Test engineering and quality assurance: the ROI of choosing Dracal
- 1. Introduction
- 2. The exercise Dracal proposes to do with you
- 3. Calculation of Net Benefits
- 4. Calculation of Initial Costs
- 5. ROI Calculation
- 6. Conclusion
Making an informed choice among various data acquisition solutions should, in theory, involve a return on investment (ROI) calculation. While everyone agrees on the usefulness of performing such a calculation when making a decision as crucial as choosing a DAQ solution in the context of implementing a test and quality assurance automation system, it must be admitted that the exercise is far from trivial.
To assist you in your decision-making process, we have taken the initiative to conduct the exercise as part of evaluating the Dracal solution based on dozens of customer interviews conducted over the years. The calculation presented is performed in the context of implementation for automation projects in test engineering and quality assurance specifically, based on real costs and challenges associated with such projects.
There is no "one size fits all" calculation when it comes to ROI. Each company and institution has its own specificities that are unique to its reality. Similarly, projects of different natures (OEM integration, for example) with different challenges also require their own calculation.
But in any case, you will certainly find a good starting point below to help you calculate your ROI.
To get a copy of the spreadsheet used to build this article, contact us with the subject "ROI Spreadsheet."
In the following, Dracal proposes to make an explicit and comprehensive calculation of the ROI of its solution based on its market knowledge. All assumptions are explained, and the logic of costs is discussed. At any time, you can consider that a cost does not apply to your situation or judge that the estimate is unsuitable for your reality. This final decision is entirely yours.
The calculation will be annualized over a period of 10 years to allow for the proper distribution of costs and benefits over the realistic duration of your project, assuming that you aim for a sustainable installation over time.
The formula to calculate return on investment is:
ROI = (Net Benefit - Initial Cost) / Initial Cost X 100.
In the following sections, we'll determine the Net Benefits offered by five key advantages of the Dracal solution, followed by the Initial Cost of choosing Dracal, so that we can finally perform example of ROI calculations for different scenarios.
To perform calculations, numbers are needed. Here are the assumptions we have based our calculations on, which you are free to adjust according to your needs.
1. The calculations consider a working schedule of 40 hours per week (5 days of 8 hours per week) and a company/institution's operation time equal to 52 weeks.
2. Amounts are provided in US dollars (USD).
3. The total hourly cost of an experienced engineer/developer (salary, charges, and infrastructure depreciation*) is estimated at $185 USD/h.
* A common mistake made by employees trying to calculate costs related to their working time is only considering their salary and neglecting the depreciation of infrastructure. This expense is real for the company and must be taken into account.
4. The total hourly cost of a non-senior technician or engineer is estimated at $110 USD/h.
5. We consider an implementation and automation project that includes 10 all-in-one instruments VCP-PTH450-CAL.
6. The cost of each Dracal instrument is estimated at an increased rate of $400 USD each.
7. Costs are annualized over the implementation for 10 years.
Calculating ROI requires assigning monetary values to what a solution offers. To determine the value (net benefit) of an advantage such as "data reliability," for example, is sufficient to determine the cost of the consequences of not being able to benefit from it. This is the exercise we will perform for each of the 5 key advantages offered by the Dracal solution, namely:
1. Data reliability
2. Access to ready-to-use all-in-one products
3. Access to simple and free multi-platform data integration tools
4. Portability and ease of installation
5. Free access to instrument calibration
3.1 What is the value of a data acquisition solution whose data is 100% reliable?
First of all, this discussion is irrelevant if you have doubts about the reliability of the data returned by Dracal sensors. If so, before continuing your reading, we invite you to review the following information to eliminate these doubts and allow us to continue the discussion freely:
this article on the robustness of Dracal data
this case study with Lumotive
this quote from a long-time customer working in the biotechnology field
There you go: you now know that choosing Dracal means choosing reliability and peace of mind. Now, let's determine the monetary value of this reliability.
The case study with Lumotive illustrates the importance of data reliability and allows us to grasp its implications. Let's try to put costs on the consequences of not having a reliable solution:
1. A technical resource or junior engineer must be assigned to check the quality of the data sporadically. At a rate of 30 minutes per week, at a rate of 110 USD/hour, this is a cost of 2,860 USD/year.
