Innovation–it’s a recurring theme for everyone these days, from global CEOs across every industry to President Obama himself as companies and the United States economy look to carve out the best possible position for sustainable long-term growth in today’s post-recession world. With innovation top of mind, companies are looking at technologies that can help stimulate and transform their product development practices, and Product Lifecycle Management (PLM) and collaboration software are front and center-at least according to a new survey by Harvard Business Review Analytic Services.
The survey, of 1,214 global enterprises and commissioned by Siemens PLM Software, found that advanced IT tools which allow stakeholders across the enterprise and value chain to participate in a product’s design, share updates, reuse data and streamline processes are becoming increasingly important to a successful innovation strategy. In addition to PLM, survey respondents cited supplier management, product requirements management, strategic R&D portfolio management, design & analysis and change and workflow process tools as instrumental to supporting new, more effective innovation processes.
Among the survey’s key findings:
- Since 2008, 55% of companies sought to increase R&D efficiency through such tactics as using IT to enhance collaboration.
- Half said increasing the rate of innovation is a top priority in 2011.
- Customer suggestions are the most important source of new product ideas.
- More than half of the companies said marketing, operations, sales and finance work with the R&D department.
- 55% said partners are an important source of ideas and innovation support.
- 43% said intellectual property protection is a challenge in working with external organizations.
The survey played up the importance of IT use and its connection with product innovation in other ways. While only one out of five survey respondents rated their companies’ evaluation of new product processes as “good,” among those organizations using technology like PLM, almost half of the senior executives put their product development processes in the “good” category. Conversely, businesses not using IT to monitor new product development-or are unhappy with the IT department’s support for it-were much more likely to report dissatisfaction with product innovation outcomes and a related impact on their overall revenues.
Alex Clemente, managing director of Harvard Business Review Analytic Services, said that successful product development will increasingly be defined by use of IT tools like PLM in a smarter, more collaborative way across geographies, multiple partners and different disciplines. Getting a high level of efficiency out of an R&D program-in other words, accomplishing more R&D with less funding-is critical now because innovation budgets aren’t surging. The report found that while most organizations say new product development and innovation are top priorities, the median R&D budget was slightly more than 4% of revenues in 2010 and that number is only expected to increase by less than 5%.
The Siemens PLM Software survey isn’t the only commissioned report playing up the role of information technology in innovation strategies. Hewlett-Packard recently released its own study highlighting IT’s burgeoning role in innovation strategies. According to the HP study, 79% of business executives and their public sector equivalents said that innovation was important to the future growth of their organizations. At the same time, more than three quarters of respondents identified limited funding as a challenge to their innovation efforts, while one out of two CEO respondents cited inadequate technology as a key innovation barrier.