GGI RapidNews R&D Product Development eZine: Volume 4, Issue 8, August 5, 2003
In This Issue
2002 METRICS SURVEY RESULTS
BOOK REVIEW - Customer Relationship Management: A Strategic Imperative in the World of e-Business
MANAGEMENT PRODUCTIVITY - R&D Spending: Corporate R&D Scorecard
NEW BIENNIAL SURVEY - 2002 RD&E Survey Results available now
NEW WEB CONTENT - Updated GTKs: Calendar, CRM/Sales Management, Sales Force Automation, Data Acquisition & Management
FEATURED iSTORE PRODUCT - 2000 Product Development Metrics Research Summary
CONFERENCES OF INTEREST - PLM; PDMA; MRT Metrics
WEBINARS OF INTEREST - Sopheon's Winning Practices for Product Development
TELEVISION EVENTS - Alexander Haig's World Business Review
2002 METRICS SURVEY RESULTS
GGI's 2002 Product Development Metrics Survey was recently published. The 2002 Survey focused on resource and capacity management practices and metrics. Over 5 months, GGI is sharing with RapidNews readers selected results from each section of the survey. Last month focused on the fourth section, "Using Systems, Tools, & Metrics to Manage Capacity." This month we present the fifth and final section, "RD&E Metrics Used in Industry." This month's selected results are summarized below.
- The most common metrics used by R&D (for example, % of Sales invested in R&D, # of patents) typically come from functional groups other than R&D, such as Finance, Legal and Sales/Marketing. Few metrics are generated and owned by R&D managers.
- The famous "3M CYS/PDTPRITPNY Metric" (Current Year Sales/Profits Due To Products Released In The Prior N Years) was the third most used metric.
- There is a general increase in the percentage of respondents using various metrics, compared to results in 2000.
The original survey questionnaire can be downloaded at http://www.goldensegroupinc.com/biennial/surveys/2002MetricsSurvey.pdf. Complete survey results are available for purchase at http://www.goldensegroupinc.com/cgi/catalog.cgi?display_p355.
GGI's next Product Development Metrics Survey will be conducted in 2004. Please contact me at firstname.lastname@example.org if you wish to participate. All participants receive a complimentary copy of the Executive Summary of the Survey results.
Customer Relationship Management: A Strategic Imperative in the World of e-Business, edited by Stanley A. Brown. John Wiley & Sons, Inc. April, 2000, 1st edition. 376 pages.
As companies expand into the world of e-Business, retaining existing customers and building those relationships becomes increasingly important and more challenging. Customer Relationship Management (CRM) is the key strategy to move a company from a product-focused organization to a customer-focused one. CRM is not limited to just customer care or simply the concern of the marketing and IT departments; CRM involves the company vision and culture, business processes, and affects all departments -- engineering, manufacturing, finance, and others. The move toward e-commerce provides a key opportunity improve customer service and increase satisfaction, in addition to increasing revenues and decreasing costs. This is done through a clear strategy and careful use of technology to manage customer data.
Successful business leaders have known for years that retaining customers equals profitability. The strategy for developing customer relationships involves choosing customers carefully, and focusing on the most loyal and profitable customers. It's important to avoid constantly chasing new customers, who are a resource drain. Research from PricewaterhouseCoopers indicates that a new customer actually reduces gross margin by 3% in the first year, because of acquisition costs. By the third year, there is a 7% enhancement to gross margin, and by the seventh year, this customer is generating a 14% profit.
The key technology tools for CRM are the Web, workflow management and data warehousing. The Web enables efficient customer information gathering. The data collection must be linked to a workflow management system, so that documents, information and tasks will be automatically sent to the right people for follow-up. The data warehouse gathers, organizes and standardizes all of the information gathered, and integrates other systems, such as order entry, purchasing and billing. The customer data warehouse contains incredibly rich information that can be mined for a number of analytical and predictive purposes, including strategic marketing, customization, and new product development incorporating customers' expressed needs. Technologies such as these allow companies to maintain and build individual relationships with their customers, to anticipate their needs, and thereby to provide profitable revenue growth for the future.
R&D Spending: Corporate R&D Scorecard
"The Corporate R&D Scorecard: 2002", Technology Review, Massachusetts Institute of Technology: Volume 108, Issue 10, December 2002/January 2003, pages 67-70.
Technology Review published its 2002 Corporate R&D Scorecard in the December 2002/January 2003 issue, reporting annual R&D spending of the world's top 150 technology companies for fiscal years ending between June 1, 2001 and May 31, 2002. Companies were assigned to one of 12 sectors, based on their primary business: Aerospace, Automotive, Biotech, Chemicals, Computers (Hardware), Computers (Software), Drugs/Medical, Electrical/Electronics, High Tech Conglomerates, Petroleum, Semiconductors, and Telecommunications. Selected results are presented here.
