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The world’s top corporations specialising in software and the internet, and computing and electronics, resisted cutting their R&D spending upon first sight of the recession. Leading firms in the two sectors, which collectively account for more than a third of the global R&D spend measured, last year grew their investments in new innovations. Assuming they operate globally, IT consultants at the Management Consultancies Association will embrace the fresh findings, from management experts Booze and Company. The UK-based association has urged companies to “look beyond the immediate economic crisis” when setting their capital expenditure for research and development. According to the findings, software/internet leaders heeded this warning, as eight of the 10 biggest R&D spenders in the sector invested more last year than in 2007. In contrast to firms in the automotive, aerospace and defences industries, those leading the software and internet sector have clearly “seen the recession as an opportunity.” Reflecting on their Global Innovation 1,000 index, Booze and Co added that R&D budgets in computing and electronics followed suit, having crept up by more than four per cent in 2008. Overall, more than two-thirds of all the 1,000 companies polled held R&D spend steady or increased it, despite more than a third reporting falling net incomes over the same period. This indicates that while the downturn forced even cutting-edge firms to think more carefully about budgeting for R&D, they have made “smart bets” in the hope that these pay dividends in the upturn. Out of the 1,000 companies, which increased R&D budgets 5.7 per cent to $532billion (£325bn), about 70 per cent are currently adjusting their innovation strategy to fit better with customer needs. And almost half are improving processes to change R&D spend during the downturn, including prioritising high-growth areas, while a similar number claim to be better at killing bad projects. “The recession has had a noticeable, but relatively mild, effect on R&D spending thus far,” Booze and Co said. “Given the weak growth in both overall sales and net income, it’s no surprise that companies are spending somewhat more cautiously on innovation. “But if that means the downturn is forcing companies to spend those innovation dollars more effectively, that’s all for the better.” Telecoms reported the second smallest growth increase in R&D spending – just 1.4 per cent (to $9bn), slightly ahead of the 0.9 per cent injection by chemicals and energy companies. Aerospace and Defence was the only industry to cut the budget for R&D last year, down 2.3 percent to $22billion. “Reducing efforts on innovation would be similar to unilateral disarmament in wartime,” said Barry Jaruzelski, partner at Booz & Co. “Now is an opportune time to build advantage over competitors, especially weaker ones that may have to skimp on R&D for financial reasons.” Oct 29, 2009 Email this article Printer friendly page Previous Page
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