This IDC Perspective explores the correlation between the cost of R&D, cost of goods sold, and revenue growth for almost 1,000 discrete product manufacturers across five industries. A strong correlation has been identified where higher engineering costs results in lower production costs (higher gross profits) and higher revenue growth. While the precise nature of this cause-effect relationship is beyond the scope of this document, there is enough evidence to provide specific recommendations for technology customers, vendors, and consultants.“Investing in engineering and R&D isn’t just a cost, it’s a strategic lever for financial success and market competitiveness. As manufacturers face increased competition and production costs escalate, it is important for them to invest in engineering and R&D, with an eye toward driving both revenue and profits,” said John Snow, research director, Product Innovation Strategies at IDC.
Executive Snapshot
Situation Overview
Product Success in a Volatile Economy
How Should the R&D Budget Be Invested?
Looking at the Data: Higher Engineering Budgets = Lower Production Cost
Looking at the Data: Higher Engineering Budgets = Higher Revenue Growth
The Power of Engineering to Reduce COGS — Tesla Example
Advice for the Technology Buyer
Technology Imperatives for the Engineering/R&D Budget
For Technology Vendors, Consultants, and Integrators
Learn More
Related Research
Methodology
Income Statement Data
Appendix: Comparing Five Industries’ Revenue, %CR&D, %COGS, and Growth Rates Across a Six-Year Span
Synopsis
Research Assistance
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.
Download eBook