IBM has added an R&D Management practice to its consulting business with the aim of helping clients maximize return on their product development efforts, company officials announced.
Operating within IBM's Global Business Services (GBS) division, the R&D-focused unit will employ an undisclosed number of dedicated consultants and researchers to work with clients in various industries to develop business processes that accelerate product development lifecycles and times-to-market.
In noting the challenges faced in translating R&D into tangible product innovation and ROI, company officials pointed to an IBM multi-industry study of over 750 CEOs worldwide, released earlier this year, which found that in many industries, R&D ranked lower than trading partners, customers, and competitors as a source for new ideas.
"It may be that some CEOs have never thought about R&D as a source for ideas," Mel Weems, R&D Management services leader, IBM Global Services, said in an interview. "There's an opportunity to take [such companies] through a transformation by actively engaging [the R&D department] in the company's business strategy."
Significant challenges noted in the study and discussed during a subsequent CEO panel discussion in New York were the cultural and organizational barriers between disparate departments within an enterprise, as well as poor internal communication in general. Inter-departmental communication has always been an issue for companies, according to Weems, who noted that different departmental languages are often to blame.
A recent report from Forrester Research (Cambridge, MA) found that a collaborative culture and a global partner network are the keys to driving profitable innovations. Examples cited in the report include office-supplies vendor Esselte, which connects its German, Asian, and U.S. marketing teams with its in-house industrial designers to expeditiously expand a concept into European, Asian, and U.S. markets.
"There's a need to shift from a culture of invention to a culture of innovation, [in which] line-of-business managers look to R&D to contribute to the business's strategy," Weems said. "This is what successful R&D organizations are doing."
Another important area mentioned in the Forrester report is an integrated marketing and supply chain relationship: "When Whirlpool launches a new R&D project, it simultaneously configures [its] global supply network to effectively build and deliver the innovative goods." (Read how Whirlpool loops its customers into the product development process.)
At Managing Automation's recent Progressive Manufacturing Summit, these intra-enterprise challenges were explored further. A pervasive theme throughout the three-day conference was the idea that a company's cultural disconnects and organizational complexities far outweigh technical obstacles when it comes to revamping the product development process. Several conference speakers stressed that such cultural and organizational issues have a real effect on productivity within their operations. That sentiment was echoed by conference attendees representing companies large and small that were looking for solutions to these potential barriers to innovation and, ultimately, their ability to stay competitive in a changing and increasingly global marketplace.
"This isn't just a 'big company' problem -- the scale of the problem varies, but the same problem exists for all of us," said Dave Shuey, director of Americas marketing at UGS, during a summit panel on product lifecycle management and collaborative design. "The key is to establish a collaborative environment with a real dissimilar group of people, and this is [the challenge faced by] the modern organization."
IBM's Global Business Services offers consulting services that span 17 industries in functional areas including human capital management; marketing, sales, and services; strategy and change management; and supply chain and procurement. The new R&D operation will complement GBS's existing services by helping clients to maximize R&D spending, build ROI and competitive differentiation, align R&D spending with broader business goals, and even help define those goals in some cases. R&D Management is in the early stages of working with clients in several industries, including electronics, aerospace and defense, and automotive OEMs with large R&D arms.
"We're working with companies that believe technology is a significant part of their products or services," Weems said. Other potential clients include CPG companies, whose technology isn't necessarily computer-based, he added.
The R&D Management business unit can help provide an alternative to traditional R&D outsourcing, said Navi Radjou, vice president of Forrester Research, in an interview. The process, he said, involves working with a client to improve its existing internal development processes with the goal of speeding time-to-market and improving the productivity of staff -- using techniques like stage-gate analysis and portfolio management as well as tools like product lifecycle management (PLM).
"Companies are scrutinizing R&D expenditures, [and facing] pressure to do more with less," Weems said. "Collaborative partners can contribute IP [to a project] and all partners can realize economic benefits."
According to an article in the September 2005 issue of R&D Magazine, worldwide R&D spending in the public and private sectors combined is projected to reach $1 trillion in 2006 -- and yet consulting firms have found that there is no direct correlation between increasing R&D spending and improving financial performance, Radjou said. In addition, although R&D costs are increasing, outdated business models -- including market-blind development processes and Western-centric product designs for emerging markets like India and Brazil -- are contributing to R&D's decreasing effectiveness.
"The services [provided by IBM's R&D Management practice] will help maximize a business's R&D ROI, and even help find ways to reduce R&D spending," Radjou said. R&D-intensive companies, he said, are looking to replicate the improvements they have achieved in other areas of their businesses, such as their supply chain processes.
IBM can distinguish itself from traditional management consultants that don't face the same types of R&D challenges as IBM does, according to Radjou. IBM's cache of R&D contacts will help provide for a solid customer base, he asserted.
Radjou is confident that the new R&D consulting practice will enable IBM to cross-sell a variety of products and services, including the PLM implementation services it offers as part of an alliance with Dassault. If a company has identified a communication gap among R&D, marketing, and the supply chain, for example, a PLM platform can help to facilitate more frequent interaction between customer-facing functions and R&D, and design better practices into the process much earlier in the R&D stage, resulting in faster time-to-market.