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What Is Research and Development: R&D in Software Product Development

How would you describe what determines the success of the company? The answer is simple: innovation, technology, and quality define the company’s future. Primarily, you need an idea that will solve a particular problem and meet customers’ needs. The idea has to be transformed into a concept with a clear communication message for the target audience. The above innovation, technology, and quality are aimed to reflect customer satisfaction and product durability.

This is the phase where R&D is about to enter the stage. R&D stands for Research and Development and carries the essential function of a company’s future success. Every company is interested in developing innovations and leading software products. If you question the primary importance of research and development, you may first be interested to hear the numbers the leading enterprises spend on research and development activities. Spoiler: they spend billions of dollars on R&D to the newest, most highly regarded products.

Such big countries as the US, China, Japan, and Germany spend more than $100 billion annually on R&D purposes. To give you an actual example, Amazon budgets approximately $22.6 billion on innovation and improvements per year; Volkswagen estimates R&D costs at $15.8 billion… The list of world-renowned brands spending an immersive budget on R&D can go on and on, but you have already understood the seriousness of the topic. Are you willing to join the list? Get comfortable and proceed reading as this article will present you with detailed information on the key features and importance of Research and Development, especially in software product development.

What Is R&D

Research and development is undoubtedly a significant tool for growing the business. In a nutshell, R&D stands for generating new knowledge. Companies undertake R&D activities focused on innovations to develop new products or services, improve existing ones, or add features. The primary purpose of research and development activities is to produce products that advance and elevate its current product line.

R&D is not supposed to generate immediate results. In the long run, having research and development initiatives implemented properly, the company expects to stay competitive in the market. Although, thoroughly carried out work may give rise to breakthrough discoveries and, as a result, open new markets or lead the field. Undeniably, these lasting benefits will bring new customers and talents and boost the company’s growth.

Difference Between R&D and Software Development

Software development is built on developing new products and services or taking those already existent to a new level. To be specific: innovation is what the whole industry stands on. So, R&D and software development are aimed at the same results. However, it is not correct to think they are the same. Let’s dig deeper into the differences between research and development in the IT sector and software development.

  • R&D provides research results; software development comes up with working software.
  • Research and development is an unstoppable process with no deadline. Developing a product implies strict timeframes.
  • R&D implies experiments with ideas and technologies; they are not necessarily a product. Meanwhile, software development presupposed work on a specific product.
  • Research and development is concentrated on coming up with new solutions for a specific problem while software development resolves a particular business problem with a product.
  • Research and development does not imply direct and instant profits. Software is one of the most profitable industries in the world and each delivered product is expected to generate revenue for its stakeholders.

Reasons to Apply R&D

There is no need to ponder why research and development are important. Yet, we have come up with a list of conclusive arguments for the necessity of implementing R&D into your business processes. The most common reasons for introducing R&D into the company are:

  • Creating new products and implementing new features to existing ones
  • Searching for new markets to introduce the products
  • Increasing share of the market
  • Following current trends in the field
  • Maintaining the relevance of the product
  • Modifying the present product range
  • Changing the technology and introducing innovations
  • Improving and updating business strategy and processes

R&D has to be implemented in the company’s strategy. Hence, it cannot be limited to any particular department and can affect any process, whether development, marketing, or finances. Although it may take much time and effort to implement research and development tools, the result can outstand the expectations.

Main Research and Development Systems

Despite commonly positive outcomes of R&D activities, many companies tend to omit innovation development as they fear that research and development are uncertain and unreliable in terms of revenues or timeline.

Typically, the vagueness associated with development and research is based on the fact that specialists often do not have a deep understanding of approaches and research systems. Let us introduce you to three central systems: basic research, applied research, and development.

Basic research

The research begins with inquiring about the fundamental understanding of the product and the qualities it possesses. Hence, do not expect commercial or practical use of it.

Applied research

Typically, this type of system is related straight to ​IT research and development​. Applied research is focused on finding the possibilities to satisfy customer requirements. Researchers and scientists facilitate the development of new products. As a result, the R&D in the software​ field provides companies with the enhancement of current products and the creation of new ones.


