SPENDING PRIORITIES
Balance seems to be the operative word for weighing R&D spending against generating a profit. “We are careful to balance cash flow and revenue, while making sure we can support R&D and engineering and customer support,” said Dick Salzman, VP of Marketing for Keeneo. “ROI for R&D is always weighed as to short- and long-term ability to turn R&D into sellable products and features.”
Several considerations are taken into account for budget decisions. “Barix dynamically controls spending depending on quarterly developments,” Rietschel said. Market trends are also noted at trade shows for product developments. However, customer input is key for Barix. “When we see that interest for a certain area, product or feature pops up in our inquiries, we take a closer look and consider pushing funds into that direction,” Rietschel said.
In response to customer demand, Fulcrum Biometrics developed a fingerprint scanner that operates as an accessory to smart phones and tablets. “Our concept is based on our channels and what they want,” Nosker said. “We have a very sustainable business model and R&D expenses will never get so big that a less-thansuccessful product launch will put the company at serious risk. My bottom line is sustainability.”
While some companies are able to raise venture capital, not all manufacturers can depend on investors to fund R&D. Some corporations can afford to acquire start-ups to fill portfolio gaps, but ROI is not instant. For Arecont Vision, it measures ROI related to R&D in terms of its ability to develop solutions that meet and exceed market demands in a timely manner, said Becky Zhou, Sales Director for APAC.
Israeli alarm vendor Visonic boosted its R&D investment. “We took advantage of the slowdown in the market activity to enhance and accelerate the introduction of new technologies and innovative solutions,” said Amir Gefen, VP of R&D for Visonic.
CATERING TO MANUFACTURER NEEDS
Component suppliers measure ROI by different benchmarks. “When I see a customer with a leading product designed with TI components, this is what I see as ROI,” Clocher said. “We are integrating and innovating on the silicon, or the IC itself, so that affects the trends of the market and brings innovation to customers. This is where we put our investment to provide the end user with a platform that makes them competitive and differentiated on the market.”
The component perspective certainly requires the latest R&D, but that innovation translates into how other people interpret it. “As a technology company, we don't have a product road map,” said Alessandro Gasparini, Senior Sales and Marketing VP and Chief Commercial Officer of ImmerVision.
The company licenses a 360-degree panomorph lens technology and dewarping software, but the lenses themselves are ground by third-party lens suppliers such as Fujinon, Gasparini said.
R&D TARGETS
Once R&D funds have been allocated, the next step is to determine where the money goes. While funds may go toward a completely new product line, integration with third-party vendors also requires R&D resources. If a company slows product launches, its R&D team may be working on smoother integration.
For Visonic, its R&D projects involve integration of its solutions with central monitoring station platforms, wireless home automation solutions and home security products by other manufacturers, Gefen said.
Israeli video synopsis pioneer BriefCam divides its R&D team into two. One responds to issues in the field, such as integrating with VMS platforms or different languages, while the other team develops ideas around its technology. “Our customers don't necessarily ask for them; we come up with new ideas we try to understand the directions in which the technology may develop,” said Dror Irani, CEO of BriefCam.
March Networks has a similar R&D structure. Its core team works on sustaining existing solutions, while the innovation team works on future technology. “R&D is protecting the existing customers in terms of what they are using,” said Fabrizio Colciago, CTO of March Networks. “We want to give them some kind of continuity. At the same time, we want to provide them the next step to go to the next level.”