Tag: Engineering Services

Engineering Services Providers Offering Significant Value in Quality Management | Market Insights™

QA in ES Dgtl sig value

Engineering Services providers are enabling enterprises to:
Reduce cost
Localize and gain access to new markets
Access expertise and mitigate risk through specialists
Adhere to complex regulatory policies and security standards
Improve efficiency and quality
Ensure speed-to-market
Overcome internal capacity constraints
Develop quality management as a strategic process

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Product Quality Management: You (Don’t Have To) Walk Alone | Sherpas in Blue Shirts

My most recent blog focused on why quality management (QM) is a critical contributor to enterprises’ ability to take great products to market. Now, let’s turn our attention to who can – indeed, perhaps should – perform product QM work for organizations.

Viewing QM activities as a core competency, enterprises have traditionally conducted them in-house. In some cases, they’ve engaged their global in-house centers (GICs) to handle some aspects of QM in order to reap the benefits of factors such as talent access and cost arbitrage, while still retaining control over issues such as IP protection and close integration with the parent entity, which is key for product design and development.

However, the advent of innovative engagement models (e.g., outcome-based pricing, collaborative IP, etc.), the pervasiveness of digital technologies, and advancements in data and IP security measures are instilling confidence among enterprises to partner with third-party service providers for their product QM activities. Recent investments by service providers in building IP and enhancing their capabilities in this space – spurred in part by slowing growth in more traditional ITO and BPO areas – is strengthening their case with enterprises. Indeed, Everest Group research shows that global sourcing in the QM space will grow at an impressive 16 to 18 percent through 2020 – higher than the growth expected in the global sourcing space for overall engineering services.

Following are some of the ways in which third-party service providers can deliver product QM value to clients.

 

Engineering Services, Product Quality Management, Quality Management, Quality Management Services

 

Of course, outsourcing product QM does come with risks and challenges. Factors that enterprises should consider when weighing a product QM outsourcing decision include:

 

Engineering Services, Product Quality Management, Quality Management, Quality Management Services

 

When evaluating a particular outsourcing service provider for product QM work, enterprises should evaluate factors including talent availability, infrastructure availability, delivery capabilities, ability to scale up/down, innovation-focus, expertise in digital themes, inclination towards outcome-based business models, and client satisfaction.

Everest Group has conducted deep-dive research on the global sourcing landscape in the product engineering space, covering all the activities involved in the validation, verification, and testing of both hardware and software across the product lifecycle. We have studied twenty-three of the leading engineering service providers in the QM services space, and have analyzed them on parameters including capabilities, scale and scope of services, and IP/investments. Following is a sneak peek into our relative analysis of these players based on their engineering services play, revenue and revenue growth, and coverage of QM services.

 

Engineering Services, Product Quality Management, Quality Management, Quality Management Services

 

Please click here to read a preview of our report, “Identifying the Right Partners for Quality Management in the Engineering Services Industry – Service Provider Landscape.”

Quality Management in Product Engineering: You Just Can’t Afford to Ignore It | Sherpas in Blue Shirts

What do products like the Samsung Galaxy Note 7, the Toyota Corolla/Yaris (in 2016), and the Fitbit Force (in 2016) have in common? All were potentially great products that cost their companies dearly – in both image and money – due to faulty performance resulting from poor quality management.

Enterprises have come to realize the significance of quality as an indispensable ingredient for creating impactful products. They not only view product quality management as a cost-saving measure (preventing the costs of rework, wastage, regulatory breaches, warranties, product recalls, etc.) but also as a way of accelerating product launches and creating a differentiating value proposition in increasingly commoditizing markets. Given the vast intermediation of product supply chains among vendors, technology partners, assembly partners, and logistic partners in today’s operating environment, the need for quality management activities is even more pronounced as products flow from one stakeholder to another.

Yet, despite acknowledging the positive impact of product quality management, many enterprises grapple with fully integrating, and regularly upgrading, their quality management initiatives across business activities. Some reasons for this are:Quality Management, Quality Management Services, Product Quality Management

To counter these issues, enterprise stakeholders need to commit to quality management as seriously as their other business mandates (innovation, margins, etc.) They should also be open to the idea of partnering with external entities and service providers in areas where their internal capabilities fall short on yielding the desired levels of quality standards.

Product Quality Management in the Digital World

Digital themes like mobility, IoT, and data analytics are enabling enterprises to build new capabilities in their products and enhance the customer experience. The advent of IoT and automation has also led to a transformation of production processes, wherein enterprises can build their products more smartly and with shorter turnaround times.

