Executive Briefings

Research and Development Spending Is Shifting From Products to Programming, Study Says

Throughout its nearly 180-year history, John Deere has been an innovation leader. Its first product was a polished-steel plow that outperformed existing tools. And over the decades, the company's research and development (R&D) efforts were aimed squarely at improving the mechanical and functional performance of its products.

Research and Development Spending Is Shifting From Products to Programming, Study Says

Today, Deere's iconic green machinery is recognized the world over for quality and durability. But over the last decade, the focus of the company's R&D has been shifting to software and service offerings.

“Our customers continue to expect the best equipment,” says Klaus Hoehn, vice president of advanced technology and engineering. “But on top of that, they want us to provide solutions that address the pain points they’re experiencing in their business.” Deere’s newest generation of corn planters not only run at twice the speed of previous models, but also feature monitors, sensors, and software that optimize the planting process and generate detailed computerized data about how and where seeds are sown.

Farmers can maximize their productivity during the shorter planting windows that new seed varieties demand, and increase their yields — while gaining a wealth of information to help them manage their operations more productively. To offer these kinds of solutions, Deere needed to significantly alter its mix of R&D resources. Over the last 10 years, Hoehn says, “we have grown software and data analytic resources significantly. It’s not hard for me to predict that we’ll have more software engineers than mechanical engineers at the company within the next five years.”

Most of the world’s major innovators are in the midst of the same transformational journey. R&D is shifting more and more toward developing software and services. Software increasingly carries the burden of enabling product differentiation and adaptability, and enhancing customer experiences and outcomes. Services, offered along with or separately from physical products, now focus more on new customer needs, providing enhanced value and improved usability.

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Today, Deere's iconic green machinery is recognized the world over for quality and durability. But over the last decade, the focus of the company's R&D has been shifting to software and service offerings.

“Our customers continue to expect the best equipment,” says Klaus Hoehn, vice president of advanced technology and engineering. “But on top of that, they want us to provide solutions that address the pain points they’re experiencing in their business.” Deere’s newest generation of corn planters not only run at twice the speed of previous models, but also feature monitors, sensors, and software that optimize the planting process and generate detailed computerized data about how and where seeds are sown.

Farmers can maximize their productivity during the shorter planting windows that new seed varieties demand, and increase their yields — while gaining a wealth of information to help them manage their operations more productively. To offer these kinds of solutions, Deere needed to significantly alter its mix of R&D resources. Over the last 10 years, Hoehn says, “we have grown software and data analytic resources significantly. It’s not hard for me to predict that we’ll have more software engineers than mechanical engineers at the company within the next five years.”

Most of the world’s major innovators are in the midst of the same transformational journey. R&D is shifting more and more toward developing software and services. Software increasingly carries the burden of enabling product differentiation and adaptability, and enhancing customer experiences and outcomes. Services, offered along with or separately from physical products, now focus more on new customer needs, providing enhanced value and improved usability.

Read Full Article

Research and Development Spending Is Shifting From Products to Programming, Study Says