The overall top spender for R&D was Ford with $7.4 billion, followed by Siemens (in the Electrical/Electronics sector) at over $6.0 billion and IBM (in the Computers (Hardware) sector) at nearly $5.3 billion. In general, the automotive industry spends the highest dollar amount on R&D, with an average of $2.9 billion for the 14 firms listed, but this sector is among the lowest three business sectors for spending as a percent of revenue. The lowest-spending sector, dollar-wise, was Biotech, which averaged $385 million for the 10 companies listed.
When the results are examined in terms of R&D spending as a percent of revenue, Biotech ranked number one. Millennium Pharmaceuticals spent a whopping 162.7% of its revenue on R&D, while Incyte Genomics spent 97.3% and Broadcom (from the Telecommunications sector) spent 91.3% of revenue on R&D. As a sector, Biotech averaged 46.4% of revenue spent on R&D for the 10 firms listed. The lowest-spending sector, percentage-wise, was Petroleum with an average of 1.2% of revenue spent on R&D for the 5 companies listed.
The Biotech sector again ranked at the top in terms of R&D spending per employee. The same three companies from the prior category also surfaced here. Incyte Genomics spent $364,677 per employee, Broadcom spent $321,822, and Millennium Pharmaceuticals spent $210,829 per employee on R&D. In the Biotech sector, the average amount spent for R&D was $139,548 per employee for the 10 companies listed. Again, the Petroleum sector spent the least amount per employee on average, $5,271, for the 5 companies listed.
The complete scorecard can be found at this link: http://www.technologyreview.com/articles/rd2002.asp.
NEW BIENNIAL SURVEY
2002 RD&E Survey - Resource & Capacity Management: Complete results from our 2002 Product Development Metrics Survey are now available, including our most detailed "RESULTS" report.
The survey focused this year on the following 5 areas of resource and capacity management:
- Loading the RD&E capacity pipeline,
- Providing capacity for RD&E activities,
- Balancing cross-functional resources (staffing ratios),
- Using systems, tools, & metrics to manage capacity, and
- RD&E metrics used in industry.
The 3 versions of the survey results reports that we offer for sale to the public are
1. 2002 SURVEY HIGHLIGHTS: A text-only report (65 pages),including the full text of all the results and analysis of the survey population analyzed as a whole,
2. 2002 SURVEY SUMMARY: A report of composite results, where the survey respondents are analyzed as a whole (116 pages, including a full set of graphics), and
3. 2002 SURVEY RESULTS: The most detailed report, complete with the composite results and "special cuts," where the survey population is segmented and analyzed in the following groups: Public vs. Private, Smaller vs. Larger, Process vs. Repetitive/Discrete vs. Job Shop, Higher Technology vs. Lower Technology, and More vs. Fewer Employees (223 pages).
These reports are available in the Market Research section of GGI's iStore (http://www.goldensegroupinc.com/iStore/store.html). The original survey questionnaire as well as a description of the survey (including survey focus and demographics, tables of contents for the 3 reports, and examples of key findings) can be found at the Market Research Reading Room at http://www.goldensegroupinc.com/readmarket.shtml.
NEW WEB CONTENT
GTK-Gateways To Knowledge: Your resource for industry and product development related information and contacts offers thousands of links to providers of technologies and services for line management functions. The main entrance to GTK can be found at:
One of our top 3 MEGA Gateways is the Calendar of Industry Events MEGA Gateway, a listing of links to conferences, seminars and distance learning opportunities. We have just updated the calendar to include over 20 new conference and seminar listings. The Calendar of Industry Events MEGA Gateway is located at:
Another one of our top MEGA Gateways is the Technology Providers MEGA Gateway, which is a directory of hundreds of links organized by technical topic (hardware and software). The Technology Providers MEGA Gateway can be found at:
CRM/Sales Management: This UPDATED Gateway offers links to nearly 100 companies that provide customer relationship and sales management software. Find it in the Technology Providers MEGA Gateway. The URL is located at:
Sales Force Automation: This UPDATED Gateway provides links to over 40 companies that specialize in sales force automation software. Find it in the Technology Providers MEGA Gateway. The URL is located at:
Data Acquisition: This UPDATED Gateway offers links to nearly 50 companies that specialize in data acquisition hardware and software. Find it in the Technology Providers MEGA Gateway. The URL is located at:
Data Management: This UPDATED Gateway provides links to companies that provide data management software. Find it in the Technology Providers MEGA Gateway. The URL is located at:
FEATURED GGI iSTORE PRODUCTS
Featured Item: GGI's iStore features one deeply discounted offering, which changes periodically. The current Featured Item is the "2000 Product Development Metrics Research Summary" (MR12).
