If you’re still running your facilities management program on a spreadsheet – or, worse, a growing pile of paper invoices – you already know that it’s time for an upgrade. From scheduling repairs and preventive maintenance to addressing emergency breakdowns and making sure invoices are paid on time, day-to-day FM responsibilities are time-consuming: When all this is carried out manually, it’s nearly impossible to avoid human error.
Facilities management software (FM software) functions as a centralized platform through which FMs can enter work orders, track payments, manage assets, and make quick, data-backed decisions based on a wealth of historical information. Not only does this help keep your team organized – it can save your business thousands of dollars in lost warranty repairs or shopping hours, and that’s just one location. However, while the decision to invest may be a no-brainer to you, it might not be so obvious to your organization’s financial executives.
To build the case for FM technology, you’ll have to do a bit of homework. Namely, your CFO will want to see that you can prove return on investment (ROI) in terms of dollar value. This requires some digging into your existing asset and spending data. While you may not be able to come up with an exact figure, even the roughest estimate will typically show a strong positive ROI – making your argument for FM software a no-brainer in the eyes of company leadership.
Jeffrey Luna, Director of National Projects for grocery chain ALDI USA, recently spoke with us to explain how he went about making the case for FM technology to his company’s execs – and just how well it paid off.
Luna will be sharing his ROI story at this year’s ServiceX conference in Scottsdale, Arizona. Don’t miss out! Join us at ServiceX 2019 for a chance to learn from keynote speakers, explore cutting-edge technology, and take part in interactive sessions with industry leaders.
The ROI Formula
Most organizations begin to look for FM software as a means to a much greater end: Most often, it’s “saving money within the maintenance department.” And, for some, it’s “providing an enhanced customer experience” to keep customers coming back. No matter how you choose to approach your case, it’s a good idea to start by taking stock of your current performance in both categories.
The basic formula for FM software ROI is this: (Software Value – Software Cost) / Software Cost
Software cost is the easier puzzle piece to determine. Software value is the trickier component, and it may not be as black-and-white as we’d hope. You’ll need to consider your current repair and maintenance costs, bucketed out into key categories, along with the costs associated with factors like downtime, inventory loss, and employee overtime. Depending on your maintenance program’s level of sophistication, you may or may not have access to all of this data and related annual costs – in which case it’s best to zero in on just one factor.
Don’t forget that “software value” means different things to different stakeholders in your organization. From a customer experience standpoint, it implies that your stores or facilities will be cleaner, more inviting, and better-organized. From a financial standpoint, it means that you’ll be able to increase efficiencies, spend less on maintenance, and reduce inventory loss. With all this in mind, you may need to calculate ROI in a few different ways (based on different sets of data) in order to reach the appropriate audience.
Cutting Costs and Streamlining Processes
In ALDI’s case, the decision to invest in ServiceChannel’s Service Automation platform was based largely on the grocery chain’s ability to cut maintenance costs and increase efficiencies in day-to-day store operations. Calculating dollar value ROI, however, proved to be something of a challenge. ALDI’s existing FM program lacked the ability to track and understand maintenance spend in a granular way:
“We felt like there was a lot of opportunity there to be able to control costs around maintenance. But we were in a little bit of a rut because there was no way for us to even evaluate those costs – they just fall into one of four buckets of our general ledger accounts. And we had no visibility into the trades or individual stores without pulling individual invoices from the divisions,” Luna explained.
Prior to implementing ServiceChannel, “There was a major lack in accountability; a major lack in being able to validate invoices. We were certainly double-paying invoices even though we have this archaic invoice log that district managers were using. More importantly, we were experiencing a lot of double and even triple trips for the same repair or work order, which was completely unnecessary.”
The most concrete way that Luna’s team could prove the long-term value of the ServiceChannel platform? Simply by calculating the savings potential for the switch from paper to digital invoicing.
“Ironically, the best way that we found to show significant ROI was not necessarily, ‘Hey, we’re being promised that we’re going to save 30 percent on repair and maintenance cost.’ Instead, we asked, ‘Okay, what are we doing now? We’re paying X number of paper invoices per month and we’re cutting paper checks to pay these invoices.’ Probably our biggest and our easiest sell on ROI was the fact that we were going to be discontinuing the payment of so many individual invoices and the amount of savings that we were going to incur by switching to electronic payments.”
