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What's your beef - July 2009 |
CFO Update - July 2009
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In the present dynamic market environment, firms must continually strive to be ahead of the competition and to grab their market share. There is the perpetual race to revise their design and range of products. Innovation is the key to survival to meet changing customer preferences.
R&D has a special economic significance and hence, companies are willing to spend large amounts on the facilities with each passing day. Consequently, it has become an integral part of today’s industrial structure. Being a relatively nascent field, R&D as a structured department does not yet exist in all industries and sectors. It requires a large financial base and resources. Hence, the finance and R&D department find themselves on opposite ends of several strategic decisions in the firm.
We asked several finance professionals “What aspects of your Research & Development team get your blood boiling?”
The response was sector specific in nature. Some sectors like Media and few segments of IT believe that R&D is not a prime focus and can be achieved simply by keeping abreast of developments in the market.
Several finance professionals expressed their distaste over the research team’s narrow, theory based approach that need not necessarily have feasible practical implications. Unfortunately, owing to the large funding undertaken to devise the processes, their implementation becomes a must, even if it may not be in their best interests.
Another grievance against the R&D department is their inability to recognise time deadlines and the need for development projects to proceed on a time and cost schedule. Some people feel that the expenditure may not be justified in terms of contribution to productivity.
R&D usually operates in a grey zone with no defined targeted results. However, the R&Ds budget requests, without a commitment on returns, do not bode well with the finance department.
In addition, sufficient emphasis is not laid on the customer’s needs and requirements – a practice that will simultaneously increase productivity and reduce overall costs.
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1. Finance Manager
Written by Mahender Kumar, on 08-08-2009 03:38
These days R&D teams are tasked with deliverables and timelines and clearly understand the impact their work has on the competitiveness of the organisation. Many times it may be a matter of communicating effectively and making them realize the importance and impact.
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