The Cost of Developing a Production Schedule in Excel
The other day I saw a comment by an Excel fan that the cost to develop a scheduling solution in Excel was much lower than purchasing an off-the-shelf solution.
Here are my thoughts about that comment.
Global Cost Comparison
- A company developing an advanced scheduling solution can offer their solution to many prospective customers, say 100 000 for discussion purposes.
- This company will need employ a development team to code the solution, make enhancements, keep abreast of technology, etc. say 50 staff.
- At the local company level, the “developer” of the scheduling solution also needs time, say 2 months, for development for the solution. Let say that the company also needs one week’s effort per year to maintain or enhance their system.
- On a global scale we can compare the number of man months that all companies will require to develop and maintain a solution to an individual company effort.
- No matter how you adjust the above figures, the cost of developing a central solution is always smaller than the cost of developing an individual solution on a national / international basis.
Body of Knowledge – Scheduling
- It is unlikely that the Excel developer has theoretical knowledge of, and experience in, developing scheduling solution software.
- Nor is it likely that he will acquire these when his daily focus is on some other area in the business.
- It is therefore likely that the local solution will not take appropriate theory into account or offer users alternate scheduling methods.
Body of Knowledge – Excel
- It would be unusual to find that the Excel developer is fully knowledgeable in all that Excel has to offer and can apply all this logic to the development of a company scheduling solution.
- We can therefore expect that the solution will be less-than-optimal when compared to a solution developed by specialists.
- Programming languages and associated databases generally provide superior user solutions for daily functionality when compared to interpretive solutions developed in tools such as Excel.
Hidden organisational costs
Cost of lost productivity.
- Successful implementations of advanced scheduling solutions report productivity gains of between 10 and 30%. We have had reported benefits of 43% from one company and 50% from another.
- APS implementations in almost all cases replace Excel based solutions.
- If you pick a conservative productivity improvement percentage for your company, say 10%, then you can add that to the cost of running the current solution, on a monthly / annual basis.
Cost of inefficiency.
- Case studies of implementations of Advanced Scheduling solutions frequently report significant reductions in effort required to generate and maintain schedules. It is not uncommon to hear of reductions of 80% in the effort required to manage and build a schedule using the new technology, when compared to the previous method(s).
- This reduction in effort speaks directly to the potential lack of development skills, the use of inappropriate technology and the lack of theoretical knowledge required to produce an efficient solution.
- Into this mix we must put the potential cost to the company should the developer leave their employ for any reason.
- This risk should cover the cost of employment and training of a new scheduler in the internally developed solution.
- Hopefully these observations make you question the costs an organisation will incur if it develops an internal solution, when compared to purchasing an off-the-shelf solution.