Evaluating Total Cost of Ownership for Quality Management System Software
Blog: Interneer blog
Comparing software packages is hard.
You are probably finding that there are very different Quality Management System (QMS) software offerings out there. While features are important, your management team will expect you to have a deep understanding of how your recommended package will impact the company’s profitability.
One way to do this is to uncover the Total Cost of Ownership (TCO) for each package and compare those figures.
As a Quality Professional, you are probably already familiar with the idea of Hidden Costs as represented by an iceberg. The goal of this article is to help you uncover all the costs that are not visible.
For help building a business case (comparing efficiencies and savings to costs) listen to the ASQ webcast Building the Business Case- How to Develop the ROI of Your eQMS Solution.
For example, you may need to conduct a GAP analysis of your favorite packages and make decisions about changing the software or changing your processes to fit with the software. Drilling down into this one issue, you will find multiple sub-topics. Examples include:
- – Configuration: do you want to be able to make changes to your QMS or do you want to rely on professional services?
- – Integrations: Is part of your decision to buy QMS software based on reducing or eliminating duplicate entries across multiple software packages (e.g. ERP, Accounting, in house databases)?
- – Scope: Do you want to expand your QMS in the future? This may include the ability to use your software to capture data that is currently locked down on paper forms or spreadsheets?
- – Hosting: Does your company have a preference for hosting in the cloud or locally? What will you do if these requirements change in the next few years?
While these are not the only factors you will be considering, we are going to look at how TCO can be impacted by your decision in these areas.
Definition of Total Cost of Ownership
The Total Cost of Ownership is defined as is the purchase price of something plus the costs of operation. Assessing the total cost of ownership represents taking a bigger picture look at what the product is and what its value is over time.
Your company will change.
As it changes, shouldn’t you adapt your software to meet your new circumstances? Assess each of the providers on the following scale:
Changes are not possible: Mark this option if changes to settings and dropdowns are possible but, no modifications can be made to fields or workflows.
Limited changes are possible Mark this option if new fields can be added or unused ones hidden or removed. This option also includes the ability to make changes to field names and labels.
Change through Professional Services (PS) only or mostly Mark this option if workflow (ownership of tasks, new workflow steps) can be added or removed but it requires paying the vendors development or professional services team. QMS software providers will provide the development or PS to build out your Standard Operating Procedures (SOP’s), however it will be at a significant cost. Extreme Configurability Mark this if your team can make changes on their own. Such changes need to include building new apps or modules, adding new fields, removing fields, changing workflow steps, adding new workflow steps, creating unique reports, changing user permissions. Look for no-code platforms for extreme configurability.
On your TCO spreadsheet, add an estimate of how much you will spend on software development, programming, and professional services to configure your software as your company grows.
Integrations can be difficult. But the rewards are tremendous.
By having a QMS software that integrates with existing systems, you can reduce or eliminate the need for manual duplicate entries across multiple software packages. Simply put, this will reduce chances of human error and avoid data silos. By providing one source of truth across all your company, you will be to make smarter business decisions.
If you don’t have integrations, your Total Cost of Ownership will go up as your company grows. For example, imagine your company uses 10 cloud solutions and you have 100 users. This year, 5% of your staff leave and your company is growing at 10% year. That means that in year one you have to remove 5 users across 10 platforms (50 edits) and add 10 new users plus the 5 replacements across all 10 platforms (150 more edits). That’s 200 edits required for 15 users, plus additional edits if any mistakes were made. Oh, did we include staff relocation, transfers to other departments or promotions.
By integrating your QMS software with the same system you are using for user management your reducing the chance of mistakes and reducing the amount of labor required to maintain your system.
Add on top of that lists that are commonly used across other systems such as supplier lists, customer lists, department lists, equipment lists and inventory lists and you can see quickly there are a lot of cost justifications for integrating all your systems.
Check with your IT department and begin making a list of integrations you want to make. You may not have all your integrations in place when you launch, but at the very least you will have a priority list of all your technology integrations.
On your TCO spreadsheet, add an estimate of how much you will spend on integrating your QMS software to other software systems your company uses.
As your company grows, do you want to expand your QMS?
This may include the ability to convert paper-based forms to mobile apps in order to capture data electronically and assign tasks automatically.
Paper forms can quickly get you in trouble with your auditors. Often, users responsible for filling them out don’t do it, or at least don’t do it on time. Frequently, there are columns for Review that are left empty. The same comments and observations are frequently copied from the previous record. And often the handwriting is illegible, making it unclear what happened or what was done if a problem was uncovered.
And when we say paper-based we are including spreadsheets because they require printing to be signed.
When users create spreadsheets outside of a system that’s referred to as Shadow IT. The danger of shadow IT is that it re-opens the door to manual input errors. There is no audit trail as to who changed data and when. And, in order to bring someone’s attention to a record that needs to be reviewed then an email or some other form of notification must be set.
Creating apps to capture the data for all of these paper-based and spreadsheet-based forms will save you lots of time, money and reduce the risk of audit findings.
On your TCO spreadsheet, add an estimate of how much you will spend on maintaining paper-based (and spreadsheets) outside of your QMS. Also, add the cost of having your provider converting them to apps in your new QMS.
Hosting Your QMS Solution
On-Premise Solutions have a number of items that will impact TCO. These include, but are not limited to:
- – Server Maintenance – this item has many factors including annual support fees, labor to maintain the system, real estate to store the system, energy to power and coolthe system, as well as many other factors.
- – Annual license fee for theQMSsoftware.
- – Professional Services to install the software in the environment.
- – Other items that your IT team can help you uncover.
Cloud Solutions also have various factors to consider.
- – Fees for hosting the software.
- – Additional license fees for additional users.
- – Additional license fees for additional apps.
- – Other items that you will uncover during your purchasing process.
It’s also important to understand the cost if you decide to switch from an on-premise or cloud solution in the future. Many QMS software providers offer a completely different solution for on-premise than cloud, and switching from only to the other is time consuming, requires retraining your team, and can be costly. Other QMS software providers offer the same solution on-premises and in the cloud, and make it easy to switch from on to the other in the future.
If you choose a software package that allows you to build your own workflows and business apps, then you will eliminate the additional cost of Professional Services. Ideally, the solution will have a drag and drop platform that will allow your team to build out the workflows to match your SOP’s. This will significantly lower your TCO. Also, when your SOP’s change, you will not need to engage PS to redo the software to meet your new workflows.
On your TCO spreadsheet, add up all your hosting costs if they’re not included in your package.
Summary of Total Costs of Ownership for Quality Management Software
Software license price is not the only consideration when purchasing a QMS. Be sure to evaluate your needs across Configuration, Integrations, Scope and Hosting before you make your final decision. If you look at Total Cost of Ownership you will ensure you receive the most bang for your buck!
Once you have your costs tallied up, be sure to work on Building the Business Case- How to Develop the ROI of Your eQMS Solution.