Model-Based Design: Return On Investment (ROI)

One of the rationales for adopting Model-Based Design is an expected Return On Investment (ROI). This has three very natural questions

What is the expected ROI?
What is the timeframe for realizing the ROI?
What is necessary to realize the ROI?

Unpacking the ROI questions

The first thing to recognize is that the ROI will be dependent on the “level” of adoption of Model-Based Design. The more processes of Model-Based Design that are used the greater the ROI, however, there is a corresponding delay in the realization of the ROI (see reference 1).

Further, the ROI is dependent on a having a defined implementation plan. A full MBD process includes multiple tools and tasks, without a well-defined implementation plan the dependencies between these tasks will become muddled.

ROI Timeline

Assuming a well-defined implementation plan, Most companies will start to see a return on investment after 9 months to 1 year. The majority of the ROI is generally realized after 3 years.

Hidden or “Negative” ROI

One aspect of Model-Based Design makes measuring ROI difficult, the fact that model-based approaches allow for the development of systems that are impossible (or at least extremely difficult) to develop using traditional approaches. In these cases where MBD is used to create systems of high complexity, the measured ROI may be lower than actual ROI due to the inherent complexity of the system.

Expected ROI

Finally, what is the expected ROI? From industry examples, ROI’s as high as 80% are known to be possible (see reference 2) with ROI’s of 30~40% are considered common. Again, these results are dependent on having a good implementation plan. Hopefully, this blog, or MathWorks, will help you develop that plan.