For many businesses, just going electronic can have an immense impact on efficiency, accountability, and minimizing human error. For ALDI, a company that was built (and continues to thrive) on the premise of efficiency, this calculation alone was more than enough to justify the investment in FM software.
Proactive Contractor and Vendor Selection
For ALDI, the ability to more thoroughly vet out service providers prior to scheduling maintenance was a major selling point for the ServiceChannel platform. The Contractor Directory and Compliance Manager features, in particular, allowed facility overseers on all levels to find, hire, and manage service providers more efficiently, helping them prevent overspend and mitigate operational risk.
“Prior to ServiceChannel, we were very reactive. Now, this program gives us the opportunity to be more proactive and choose the right vendors. We’ve got a lot of vendors that are phenomenal; they haven’t been overcharging us and they’ve been doing a good job. But no doubt we have a significant number of vendors who’ve been working with us for years and years, and no doubt we’re paying too much money or they’re finding the loopholes.”
It’s not just finding better vendors and planning maintenance ahead of time, though. The value-add also has to do with putting store maintenance back in the hands of those who are most directly involved with the physical stores, day in and day out. For ALDI, this meant putting store managers in control – giving them the opportunity to shape the customer experience, prevent breakdowns, and keep their stores in top condition.
As Luna noted, without a centralized platform, ALDI store managers were responding reactively to any failures or breakdowns: “Managing the mess,” so to speak, and trying to relay the problem to district managers as quickly as possible while juggling other responsibilities. Now, with the ServiceChannel platform in place, store managers can take ownership and submit work orders themselves with pre-set limitations in place to prevent overspend.
“As it stood before, only the district managers could submit a work order. With ServiceChannel, we can actually control, monitor, and maintain what the store managers are putting through. They want a good presentable store, of course, but their hands were tied because they had to get everything approved through their district manager. With ServiceChannel, we have ‘not to exceed’ limits and state-certified, approved vendors on our network. So, it takes out that worry that some stores are doing too much or that others aren’t doing enough.”
Join us at ServiceX 2019 for More on ROI
Calculating ROI for your FM software investment may not be simple, but it’s more than likely the only way to gain buy-in from the key players in your organization. Proving that an FM software solution will have a real impact on your company’s bottom line – meaning the hard dollars and cents you’ll save upon implementation – is the first step to modernizing your FM program as a whole. After all, manual, on-paper processes simply don’t offer the kind of agility that a proactive maintenance program demands.
For ALDI, the ROI case for ServiceChannel’s Service Automation suite was based just as much on metrics and data as it was on certain “intangibles’ – like the ability to bring their maintenance program up to par with the rest of their corporate strategy:
“ALDI is a very unique company in that we are very much about productivity; we’re very much about streamlined processes and efficiencies,” Luna explained.
Now that ALDI is competing head-to-head with the likes of Wal-Mart, this mission comes as no surprise. Their low prices and hyper-efficient shopping experience have drawn a cult-like following of shoppers across the US; the grocer is now on track to open 130 new stores just this year.
Ready to hear more about making the ROI case to key stakeholders in your organization? ServiceChannel’s Mike Roberts will be leading a breakout session at Service X 2019. Space is limited – sign up today!
Make the ROI Case to Your VPs for FM Technology – ASAP
Tuesday, September 24, 2019
10:45 – 11:30 AM
Learn how to use the language of ROI to educate executives and stakeholders in other departments on the value of using technology for facilities management. We’ll cover the three types of ROI and explain how to put them to use when communicating the benefits of the ServiceChannel platform.
ServiceX takes place September 22-24, 2019 in Scottsdale, Arizona. Learn how to activate the power of the #1 Facilities Management Platform to transform your business at this premier, no-cost event. Space is limited:
Some important dates and times to mark on your calendars:
- Where: Scottsdale, AZ – Omni Scottsdale Resort & Spa at Montelucia
- When: September 22nd-24th. On-site registration begins at 3:00 p.m. on the 22nd.
- What: An exclusive 3 days of learning, networking, innovation, sharing, and fun.
- Who: Anyone who is involved in ensuring their business maintains a consistent customer experience.
- Extras: Expert speakers, product training, networking sessions, innovation showcase, a chance to meet the ServiceChannel staff
- ServiceX Registration Deadline: Tuesday, September 3rd, 2019
- Omni Scottsdale Resort & Spa Booking Deadline: Friday, August 23rd, 2019