What provides a better return on investment—implementing a print MIS system like PrintVis to improve your productivity or buying new equipment?
Speaker George Brown brings his considerable business experience and strategic planning expertise to help address the question. In this video, he offers a detailed assessment of the many considerations involved in making these high-level changes and walks us through the process of determining the return of investment (ROI) in implementing a Print MIS/ERP system.
Brown’s analysis features a hypothetical mid-sized company that he calls Compete Printing Inc. to represent the average print business [2:18]. As a $25 million touch sheet printer, it’s got an operating profit taken from a recent study by Print Industries of America and what they defined as benchmark profitability. In the diagram below, you will see that the average mid-sized print shop has a profit of 2.27% based on the average revenue of $25 million.
To assess the return on investment, Brown uses industry-standard calculations to determine the gain in operating profit, using the conventional definition of EBITDA (earnings before interest, tax, depreciation, and amortization). As George explains at 11:26 in the video, to calculate the EBITDA: “… if the revenue at Compete Printing is $25 million, if their EBITDA 2.27, I’ve converted that to true dollars.” This calculation results in an EBITDA of $ 567,500 for this hypothetical benchmark company, Compete Printing.
What Does a Company-Wide Print MIS/ERP System Do?
Rather than looking at piecemeal changes, this company-wide workflow management software provides all information on print jobs, from quotes to cash, using a single source of truth.
The same program is also used to track inventory, purchases, and accounting. This single system can considerably improve workflows, profits, customer service, working capital, inventory management, and cash flow.
As George Brown explains at 6:04, when describing the print industry:
“If you look at the average printer today, they probably have 10 subsystems within their business. They’ll have an imposition software; they’ll have an estimating software; they’ll have some pre-press; they’re going to have some production software, some planning and scheduling software, some shipping software, some accounting software, maybe some reporting software, and more and more and more…“
Finding the true cost of any activity is difficult when a print company has multiple systems that track its activities. By contrast, a single company-wide workflow management system provides a dramatically simplified way to access information.
George explains in the webinar at 8:43 that with an integrated print workflow management system, you can tell exactly how much it costs to run a print job. If you input all the information from a sales perspective, you can look at your actual costs through one view of the business. How is this information useful? Brown explains:
“I would always argue that any well-run print shop with good management, and that’s the bulk of the print shops today, could improve their cost if they could see it, but the very systems they have [now] obscure it.”
Calculating the ROI After Full Implementation of Print MIS/ERP
Let’s look at the most conservative cost reduction, using the Compete Printing Inc. example. Even if we assume a very modest cost reduction of .5%, we can see that this results in an extraordinary ROI of 76% in the first year alone and a whopping 382% ROI after 5 years.
Print ERP (MIS) Benefits Beyond ROI
In addition to the cost reductions included in the preceding ROI calculations, there are significant other financial advantages. Brown identifies these additional areas that provide payback from an ERP investment:
- Working Capital Improvements [16:01]
- Revenue Improvements [20:02]
- Risk Reduction [21:53]
- Easier Compliance [22:49]
Print Management Software Benefits That Last
All these ROI improvements provide long-term benefits. As Brown points out at 24:26 “…that ERP solution will help you drive that EBITDA for probably a 10- or 15-year period.”
Perhaps the most interesting conclusion to be drawn from this entire analysis is that the ROI on implementing a company-wide workflow MIS system can provide enough financial benefit to grow your company, such as funding new equipment. Additional working capital becomes available as better, more timely information allows you to free up money otherwise trapped in accounts receivable, accounts payable, and inventory. Brown estimates an annual improvement in working capital of $950,000 to $1.8 million.
The business case is compelling—rather than comparing your investment options in terms of “either/or,” you can more confidently think of your investment options in terms of “first/then.” First, implement a comprehensive ERP Print MIS (like PrintVis), then use the considerable payback to further invest in equipment.
To help you maximize ROI when implementing print ERP (MIS) enterprise-wide solutions, your best choice is to work with an established print industry specialist as your business partner to help guide your entire change process. Clients First Print Solutions offers everything your print business needs to plan, install, manage, optimize, and maintain the business applications you rely on.
The recommended Microsoft Cloud solution is PrintVis, an enterprise resource planning (ERP) and print management information system (MIS) built for total print shop management. PrintVis is built to meet the needs of all types of print shops and delivers all the scalability benefits of Microsoft’s cloud platform.
Book a PrintVis Demo
To see how PrintVis can provide you with excellent ROI and other benefits for your company, click on the link below to connect with a print MIS and ERP professional from Clients First Business Solutions.