2. Erroneous data has caused equipment failures in testing equipment or testing products. Assume 350 USD/year.
3. As illustrated in the Lumotive case study, the time required for recurrent debugging inflates the bill. At a rate of 2 hours/month of time from an experienced engineer or developer, an amount of 4,440 USD/year is added.
4. And if we evaluate the time lost in tests that need to be redone, either because they failed or couldn't be completed, at a block of 4 hours every two months, another amount of 4,440 USD/year explodes the bill.
So, the reliability offered by the Dracal solution can be worth up to 12,090 USD/year.
3.2 What is the value of an all-in-one ready-to-use solution?
The Plug & Log solution from Dracal works instantly. Sometimes, it may be tempting to opt for a "do-it-yourself" solution that, at first glance, seems less expensive. But is it really? Let's see how much your time is really worth.
1. To create a functional instrument from scratch, you need to include time for component shopping, assembly time, time for checks, and corrections. In the case of this project, as the required measurements are temperature, relative humidity, and atmospheric pressure (equivalent to the assumed PTH450), we can estimate 4 hours of engineering time per instrument, totalling 7,400 USD for the 10 instruments. By annualizing these costs over 10 years (excluding hardware and assuming that this solution really lasts that long!), this solution costs 740 USD/year.
2. Once the instruments are assembled, don't forget the software development part needed for data integration into your own systems. Will your homemade instruments have a unique serial number for clear, error-free interrogation? In a quality assurance context, will they support a robust calibration mechanism allowing an accredited laboratory to adjust them? If the software architecture development to support your instruments with these necessary features is estimated at one week, the development cost is $7,400, or 740 USD/year once annualized.
3. With the homemade solution (instruments and software) built, essential recurring maintenance is required. Without access to specialized support like the one offered for free by a manufacturer, we can easily estimate conservatively at 1 hour/month the time for maintenance and online research to answer questions, correct programming errors, etc. This is another 2,220 USD/year added to the bill.
4. What about the data quality offered by this homemade solution? Recall the calculation performed in the previous section, illustrating how expensive a solution that generates unreliable data can be.
So, the "do-it-yourself" solution you are considering may seem less expensive initially in terms of parts, but when you take your time into account, it is actually more expensive than it seems, namely 3,700 USD/year, excluding costs associated with the data reliability problem calculated in the previous section.
3.3 What is the value of multi-platform integration tools into your existing systems, readily available and documented?
Once the instruments are installed, you will want to integrate the data into a centralized location. Dracal offers simplified data integration tools into your own systems and provides simple and straightforward documentation and a bank of code examples, all for free. Let's see how much an alternative solution without all these advantages could cost.
1. Do you operate on multiple different platforms? Do some of your machines run on Linux and others on Windows? If the solution you choose is not inherently multi-platform, you will need to build your own tool to support all your machines. Assuming an experienced developer takes a week to build a flawless tool, this solution costs $7,400, or, once annualized, 740 USD/year. And, as software tool development implies maintenance, assuming a reserved block of 1 day/year for maintaining a homemade system, this is an additional cost of $1,480/year. So, if the chosen solution does not offer the multi-platform operability you need, an additional cost of 2,220 USD must be added to this solution.
2. Now, you must figure out how to integrate the data. How much is clear documentation and ready-to-use code examples worth? The time spent searching on the vast web, on Stack Overflow, and the time spent on trials, errors, and debugging can be conservatively estimated at 2 days of work during implementation, or 16 hours. So, it is $2,960, which, once annualized, amounts to 296 USD/year, which the integration time can cost. And the time for Dracal? Integrating your data in about twenty minutes is possible, so it is negligible.
3. And if on-site installations are not enough? The Dracal solution is practical: any computer can be used for your automation and data collection project. But you need an industrial DAQ system with acquisition cards for many other solutions. These systems easily cost $3,700 each once all components are purchased. Assuming that two units are needed to cover the 10 test stations we are trying to build in this exercise, your installation will cost you 740 USD/year.
4. And what are the license, maintenance, and support fees? These vary from manufacturer to manufacturer, but a competing industrial manufacturer can easily charge 740 USD/year in license fees to use their tools and in annual support to cover 10 test stations.
