Image Access WideTEK CIS scanner Contex large format scanners

How to Justify a Large-Format Scanner, Part 2

by Henrik Vestermark

Some background information and a few general considerations to help lay the groundwork as you consider this major hardware investment.

This article appeared in Cadalyst in two parts on 22nd and 23rd August 2006. It is kindly reproduced courtesy of the author, Henrik Vestermark, an independent consultant with professional experience in the wide-format scanner industry since 1988. Previously Contex's Vice President for the Americas his expertise includes all aspects of the wide-format and large-format digital capture market, with experience in development, sales and marketing for a wide-format scanner manufacturer. In 2006, Vestermark started The Other Solutions, a web-based company focusing on delivery of affordable solutions and consultancy to the IT and wide-format markets, specializing in the identification of business needs and justification of solutions. He currently lives in Idaho.

hve@theothersolutions.com
http://www.theothersolutions.com

How to Justify a Large-Format Scanner, Part 2

A new tool helps calculate potential return on investment so you can make a sound decision to purchase this hardware — or not!

(Editor's Note: Three points before you use this tool:
1]. The Other Solutions run two versions of it. The first allows you to chose the make and model of scanner you want. The second tool defaults to GTCO scanners.
2]. This tool only works in US dollars!
3]. Colortrac SmartLF scanners are not included at present.)

Tool 1 - All brands: http://TheOthersolutions.com/Wfs/All/ROI_CALC.htm

Tool 2 - GTCO Calcomp only: http://theothersolutions.com/Wfs/ROI_CALC.htm

Whether you're a graphics service provider or a design/engineering firm that has drawings on paper, at some point you probably ask "Do I need a wide-format scanner?". Perhaps the idea is appealing, but you wonder whether such a purchase is a smart one for your company? This two-part article is designed to help you make the right decision.

In Part 1, I outlined the various uses of wide-format scanning -- including scan-to-file, scan-to-print and scan-to-application -- as well as general things you should consider in your decision to purchase this hardware. Today, I'll present a tool that will help you answer the most important question: Is a large-format scanner worth the investment for our company?

Until now, potential owners of wide-format scanners have had very few tools to help determine whether and when to invest. Granted, some of you have probably thrown some numbers down on a piece of paper in an attempt to answer these questions. However, most prospective owners of wide-format scanners realize they are encroaching on new turf, and they have no idea how to obtain and calculate realistic numbers for such an investment.

My company, The Other Solutions, has developed a tool that can simplify this decision-making process. This tool, presented on our Web site, is designed for both the novice and experienced user. It consists of a two-stage analysis you can use for business justification, whether you're a service bureau or are considering a scanner for in-house use.

Step 1: Narrow Your List of Options

You can skip this step if you're already familiar with the wide-format scanner industry, but the first thing you need to do is narrow your list of wide-format scanner choices. The top three manufacturers of wide-format scanners offer 67 different models, and the choices can seem overwhelming. Step 1 calls on our Wide-Format Scanners Buyers Guide. Use it to reduce the choices to a more manageable number. By answering questions about your industry and the document sizes you use, you can pretty much narrow your selection to a list of three to five scanners.

Step 2: Determine and Justify Your ROI

This is the real deal because it gets to the root of justifying your business investment. It presents two scenarios and their break-even values and return on investment. The first break-even analysis is based on an equipment purchase; the second applies to leasing the equipment. Then finally, the return on investment indicates whether it is financially better to buy or lease equipment rather than outsourcing the scanning work to a service bureau.

In a nutshell, this tool simply asks you to enter actual equipment, scanning and copying parameters, production parameters, the actual cost of a scan-to-file or scan-to-copy/print and optional requirement plan. Then it automatically calculates the return on investment.

Here's a look at parts of the tool in more detail.

Scanner Cost

This is the sum of the scanner model price and any optional upgrades and extra software. This calculation is based on the manufacturer's suggested retail prices. If a discount or extra fee applies for you, you can enter any addition or subtraction in the Capital Cost Adjustment field.

Computer Cost

Select which type of computer system you have or intend to buy. There are four options:

  • Standard: Regular PC with an approximate cost of $1.000.
  • Premium: Higher-end PC with an approximate cost of $2.000.
  • High-end: Very high-performance PC with an approximate cost of $5,000.
  • Compatible PC is already owned.

The higher-end PC can handle more throughputs and will affect the total amount of scans you can process in a given day. If you already have a PC, select "I have a PC" to avoid adding this cost to the ROI analysis. If you will purchase a PC that does not match the cost of any of those listed, you can adjust the amount in the Capital Cost Adjustment field.

Scan2File & Scan2Print Cost

In this section, you can estimate the cost or revenue income for just copying or just scanning. The first two lines cover the cost of scanning to a file in black-and-white and in color. Most black-and-white scans are paid as a flat rate per scan, while color scan costs are normally calculated per square foot. For copying, the industry standard is to charge per square foot, both for black-and-white copies and for color. If you are paying or earning other costs, just adjust the appropriate fields. If your new scanner would be for in-house use, enter the cost of getting the job done at the local service bureau.

Scanning & Copying

Here you specify the breakdown of your anticipated scanning and copying work. Enter the percentages for each size of document you use: E (36 x 48"), D (24" x 36") and C (18" x 24"). Enter the percentages of black-and-white vs. color work as well as Scan2File vs. Scan2Print applications. In both cases, the numbers will automatically be adjusted to add up to 100%.

Production Parameters

This section is applicable mostly to facilities that have more than one scanner and printer. The default values (1 scanner, 1 printer, 1 shift of 8 hours per working day) should be sufficient for most ROI calculations.

Requirement Plan

We are finally coming down to the last section that needs to be filled out before we can proceed -- the requirement plan or expected number of drawings. Specify the number of drawings to be handled in a given time frame. For example, a city engineering department might estimate the volume it will scan/copy at 1,200 drawings in two years. These values are important and are required to calculate the net present value of your investment.

These figures should generate the breakdown of purchase, lease and the net present value of the investment. Every time a parameter is entered or changed, the calculator will automatically recalculate the return on investment. A positive net present value indicates that you should go ahead and invest. If the net present value is negative, you are better off outsourcing your scanning needs.

The Outcome

Following are two examples showing different cost breakdowns and their results using the ROI tool.

 

The above example -- a scenario in which the wide-format scanner use would be mostly scan-to-file -- finds a net present value of the investment of $7,278 after one year of scanning 1,200 drawings to file in black-and-white. A positive net present value indicates that we should go forward and invest in a wide-format scanner.

 

This ROI analysis shows a net present value of $53,877 after two years of scanning 120 documents to file and copying 1,080 drawings. Again, the conclusion is to move forward and invest.

 

Where to Go From Here?

Armed with this new tool and the data it provides, you can now better justify the "go, no go" decision for your business. If you go for investing, the next step is where to get the best deal. But that's a whole separate topic -- and one I'll save for another article!