The findings provide a rough guide to CEOs grappling with how seriously they need to take advances in software technology, which are allowing companies to enhance manufacturing processes, improve and connect existing products and mine customer data for trends and ideas.
They’re also good news for software and data engineers, who will be increasingly favored over workers with mechanical engineering skills.
Today, companies allocate more than half of their R&D spending to product-based offerings, but this is set to change as software capabilities improve, according to the Global Innovation 1000 Study by Strategy&, a strategic consulting division of PwC.
It based its findings on an investigation of the 1,000 public companies around the world that spent the most on R&D in the year to June 30. The proportion of spending dedicated to software and services in the most recent year was 59%, up from 54% in 2010, and is expected to rise to 63% by 2020.
Spending on product-based offerings fell to 41%, from 46% in 2010, and is expected to fall to 37% by 2020.
The shift is primarily being driven by changing customer expectations, Barry Jaruzelski, a principal at Strategy& said. But it’s also underpinned by “the supercharged pace of improvement in what software can do”, he added. Key capabilities include embedded software and sensors in products, cloud-based storage and the ability to connect products, customers and manufacturers via the Internet of Things.
And embracing digital R&D isn’t just about keeping up with the latest trends. It also appears to boost revenue.
Companies with faster revenue growth than key competitors spent 25% more of their R&D budget on software offerings, the research found.
Interestingly, the two companies that topped Strategy&’s list of R&D spenders, Volkswagen and Samsung, have both been the subject of costly scandals, a reminder that innovating successfully isn’t just about spending. The German auto company is still reeling from the revelation that it placed emissions-cheating software in cars, while Samsung this month was forced to kill off production of a smartphone prone to catching fire.
Rounding out the top five were Amazon, Google parent Alphabet and Intel.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
