Deficits in strategic research and development management

Deficits in strategic research and development management

A study by BearingPoint, pdma, IBM and TU Berlin shows: Top management and IT are not sufficiently integrated in controlling processes

Frankfurt am Main, February 2010 – The strategic controlling of product development in German companies is still in its infancy. This result is obtained from a qualitative study conducted by the management and technology consulting company BearingPoint (www.bearingpoint.de) in collaboration with the umbrella organization pdma (Product Development and Management Association), IBM and the Technical University of Berlin. According to the study, in which 40 German companies participated, top management is generally not sufficiently integrated in controlling processes in order to effectively co-create these. Only few companies have implemented efficient IT-based processes, consistent standards and corporate guidelines. “However, a functioning coordination of research and development can secure competitive advantage, particularly in difficult times”, Donald Wachs, Industrial Products Partner at BearingPoint, explains. “An optimization of the controlling process increases profitability. The probability to achieve higher margins for new products is increased considerably.”

The role of IT is greatly underestimated

Process support in particular holds potential for improvement. Only every fifth company acknowledges that their IT department needs to be involved considerably in their innovation management. The full potential of the systems is not harnessed. Important decisions are often based on interpretation instead of substantiated analysis of current and consolidated data. Therefore, more than a quarter of the companies lack an effective controlling. “The CIOs should be involved in all strategic controlling matters right from the start. With their IT-organization they form the basis for data evaluation and information as well as providing a functioning infrastructure for the professional management of research and development activities”, Donald Wachs states.

Process design is a management issue

More than 80 per cent of the interviewed companies regard the controlling of development portfolios as a task of their executive management as well as their development and sales departments. In practice things look different: Particularly CEOs and CFOs are generally not provided with detailed, structured information. This affects complex processes such as product development in particular.

The conforming to standards and corporate guidelines is essential for optimum controlling and governance. Currently, 70 per cent of the companies do not operate based on these specifications. Only every tenth company has defined clear criteria to stop unprofitable projects or those with less future potential.

“Although a majority of German companies already use controlling tools for their development activities, they still waste potential for research and development.” Donald Wachs advises, “IT-supported processes that enable central and effective controlling by top management are the right optimization approach”.

Download of the complete study “Governance and strategic controlling of product development” (German) in which decision-makers in the machinery and plant, automotive and high tech industries participated: Click here for study

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