This system is focused on studying the actual product and ways to improve it. Production, materials, and design of new ideas for the product are part of the process. The development phase explores and generates ideas for the project and then uses the research to implement its core ideas to produce the final product.

How to Benefit from R&D

The importance of R&D cannot be ignored as it is a crucial tool for companies to stay competitive. To say the least, it helps companies to create innovative products that are not present on the market yet, which helps bypass the competitors and leads to improved productivity. Increased income would be the obvious result. In a broader context, R&D can allow a company to foresee market trends or audience demands and stay ahead of the competition. research and development importance in a company’s future is invaluable. No business that strives for market dominance can ignore it.

  • Proper research and development are aimed to create advanced and innovative products as well as add new features to current products. When implementing R&D, the company is not limited with deadlines and can connect various departments working on the same result.
  • Overall R&D direction is supposed to help organizations to gain knowledge on how to plan, design, develop, and modify the company’s products, services, processes, technologies, even strategic plans.
  • With the help of R&D, a company can change the way people work or provide them with some product or feature they have never used before. An enterprise’s efforts will most likely result in an instant increase in market share.
  • Keeping up with market trends may be a complex task. Research and development is here to help a business stay relevant. An in-house or outsourced R&D team is supposed to keep future trends in mind and presuppose potential customer needs by producing the concepts of visionary products.

Marketing strategies have to match with R&D purposes. With all the departments working together on a shared mission, companies can create successful campaigns before releasing a product or feature.

What Happens When Companies Don’t Invest in R&D?

If the list of the benefits is not persuasive enough, shall we imagine a business that does not concentrate on innovating its products? The research, published in the Harvard Business Review, reveals the topic. The study sums up the following stats:

  • The companies are likely not to invest in Research and Development as they are afraid that developers may quit and look for better opportunities or start their own companies. The lack of trust in their prominent employees leads to acquiring firms that (they believe) have the technology the companies need.
  • Bigger companies tend to invest more in R&D than small businesses. As a result, they have a higher return on R&D investments.
  • Only 25% of small startups supported by venture capital return the investments despite they tend to receive more public attention on their research and development success.

The conclusion is that there is no real alternative to your own R&D, and investing in this is a solid business strategy. Understanding that technology downstream cannot be simply bought forces companies to be more productive with in-house R&D investment. It brings about greater productivity, more rapid time to market with new products, higher profits, and growth, and ultimately more than pays for itself. Whether this is accomplished through in-house R&D staff or the use of contracted expertise, it does not matter. The goal is to gain the leading R&D edge in one’s sector.

Software R&D: Present and Future

In the modern day, research and development shifts from traditional labs to two- or three-day hackathons. The same rules are applied for both big enterprises such as Apple, Microsoft, Facebook, etc., and small startup companies. According to the study, leading organizations tend to spend less on developing innovative physical products (for example, gadgets), and instead, they invest more in software and IT services. Meanwhile, internal, local, or international hackathons are a great tool to embrace both hardware and software research and development potential and gather the world-known developers, innovators, and other experts in one place. Such events demand concentrated research, development, and implementation of a relevant solution within a strict deadline. Undoubtedly, companies that pioneer in specific trends and deliver genuine market-changing solutions will establish their leadership in their industries.

Growth with R&D Solutions

Once you have aimed to enhance your business results, it will be the duty of a Chief Technology Officer and R&D manager to conduct initial research of the current market situation, including competition, the needs and wishes of clients, and potential customers. The expected result would be the concept of a new software product. The following scope of work has to concentrate on the primary features of the product and later on proceed to the processes: project management methodologies, architecture, design, development, testing, debugging, and, finally, its launch.

If you lack the in-house R&D expertise, then it is time to contact Smart Tek. We have Research & Development expertise and provide end-to-end R&D services. R&D services are the first milestone to achieve during the development of a market-leading product. We at Smart Tek are constantly looking at new trends, technologies, innovations to contribute to our partners’ businesses by providing high-end solutions. To find out more about our services, please text us here.

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