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SMT-Apr2015

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82 SMT Magazine • April 2015 Recently, I saw an innocuous LinkedIn thread that eventually became the inspiration for this ar- ticle. In the thread, one of my connections men- tioned that he had read an article touting the fea- tures of a new software tool that allowed users to create interactive Excel spreadsheets and charts with real-time links to their underlying ERP sys- tems data (I am not affiliated in any way with the company or solution that was being described). My contact had sim- ply said something like "looks good" or "sounds power- ful." It was the re- ply from one of his contacts that struck me. It stated some- thing like, "looks good until you find out it costs $50,000." On the surface, this statement about the implied exorbitant price tag was a reflec - tion of a cost con- scious decision mak- er. Scratch under the surface and it is the perfect example of a pervasive strategic er- ror that costs manu- facturing companies many multiples of $50,000 annually. The problem is that in those few words ("looks good until you find out it costs $50,000") the LinkedIn contributor had in effect conducted an ROI analysis on investing in the software tool. Manufacturing companies are experts in con - ducting ROI analyses when it comes to produc- tion equipment, but most of the analysts and ex- ecutives who prepare and review ROI analyses do not approach the purchase of software solutions with the same rigor. To clarify this point further, not all software tools suffer this bias. If a piece of hardware or software will impact the production or engineering processes within the organization, an ROI is usually conducted. Investments in CAD tools and other DFM, DFT, and DFx enablers come to mind as great examples of software for which ROIs are explicitly or implicitly conducted as part of the purchasing process. However, if the soft - ware is a business intelligence or data analytics solution it is basically treated as an expense or luxury product where the decision amounts to "Should we splurge and get this expen - sive tool?" The problem with this approach is that it ignores an undisputed fact: Business intel- ligence solutions bring efficiencies to an organization's most expensive and most influential functions. The irony here is significant. In effect, many com - panies are saying, we will spend countless hours poring over projections to analyze and justify adding a machine that will make our direct la- bor more efficient, but we will not invest in mak- ing our executives, operations analysts, financial analysts and supply chain professionals more ef- ficient. Why is it acceptable to have executives wait for reports that drive key business decisions? Why is it acceptable to continue to drive business analysis and reporting in largely manual ways by by Bill Moradkhan PoRTuS InC. SMarT BuSiNESS SOluTiONS advanced Business intelligence Systems are Not a luxury Column

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