What is Return on Investment?

Return on investment (ROI) is a performance measurement expressed as a ratio of the net profit to the cost of an investment. Let’s take a look at Example Co, a manufacturing company currently investing $1,500,000 to construct a new facility. Over the course of the first year the facility is in service, it generates a net profit of $5,250,000. The ROI on the original investment is the net profit (5,250,000) / the facility cost (1,500,000) x (100) = 350%. Well done, Example Co.!

Four Steps to Track Portfolio and Project ROI with Primavera P6

1. Create a project;
2. Create a portfolio;
3. Define spending plan and benefit plan, and;
4. Analyze ROI.

Key Elements and Formulas

• Total spending plan. Sum of months in spending plan column
• Total benefit plan. Sum of months in benefit plan column
• Annual discount rate. Users enter this value
• Payback period. Calculated by P6
• Net present value. (total benefit plan) – (total spending plan)
• ROI. (net present value) / (total spending plan) x (100)

Oracle Primavera P6 enables ROI tracking per project with different user-managed time frames. Users can define a spending plan vs benefit plan for a project on a monthly, quarterly, or yearly basis.

Step 1. Create a Project

The figure below shows a list of sample projects created to demonstrate tracking ROI in Primavera P6.

Step 2. Create a Portfolio

The figure below shows a list of sample projects (created in the previous step) inside a sample portfolio.

Step 3. Define Spending Plan and Benefit Plan

• Click on the project name

• Select time scale
• Click edit spending and benefit plans

Update spending plan and benefit plan values (by month)

• Update spending plan values by month
• Update benefit plan values by month
• Update annual discount rate
• Select discount period (optional)

P6 will automatically calculate:

• Net-present value;
• ROI, and;
• Payback period.

Step 4. ROI Analysis

P6 users can perform ROI analysis at the portfolio and project levels. The figure below displays the information discussed at the beginning of this post.

• Total benefit plan
• Payback period
• Total spending plan
• Net-present value
• ROI %
• ROI graph

To view the ROI graph for a specific project, click the corresponding view chart link.

To view the ROI graph for a specific portfolio, click the corresponding view chart link.

Notes on Tracking ROI in Primavera P6

• Java is required to view ROI analysis pages.
• No option exists for bulk updating of the spending plan and benefit plan for multiple projects. Users must manually update these items for each project.
• The spending plan must be manually updated. The system is unable to calculate the amount from project planned costs from activities.

Gaea provides Primavera P6 scheduling and project portfolio management services for organizations in every industry. Contact us today to learn how we can help you implement an Oracle Primavera P6 solution that matches your unique enterprise needs.

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For success on a software implementation project, you’ll need two kinds of “change champions.” Pre-implementation change champions put project infrastructure in place, obtain funding, and get the project rolling. Post-implementation change champions focus on end-user adoption and enhanced change management.

The article includes a list of attributes that must be understood for change champions to be successful. While you’ll rarely find all this knowledge within one individual, it’s important that the collective wisdom of your team of change agents includes proficiency in:

• The business processes they will implement;
• The skills required to drive change;
• Political savviness;
• How to incorporate user feedback into your plans and the delivered solution;
• How to sell the value of the implementation to your organization, and;
• Organized project planning and solution configuration to alleviate learning curve pains.

A key takeaway from the article is that effective communication is a vital skill that change agents must develop, and knowing your audience is the first step. Research must be conducted before you’ll be able to deliver on-target answers when you’re asked, “what’s in it for me?” Before you begin outbound communication about planned changes, utilize inbound communication. Ask your stakeholders what’s important to them and listen attentively, then map their existing pain points to your proposed solution. That’s how you’ll convince your organization that change is worth the cost and effort required.

Another takeaway is that fear can be overcome by presenting evidence of success. References from other firms in a similar industry, or that are similar in size or other details, will help convince your decision makers that the proposed solution will yield desired results. Beginning with a pilot project within one division or business unit will minimize disruption across the enterprise, provide helpful lessons learned, and deliver tangible ROI measurements that show the value of expanding change across the entire organization.

Contact Gaea today to learn how we can help you become a change champion in your industry.

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Gaea recommends focusing on five key PPM solution components: analytics, project ROI, resource management, standards and automation, and integration.

1. Leverage analytics
The best performers in Aberdeen’s study were twice as likely to utilize analytics tools integrated with their PPM system to support wise decision making.

2. Select and execute projects that deliver the greatest ROI
Every project requested across an enterprise cannot be executed. A great PPM system will help determine the potential ROI of each project in your organization’s portfolio, prioritize those projects, and then help execute them on time and on budget.

3. Intelligently manage all resources
No firm has unlimited resources, whether they’re human or materials. Organizations need to be able view and assign resources across their entire portfolio of projects to ensure optimal, prioritized performance.

4. Enable repeatable success through standards and automation
Utilize PPM system best-practice capabilities, tailored to fit your organization, to streamline operations, speed execution, and facilitate collaboration.

5. Integrate for optimal reporting and proactive management
An integrated enterprise PPM system that manages costs and execution not only provides one source of truth for reporting, it enables proactive management. Don’t wait to run reports to determine project health. Your PPM system should alert you whenever certain conditions arise, enabling action to avoid cost overruns.

Contact Gaea today to learn how we can help you implement, integrate, and optimize a PPM solution that will empower you to become a leader in your industry.

