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| Services overview |
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| For users |
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| Cambashi ezine |
|
Sep 2005 issue May 2005 issue |
| e-Xpertise in Industry September 2005 | 
ezine print version |
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Hot Topic: Profitable R&D? There is a "golden rule" for companies developing and selling industrial software packages. After the start-up phase, they must manage their business model so that development spend is about one sixth of revenues. If they do so, then they can enjoy profitable long term growth. We've studied these companies for over 20 years and there are few exceptions, all of which have specific explanations, such as the symbiotic relationship between Dassault Systèmes and IBM. Many software companies start as technology companies and their senior staff as technologists. It is natural that, when money comes in, they spend it on software development. Many proudly boast on their websites that they spend 40% of revenue on development, or that they have so many software engineers. However, this can lead to technology push rather than customer satisfaction and demand pull. It is difficult to break this cycle, but there is one way, at least for those companies that develop within the Europe. In all the arguments about the European budget over the last six months, one fact got little attention: there is a pot of money to encourage software development in Europe - the latest call allocates €638m. The mechanisms and details are beyond this short article but can be found at www.cordis.lu. European ownership of the business is not a criteria, it is development and jobs in Europe that matter. In fact, similar arrangements exist in North America and Japan, but these are much more difficult for non-domestic firms to harness. A key criterion is that the development is a consortium of several distinct organisations, perhaps a customer, a software development firm, and a university. These arrangements are not
for everyone. There is an overhead of elapsed time and bureaucracy
in both the application and co-operation during the project. However,
for those trying to correct their business model it can help to
achieve that vital balance between development and profit.
Also in this issue . . . .
Cambashi researches best practice and assists IT suppliers in best practice implementation. For more information on Cambashi services please email info@cambashi.com To subscribe: send an email with the word "subscribe" in the subject line to : ezine@cambashi.com © Copyright 2005 Cambashi Ltd |
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