The simplified software integration solution that Dracal offers for free can save you up to 3,996 USD/year.
3.4. What is the value of a portable solution that is easy to move, reuse for new projects, and store when needed?
While it is more difficult to assess how much reserving permanent space in your factory can cost, it is very easy to estimate how much the assembly and disassembly time of a test installation can cost.
Based on our customer discussions, assembling and then disassembling a test station that was not designed to be quickly reassigned can take up to 4 hours to assemble and 4 hours to disassemble. At a rate of once per quarter, or four times a year, this is 16 hours of technician time annually or costs 3,520 USD per year. Nothing compared to the few minutes required to plug and unplug USB communicating instruments.
3.5. What is the value of a simplified, freely accessible user-calibration solution?
The measuring instruments offered by Dracal can be purchased with the option of a user calibration in 3 points. The cost of obtaining this option for your products is a fixed cost of about 50 USD per instrument at the time of purchase. It has been included in the choice of our reference instrument for calculations, which is a VCP-PTH450-CAL (-CAL for CALibratable). Although this option offers several advantages, the goal here is to calculate the value of the free and open-source calibration software that comes with this option, namely the 3-point user calibration mechanism. Indeed, while Dracal offers the calibration service through partner laboratories, all users are free to deal with the laboratory of their choice.
The costs associated with an instrumentation solution that does not offer this freedom are as follows:
1. If the calibration and certification of an instrument cannot be done freely, it is because the manufacturer maintains a monopoly on this recurring task. It is, therefore, necessary to have instruments calibrated and adjusted in a laboratory imposed by the manufacturer at a cost generally higher than another laboratory whose prices must be determined according to free-market rules, i.e., according to supply and demand. If we estimate an additional cost of $100 per type of measurement for calibration work that must be done by a proprietary laboratory for 10 instruments measuring temperature, relative humidity, and atmospheric pressure like the PTH450 (thus three types of measurements), we estimate an additional cost of 2,220 USD per year for not being able to choose your calibration laboratory freely.
2. If you have the necessary setup to calibrate your instruments yourself from traceable references, the costs of not being able to benefit from your facilities arise. If we estimate at $500 per instrument the cost of a 3-point calibration task for three types of measurement (based on the prices offered by Dracal), for 10 instruments, this task will cost you $5,000 annually. Assuming that with your facilities, a technician could have calibrated your instruments at a rate of 2 hours per instrument, this is, therefore, 1,500 USD per year that the impossibility of calibrating your instruments yourself costs you.
Thus, whether you are in one or the other of the two situations above, free access to calibration software for your precision instruments can save you at least 1,500 USD annually.
Total Net Benefits
In summary, the net benefits of the 5 key advantages of the solution offered by Dracal Technologies:
Annualized net benefits (in USD / year)
All-in-one ready-to-use products
Simple and free multi-platform data integration tools
Portability of the solution
The second step in calculating the return on investment is to determine the value of the initial investments. Here are the estimated costs of implementing the simple solution offered by Dracal Technologies:
4.1 Product costs
In our assumptions, we have determined that the project requires 10 X VCP-PTH450-CAL, totalling approximately 4,000 USD, which, when annualized, becomes 400 USD.
4.2 Software integration time
The simplicity, documentation, and available code examples make it possible to integrate the Dracal solution in as little as twenty minutes. However, to provide some flexibility, let's assume an implementation time of 2 hours, equivalent to 370 USD in developer time, annualized to 37 USD/year.
One of Dracal's promises is "What works today will work tomorrow," precisely to minimize maintenance tasks. Nevertheless, your team may want to make modifications to their codebase for one reason or another. Assuming 1 hour of minor modifications per quarter performed by a technician or even an intern, the maintenance cost for your Dracal installation is a maximum of 440 USD/year.
Total initial costs
Annualized Initial Cost (in USD/year)
Let's recall that the formula for calculating Return on Investment is: (Net Profit - Initial Cost) / Initial Cost X 100. Based on the figures from the two previous sections, we have everything we need to calculate it for different scenarios. Why calculate an ROI for each scenario instead of simply taking the sum of the values of the 5 pillar benefits? Because it's possible that other solutions also offer some of these benefits, therefore those may not be a differentiating factor to help you in your decision-making process.
