Why invest in new test technology – Part 2

Readers of my previous Blog will have seen that investing in new test technology might be a smart thing to do, to save your company money. And if you save your company money, you’ll be a hero. Let’s dive into this a little deeper.

In https://blog.asset-intertech.com/test_data_out/2012/06/why-invest-in-new-test-technology.html, I demonstrated how investing in new test technology may lead to benefits in the following four areas:

1. Reduced ICT costs
2. Lowered custom functional test costs
3. Reduced scrap
4. Eliminated debug time

The first two items are one-time savings, whereas the second two are recurring benefits. So, to do the Return on Investment (ROI) analysis properly, it is necessary to develop a cash flow model for the investment over time.

Beginning with the end in mind, the ROI model over a three-year period looks like this:

Quickly running through the model assumptions from my previous Blog, we demonstrated that In-Circuit Test (ICT) costs (inclusive of fixture and test development) could be dropped in half; board function test (BFT) likewise; and that the powerful test coverage and diagnostic capabilities of non-intrusive board test (NBT) could reduce the bone pile by 50% and similarly dramatically drop the repair technician’s debug time. Real-life Case Study examples for these assumptions can, for example, be seen here: http://www.asset-intertech.com/Case-Studies/Zebra-Technologies.aspx and here: http://btw.tttc-events.org/material/BTW09/Presentations/Session%204.2.pdf.

Of course, this is a simplified model, and neglects some of the finer details of implementing a new test strategy. There are up-front costs associated with introducing any new program, such as training, site preparation, technology evaluation, etc. etc. that need to be taken into consideration. The model also ignores the split of the NBT cost between capital and expense (the latter, being test program development); it also doesn’t take into account a company’s tax benefit from the depreciation of the NBT capital investment. Adding in these additional costs and benefits will change the ROI profile – most models end up having a negative up-front investment, followed by a recurring annual benefit yielding a very short (substantially less than one year) payback period.

As test engineers, you understand the technical criteria used to select new test methodologies. Being able to justify new investments to management is also part of the job. Once this is done, the fun job of deploying new technologies, saving your company money, and improving product quality begins.