The costs and benefits of product configuration projects in engineer-to-order companies

Abstract

Abstract In recent decades, many engineering-oriented companies have gained significant benefits from the use of product configurators, including higher product specification quality, fewer specification errors, faster quote creation and higher quote accuracy. On the other hand, many companies also experience great difficulties in realising such benefits within reasonable costs, which in many cases makes them abandon such projects. Although the literature provides a variety of methods to support the development and implementation of product configurators, it remains unclear how to estimate the costs and benefits for different scenarios — and, from there, how to define a profitable project scope. To address this issue, this paper develops a framework to support the estimation of costs and benefits of configurator projects in connection with their scoping. The framework includes models of the relationships between costs and benefits of product configurators at three different abstraction levels: product family level, product part level, and product detail level. The framework is investigated through studies of five configurator projects, which include descriptions of the total costs and benefits of these projects. The numbers from the projects studied support the hypothesised cost-benefit models. The studies also show that there can be great variety with regard to break-even points, as one of the configurator projects became profitable after only 12 months, while two projects had yet to become so after five years.