In all the calculations below, the Initial Cost will be the annualized implementation cost of a Dracal system, which is 877 USD. The values of the benefits will be taken as-is from the summary table.
Situation: The data from my current solution is not reliable. What will be my ROI in switching to a Dracal installation?
Benefit in play: Data reliability
Annualized value: 12,090 USD/year
Dracal ROI = (12,090 - 877)/877 X 100 = 1,279%
Conclusion: Unreliable data is a recurring financial burden for an organization/business. Regardless of the time already invested in implementing this solution, one must look ahead and see all the future costs if this solution were to be maintained. The advantage of switching to a reliable solution is indisputable. Every 100 USD invested in your redevelopment project towards a reliable infrastructure like Dracal will free up an additional 1,279 USD for your other projects.
Situation: I need to implement an acquisition solution. Since my budget is limited and my skills allow me, I am considering assembling a solution myself using "do-it-yourself" open-source resources. Is this decision financially justified?
Benefit in play: Ready-to-use all-in-one products
Annualized value: 3,700 USD/year
Dracal ROI = (3,700 - 877)/877 X 100 = 322%
Conclusion: Despite appearances, a "do-it-yourself" solution is at least 3 times more expensive than a ready-to-use solution like the one offered by Dracal. Choosing to build a solution from scratch would neglect the value of your time, a precious and limited resource. Every 100 USD invested in acquiring a ready-to-use solution like Dracal frees up 322 USD from your budget.
Situation: I am currently evaluating some reliable and ready-to-use solutions. One of them is very well known among calibration laboratories, giving me a sense of security regarding the quality of data. However, I cannot quickly find out if it is possible to integrate the data into my system, let alone if all operating systems are supported. I feel that the process will be arduous. With equal reliability, what will be my return on investment in choosing Dracal over this popular solution?
Benefit in play: Simple and free multi-platform data integration tools
Annualized value: 3,996 USD/year
Dracal ROI = (3,996 - 877)/877 X 100 = 356%
Conclusion: It is neither necessary nor financially profitable to go through the arduous process of searching for documentation to integrate data into your measurement and automation project. Unless you enjoy playing hide-and-seek, the time taken to search for information to figure out how to integrate your data is an expense that is hard to justify. Every 100 USD invested in setting up a well-documented solution with copy-paste code examples frees up 356 USD that would otherwise have been lost in a search-and-find process.
Situation: Our data acquisition project does not require constant measurement throughout the year. Instead, we perform sporadic tests aligned with new developments in our products. We deem it unnecessary to incur the costs of additional permanent space for sporadic tests. Some popular solutions recommended to us are bulky, and their calibration requires dealing with manufacturer-accredited specialists. Is it worth considering the implementation of the Dracal solution in this context?
Benefits in play: Solution portability + User-calibration freedom
Annualized value: 3,520 + 1,500 = 5,020 USD/year
Dracal ROI = (5,020 - 877)/877 X 100 = 472%
Conclusion: In this context, opting for a portable solution that uses your existing facilities and allows you to choose your own calibration partner will save you a lot. For every 100 USD invested in your Dracal setup, an additional 472 USD is freed up to advance your other projects.
Whether it's the acquisition solution you currently have in place or solutions under evaluation, ROI calculation is a very informative exercise that highlights the hidden costs associated with adopting a complex system. Considering that the assumptions and cost calculations made in this article may not apply directly to your situation, we still hope to have succeeded in demystifying the various steps involved in establishing an ROI calculation and provided you with some intuition on evaluating the value of your time and that of your entire team.
At Dracal, as we understand the value of your time, we offer a solution that stands out for its simplicity of implementation and maintenance, armed with its free and multi-platform software solutions. Although each of the pillar benefits individually offers a positive return in choosing to invest in a Dracal infrastructure, their combination makes it an extremely high-performing solution and a very high return, and therefore, interesting to consider for any company concerned with implementing solutions that are not only sustainable (quality) but also viable (ROI) over time.
Whether it's Dracal or an alternative solution, this exercise certainly has highlighted the danger of neglecting the value of your time and the impact of a complicated solution on your ability to move forward quickly.
If you have any questions about the assumptions used in writing this work or are interested in getting your hands on the spreadsheet used, feel free to contact us at email@example.com.