Contact Center Solutions Featured Article

November 02, 2009

Good News: R&D Investment Up, Booz Finds

By David Sims


Okay, you wanted some good news, we have some good news: Global management consulting firm Booz & Company’s fifth annual analysis of global innovation spending finds that the world’s 1,000 largest publicly traded corporate research and development spenders increased spending on R&D in 2008.

Yes, this is in the face of a global economic downturn. If you're really looking to read the tea leaves you can see this as an affirming the importance of innovation to corporate strategy.

R&D outlays for these companies rose by 5.7 percent to $532 billion, a sizable sum almost equaling Alex Rodriguez's contract with the Yankees, even as sales were up only 6.5 percent. While the increase in 2008 R&D spend was less dramatic than 2007's gain of 10 percent, Booz analysts found, "it was just slightly less than the 7.1 percent global five-year compound annual growth rate for R&D."

It's not just deep spending, it's wide, as well: "Overall, more than two thirds of companies maintained or increased their R&D spending in 2008, despite more than a third, or 34 percent reporting that net income plummeted last year," according to the study. 

More than a quarter of companies decreased their R&D allocation in 2008, but we won't talk about them.

In a particularly striking metaphor Barry Jaruzelski, a partner at Booz & Company, who's obviously been reading a bit of Sun Tzu on the side, said, “Reducing efforts on innovation would be similar to unilateral disarmament in wartime. Now is an opportune time to build advantage over competitors, especially weaker ones that may have to skimp on R&D for financial reasons."

In another bit of news that bodes well, the study also found that according to senior managers and R&D directors seven in 10 companies are now adjusting their strategies to better capture changing customer requirements. 

And this'll shock you: No industry felt the pain more than auto, with nine out of the top 10 R&D spenders in the category cutting their innovation outlays in 2008.

Early this year, TeleCommunication Systems (News - Alert), a company that specializes in wireless data communications technology solutions, partnered with Booz Allen Hamilton (News - Alert) to support the United States Army Information Technology Agency, the technology component of the Office of the Administrative Secretary of the Army with "a broad range of information technology professional services and to meet future enterprise architecture requirements."


David Sims is a contributing editor for TMCnet. To read more of David’s articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Amy Tierney


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