ROI computation than it is to say, “I want some new software” and you will see the
power of ROI based decision making!

The ROI Mindset

If your company can find high ROI ideas, like the case of XYZ Steel Detailing above,
they will invest in the software because they see a clear return in doing so. The problem
is typically identifying the software functionality to provide high ROI savings
opportunities and then working those ideas through implementation so they can be fully
adopted.

Companies that do well with ROI methods tend to have several traits in common that
can be summarized in these strategies:

Users provide savings suggestions. Who better to find inefficiencies in CAD

software that could lead to savings than the people who use the software every day?

CAD/project management teams prioritize. User suggestions are evaluated by the

CAD and project management teams so the suggestions with the highest possible
savings are acted upon first.

Senior management tracks savings. As user suggestions are evaluated and

implemented the savings and ROI numbers are shown to senior management on a
regular basis.

The company provides incentives. When great ROI ideas are found and
implemented the company provides an award or small bonus to recognize the
achievement.

In a short period of time the ROI mindset starts to take hold and everyone from the
lowest level CAD user to the highest level manager understands how much money is
being saved by using CAD smarter. In a longer period of time a culture of constant
improvement (as quantified by ROI and savings) establishes itself and everyone starts
looking for ways to improve CAD usage to generate more savings.

Fine Tuning Cost and ROI

The example case of the steel detailer neglected to take into account that all detailers
will need to learn how to use the AutoLISP utilities with AutoCAD to achieve project time
savings. It is therefore worthwhile to consider the total cost of implementing new
software, like the following:

Difference in software cost. How much more per year will the new software cost?

Implementation time. How much time will CAD management and/or IT staff need to
implement the new software?

Training time. How long will the user need to be trained to use any new software?

While the difference in software cost is an annual expense (repeating yearly) the
implementation and training time is typically only required in the first year of software
usage. This means that the first year of any new software implementation will be more
expensive than subsequent years so a multi-year analysis of ROI should be undertaken.

It Gets Better

We can now expand our definition of software ROI as follows:

Where Costs Year 1 = Software Cost + Training + Implementation

Where Costs Year N = Software Cost

If several years of ROI values are considered, it becomes easy to draw the following
conclusions:

• The ROI for the first year of a software investment is lower than subsequent
years because costs are higher in the first year.
 • If the ROI for the first year on a software investment is good, ROI will only get
better in subsequent years as costs drop.
• The more years the software is used the higher the ROI will be.

Summing Up

Deciding on which software tools are best for your users isn’t a guessing game or just a
matter of buying the latest product in hopes they’ll work. By using the time tested ROI
approach to analyzing costs and time savings you can make smart decisions that you
know will serve your company well.

Of course you’ll have to do some homework to do a thoughtful ROI analysis, but isn’t
the certainty of doing the right thing for your company worth the effort?