Download the full Aberdeen report from Oracle’s website.

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Servitization (or servitisation for those across the pond) refers to the refocus of sales strategy from a product-centric approach to a service-centric approach; from a-one-sale-and-done approach to a customer-for-life approach.

The term servitization has been in use since at least 2010, but the concept of prioritizing the long-term customer relationship over a short-term sale has arguably been around since companies began selling maintenance contracts, and unquestionably since the SaaS subscription model was introduced. The buzzword is new, but the concept is not. What is new is the cool new technology for delivering servitization. And the driving force behind this new technology is the increased customer demand for convenience.

The Three Servitization Models

Companies can deliver servitization via one of three models, with new digital technologies making servitization delivery faster and more effective across all three.

Improving core customer service is the actual service delivery part of customer service. Your company likely already has telephone or email support, but a slew of new digital applications like chatbots and service apps specifically designed to track and nurture customers. These new apps are very important as today’s customer on the service line may be tomorrow’s repeat purchaser.

Building new packages of aftermarket services is the delivery of service-related products after, or distinct from, the initial product sale. For many products this service delivery has traditionally included maintenance. One new development here is IoT (internet of things) sensors that can be built into your products. These sensors can report how, where, when, and by whom your products are being used, providing useful pre-sales qualification data.

Delivering your products as services is the change in your sales model from a single upfront sale from which a customer can use your product in perpetuity, to a customer pay-as-they-go model. For software products, the term software as a service, or SaaS, is common. This model may require significant adaptive product changes so usage can be monitored remotely, and a new financial model that recognizes a fundamentally different revenue stream.

Gaea implements Oracle supply chain management solutions that deliver results, including:

• A choice of channels through which to engage with your business;
• Tools like live chat and AI-powered chatbots to help everyone get the answers they need when they need them;
• A unified view of customer data that enables agents and bots to serve people quickly and effectively;
• Discrete devices that monitor product status in real time and help you deliver support proactively;
• Field service teams with access to customer and IoT data, so they can deliver the right service, the first time, every time;
• Sensors that monitor product usage, enabling customers to only pay for what they use;
• Data gathered at every point is used to continuously improve service, and the quality of the products you manufacture, and;
• Long-lasting customer relationships with your company and your field-service teams.

At Gaea, we build long-term partnerships with our clients. Most of our clients continue to rely on Gaea as a trusted advisor for many years after their initial software implementation.

Contact us using the form on the right and let’s discuss why Gaea is your best partner to help you adopt the customer-for-life approach of servitization, enabled by Oracle applications.

Learn more about servitization by reading Oracle’s eBook, The Manufacturer’s Guide to Digital Connected Service.

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Exciting and trusted digital technologies like big data, mobile, and traditional web technologies, are getting a lot of press these days. But how many companies are implementing digital technologies, and to what extent? Does implementation vary by sector? Are these companies realizing financial benefits from their investment in digital technologies? Should your firm accelerate its digital investment?

A recent McKinsey survey answers many of these questions. The survey results show that companies utilizing digital technologies, “digital reinventors,” are experiencing superior revenue and earnings growth versus their “digital laggard” counterparts. And looking forward, the surveyed companies realize that not embracing digital technologies may lead to almost one-third of their revenue being lost or cannibalized. This threat to companies comes not only from “digital natives,” but also from traditional companies that are aggressively adopting digital technologies.

Not surprisingly, the survey also shows that digital technologies are being aggressively adopted in industry sectors known for technology leadership, like high-tech, media, and entertainment. These sectors are also dedicating a much higher percentage of their workforce to digital initiatives. A strong correlation exists between dollars spent on digital technologies and revenue generated by these technologies.

Digital Technologies Encourage Growth

Technology alone will not create growth, but it does enable new ways to conduct business. Companies applying digital technologies are likely to be the same companies aggressively implementing other leading-edge management, marketing, or technology innovations. As the McKinsey article notes, “companies in this group are not only investing more in digital but also investing and executing differently.” These other initiatives may also be driving an elevated operational tempo and/or new opportunities.

Digital technologies are not solely responsible for revenue and earnings growth disparity. How they are used by each company is the key to success. Still, although varying in intensity by industry, digital disruption is real, inexorable, and accelerating. The McKinsey survey should be a wake-up call to any company who has not yet adopted digital technologies. Continuing to lag may lead to financial peril for such companies.

What if My Firm Isn’t A Digital Reinventor?

So how should a firm that isn’t already a digital reinventor proceed? Where should they start? The survey results indicate three possible entry points for digitization. Companies should:

1. Employ a dual approach of applying digital technologies to existing businesses while creating new digital business lines;
2. Experiment with digital technologies, particularly increasing in-house digital expertise among the company’s leadership, and;
3. Make decisive digital investment decisions, fully funding promising investments and defunding others.

If your company qualifies as a digital laggard or is simply not maximizing its full digital reinventor potential, Gaea is happy to help. We will:

• Provide you with an assessment about how your company is currently managing its supply chain management and enterprise project portfolio management operations and help you identify areas for digitization that will offer the greatest opportunity for positive ROI.
• Help you identify which specific digital technologies are likely to be most beneficial to each of your business lines.
• Offer detailed guidance and recommendations on specific investment decisions for each of these digitization initiatives.

Take charge of your digitization future. Complete the form on the right or call Gaea at 844 987 4232 today!

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