The Case for Investing in Mathcad

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 * 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 over-riding 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 vs.

overall costs); and cost savings such as reduced manpower.

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

We 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 ?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 man-hour cost of ?58.

Assuming that a project lasts 10 weeks and involves 5 engineers full time, the personnel cost of the project is ?101,500.

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

In a 175 man-hour week, we estimated that 35 hours (20% of the time) are spent in retrieving and communicating information; 26 hours are spent re-working designs that have been done before; 9 hours are taken up with training, learning and familiarisation with systems; and another 13 hours can be allocated to administrative work, staff turnover and other non-productive time.

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

In this scenario, we calculate that implementing Mathcad Enterprise can reduce the time spent finding and communicating information by almost half: 17 hours.

The time spent on re-work is reduced by 8 hours, and the learning time is reduced by 2 hours.

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

Using Mathcad Enterprise therefore saves around ?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, we found that the payback time is less than 6 months.

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

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

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