The challenge of investing in anything, including technology, is justifying the purchase price. Say you’re a decision maker for a field service firm contemplating whether to upgrade or add a software solution. The first step is determining how the solution will benefit your firm financially, the next step is to figure out how quick the ROI turnaround will be. A year? Six months? Shorter?
A post from Managing Automation tackles these questions, and provides a couple ways to improve your firm’s technical capabilities at a reasonable price, along with an accounting method that will help measure the value of your project.
Open Source Software
While it might sound crazy, sometimes great solutions are available at no cost. You just have to locate them. Managing Automation lists some enterprise resource planning (ERP) solutions that are available; generally what these solutions offer is the starter software with source code and the ability to modify and distribute licenses for free. The challenges with open source solutions include the possibility of bugs and security concerns, but for many field service automation tasks open source software can get the job done without compromising your business’ security or bottom line.
It seems like many field service companies are moving to the cloud these days, and for good reason. Letting another company host everything allows for an extremely quick startup, according to Managing Automation. So while licenses still need to be purchased, there is less (or no) equipment to buy and maintenance is generally a non-issue.
Resource Consumption Accounting (RCA)
If you’re like some people, talking about the nuts and bolts of accounting can make your eyes glaze over. Actually, unless you’re a controller or a CPA that’s probably the case. But different accounting methods can have a large effect on how costs are tallied, and in the case of new software solutions can be the difference between taking a chance on a new program that could save thousands of dollars and sitting on the sidelines, utilizing the same old tools. Here’s an explanation of how RCA is different than traditional cost accounting methods, which allocate overhead uniformly:
As the name suggests, (RCA) is focused on quantities of resources consumed for very specific activities. RCA thus overcomes many common overhead allocation issues with improved accuracy and accounting, rather than just randomly allocating those overhead components. The foundation of RCA is to build a model so that a change to one resource is reflected through all aspects of the business, product, and customers. Don’t worry that your controller won’t accept this approach: RCA is now cited as a mature practice by the International Federation of Accountants’ International Good Practice Guide.
If that’s a little confusing, think of it this way: it’s a relatively new accounting method that will allow your business to realize the results of software investments in a quicker and more realistic fashion. Paired with open source or cloud-based software programs, and your ROI will come fast enough to please everyone in your company.