This 96-page report presents the detailed results of GGI's 2000 Product Development Metrics Survey, which focused on metrics systems in use in industry as well as portfolio management. The report is organized in 5 sections, each of which contains factual observations, management analysis and a full set of graphics. This report, which analyzes the survey population of 122 respondents as a whole, will provide you with detailed information on
1. R&D linkages to corporate strategy,
2. Portfolio management metrics,
3. Product selection metrics,
4. Product success metrics, and
5. Actual metrics in use in industry.
This research is still valid, given the fact that the economy has not been in a state of high growth for the past few years. We have found consistency between the 2000 and 2002 surveys in areas where we could compare.
The price for the report has been dropped from $1920.00 to $1152.00, a deep discount of 40%. For more information or to purchase this valuable report, go to
CONFERENCES OF INTEREST
PLM 2003: Worldwide Business Research will hold its product life cycle management event, PLM 2003, on September 16-17 in Scottsdale, AZ. The conference is geared toward executives in all functional areas of product life cycle management and will emphasize minimizing product cost and maximizing life cycle value. Companies giving presentations include Deere & Company, Lam Research, Boeing, Lockheed Martin, Sun Microsystems, Agilent Technologies, Hewlett-Packard, and Dell. The conference also includes one day of pre-conference sessions on Monday, September 15, focusing on benchmarking and performance measures to identify key performance indicators.
Brad Goldense will be speaking on the subject of "Benchmarking Resource and Capacity Management Practices in R&D and Product Development" and is moderating two days of the 3-day conference.
For more information, go to WBR's web site: http://www.wbresearch.com/PLM/index.html
PDMA International Conference: PDMA's Annual International Conference will be held October 4-8, 2003 at the Boston Marriot Copley. The conference theme is The Business of Product Development: People, Process and Technology Across the Life Cycle and features keynote speakers Knight Kiplinger and Peter Senge. The conference will focus on successful product development and product life cycle management, with an emphasis on how-to's and new techniques to apply immediately to your competitive advantage. Three conference tracks are featured: People, Process and Technology.
Brad Goldense is part of the conference planning team, is the track chair for the Process Track, and will give an Executive Presentation on the subject of Industry Best Practices for Product Life Cycle Management. Other Executive Presenters include Dr. Robert Cooper.
More information is available at PDMA's web site: http://www.pdma.org/2003/.
MRT 8th Annual Metrics Conference: Management Roundtable will hold its 8th annual conference, "Product Development and R&D Metrics: Quantifying Innovation, Portfolio Value, and Resource Capacity," on November 3-6, 2003 in Chicago, IL. The conference brings together leading metrics experts and advanced industry practitioners to explore the latest approaches and methods for using performance measurement systems to manage new product development activities. The conference features keynote addresses, case studies, expert clinics, pre/post-conference workshops, and Q&A and networking sessions.
Brad Goldense will be facilitating two expert clinic sessions on Tuesday, November 4 on "Proactive and Predictive Measurements." Brad will also conduct a post-conference workshop, "Product Development Metrics Portfolios," on Thursday, November 6.
More information is available at MRT's web site: http://www.managementroundtable.com/event_center/MET03/MET03.html
WEBINARS OF INTEREST
Winning Practices for Product Development: This free, online seminar series is co-sponsored by Sopheon and the Society of Concurrent Product Development [SCPD]. These one-hour, online events feature experts and leading practitioners who will share process knowledge and practical advice about ways to improve your product development performance and results.
Sopheon and SCPD are currently in the process of planning the fall Webinar series. Your input on potential topics is requested at the link listed below. Past Webinars have been archived and are available online by following this link: http://www.sopheon.com/events_onlineseminars.asp
Alexander Haig's World Business Review: Brad Goldense has made several appearances on Alexander Haig's World Business Review in the past year. Streaming video is available for all shows, which aired on August 4, September 29 and December 15, 2002 and on May 20, 2003. See below for details.
May 20, 2003 Broadcast of September 29th In-Studio with Alexander Haig (22.5 minutes): Streaming video for this segment is available at: http://www.goldensegroupinc.com/ggiontv.shtml#wbr5
December 15, 2002 In-Studio with Alexander Haig (7.5 minutes) on CNBC paid programming: Streaming video for this segment is available at: http://www.goldensegroupinc.com/ggiontv.shtml#wbr3
September 29, 2002 In-Studio with Alexander Haig (22.5 minutes): Streaming video for this segment (as well as the entire 30-minute show) is available at: http://www.goldensegroupinc.com/ggiontv.shtml#wbr2
August 4, 2002 On-Location at GGI (3.5 minutes): This On-Location field report is available in streaming video on GGI's website. To see the program, go to: http://www.goldensegroupinc.com/ggiontv.shtml#wbr1
The web page includes links to download a streaming video player, if you do not currently have one installed on your computer.
For more information on any of Brad's appearances on television, go to:
GGI RapidNews is an e-mail publication from Goldense Group, Inc (GGI). Its subject matter includes survey findings, company news, book reviews, key industry conferences and R&D information of interest to clients and associates. Please send communications to rn(at)goldensegroupinc.com. Thank you.