Guest column: Gaining an R&D advantage

THE CLOUD, ERP and business applications market is competitive and was traditionally dominated by a few players with a slew of smaller local players. However, in the past few years we have seen disruption in the market by the entrance of a number of new providers with business models centred on leveraging the latest cloud technologies and SaaS product offerings.

In order to grab these opportunities, we are implementing internal changes. The pace of change in technology, requirements from users and competitive landscape is unrelenting. We need continual innovation to stay ahead, so investment in our research and development (R&D) capabilities is a critical requirement.

This raises the perennial question: How to do more for less? We analysed the set-up of our R&D operations in order to understand how we could increase our levels of development and look at maintaining or reducing costs. We concluded the current arrangement of resources and capability based in a fragmented local arrangement was sub-optimal in two key respects: it reduced the level of productivity due to lack of scale and proximity, and it was centred in higher-cost geographies.

The solution was simple. By centralising the function in lower-cost regions and locating staff in larger development centres, we would bring in new talent with relevant skills, foster innovation, and reduce costs. We began to look at a range of alternative models to R&D, including insourcing, outsourcing and a combination. In the end, we decided it was important to keep the majority of our core business in house while adopting a two-centre strategy for business continuity.

The next step was a shortlist. We listed some criteria on which international locations were ranked. Shortlisted locations and government institutions were visited to see what assistance would be available. We had to understand what our commitments would need to be in terms of investment. The local development organisations also facilitated visits to similar sites so we could learn from their experiences.

It is crucial for the finance team to be part of this process. To help establish the base line of the “as is” situation and then work with the R&D functional leaders to understand the business requirements, evaluate the options of the “to be”, and ensure all costs, benefits and risks have been assessed. It is also important to visit the locations not just to understand the investment, but also get a feeling for the area. Taking these considerations into account we decided on Granada in Spain and Wroclaw in Poland – in both locations the business already had a presence and confidence in the quality of the staff and the deliverables.

R&D is not just about FTEs, statistics and financials. An innovative product offering is a consequence of the mind-set and capability of the staff; it is vital to become an employer of choice in the region so we attract and retain the best talent. To that end we have allocated investment in recruitment, on-boarding, attractive packages and training. We are looking at every detail, such as working with local development agencies and investing in employer brand awareness through public relations so prospective employees know about us – we want them to want to work for us.

We are also leveraging the skills of our highly talented R&D teams through formal knowledge transfer programmes to new employees. With the people in place, we are providing them with the infrastructure and technological tools to be the best they can be and deliver world-class products.

It has been hard work and the finance team has had a vital role to play, but it has also been worthwhile. To be the best in technology you must innovate, but do so at lower cost so savings are exponential and growth is sustained. Everything we have done in remodelling R&D has underpinned these objectives. I believe our careful investment in the best people and facilities will bear significant fruit. ?

Ray Leclercq is chief financial officer at UNIT4