However, many enterprises face initial failures in bringing robust digital products to market because they tend to focus only on developing digital products, completely ignoring the need to adapt the underlying processes to ensure the reliability and quality of these products. This is the same as having a Euro Standard VII vehicle engine ready for market, but not having focused one bit on developing compatible fuels. We all can guess how successful (at least in the near term) these engines will be.

Digitization has thus ushered in a new era of product quality management, where capabilities need to be enhanced for testing more sophisticated products while factoring in for data management and security. Further, advancement and automation of production processes is creating the need for redefining metrics and KPIs for quality management.

So, what immediate steps should enterprises take to develop digital-ready and digitally-enabled quality management activities? They include:Product Quality Management, Quality Management, Quality Management Services

Everest Group has conducted deep-dive research on quality management services in the product engineering space, covering all activities that are involved in the validation, verification, and testing of products (hardware or software) across the product lifecycle. The research covers the market landscape of quality management services, and delves into the role of digital technology themes in reshaping the way enterprises look at their product quality management efforts. Read a preview of our report, “In Pursuit of Product Excellence: Quality Management in the Engineering Services Industry.”

Reimagining Global Engineering Services – a Hierarchy of Needs | Sherpas in Blue Shirts

The engineering services industry is one of the most interesting segments in the global services landscape today.

Compared to IT and business process services, the global engineering services market is much smaller, at approximately US$ 90 billion. It is also growing much faster, at approximately 15 percent per year.

The bulk of the growth is going to be driven by a need to reimagine global sourcing of engineering services, in line with the progression of enterprise digitalization strategies.

Everest Group believes there are four distinct objectives behind digital engineering strategies:

Hierarchy of Digital Engineering Services Demand

Global Sourcing of Digital Engineering Services

  1. Crushing spend: Arguably, there’s nothing new about leveraging a global sourcing model to reduce spend. However, the optimization levers go well beyond arbitrage, extending into the realms of analytics, the IoT, and automation. We are beginning to see enterprises contracting not just for cost savings, but for specific details around how cost savings are being achieved (e.g., success of automation projects, and ongoing commitment for automation.) Digitalization can often achieve breakthrough spend reduction outcomes (e.g., maintenance of oil refineries leveraging IoT technologies), well beyond the traditional arbitrage levers.
  2. Transforming experience in plants or mines: The experience is typically optimized across a bunch of typical considerations such as safety and accessibility, speed, and convenience. For instance, using design thinking principles in plant assembly line design, IoT implementation in mines for health and safety related use cases and medical device companies are using digitally reimagined techniques to create improved patient care outcomes.
  3. Accelerating product innovation: Sophisticated enterprises realize they can’t do it well enough or fast enough unless they embrace a broader innovation ecosystem. Globalization is a major driver of demand, as is the need to accelerate and contextualize cross-industry innovation. For instance, automotive OEMs realize they need to embrace a broader ecosystem of talent and technology providers to create differentiated infotainment offerings.</>li
  4. Disrupting the business model: Business model disruption comes about as a natural progression through the first three levels of the hierarchy, coupled with a disruptive idea. For instance, automotive companies the world over are waking up to the potential of a new business model that is built on asset sharing as opposed to asset ownership. Utility companies are creating parallel energy sharing models using blockchain. Medical diagnostic companies are reimagining their business model by experimenting to service-led, as-a-service models.

Everest Group recommends enterprises follow a “3E” approach to shaping their engineering services global sourcing strategy:

  • Evaluate the current state of your digital engineering journey against the strategic objectives of efficiency, experience, innovation, or disruption. The way you measure success in the short term should derive from where you are, and your longer-term strategy should stem from a broader industry vision.
  • Evolve the ER&D sourcing model in line with your aspirations. If you are trying to drive strategic business impact at the higher reaches of digital engineering maturity, you should be able to use objective data to benchmark the impact on business processes. For instance, your ER&D sourcing models should be linked with improvements in supply chain metrics, experience, accelerated time to market, or an increase in digital-led revenues.
  • Enrich the sources of engineering and R&D innovation by engaging with service providers, start-ups, academia, designers, social scientists, etc. Such an ecosystem should transcend the traditional enterprise-partner model, and requires a central orchestration function for scalability.

Visit our engineering services page for more insights on engineering services global sourcing strategies.

New Paradigm in ER&D Services: Convergence of Engineering and Technology – Part 2 | Sherpas in Blue Shirts

In New Paradigm in ER&D Services: Convergence of Engineering and Technology – Part 1, we talked about the emerging trend of convergence of engineering services and new technologies, and why it is important for enterprises to deliver an enhanced customer experience. Now, let’s turn our attention to the steps and measures enterprises and service providers are taking to tap into the trend and enhance their value proposition.

Engineering Services and Technology ER&D

  1. Access talent with hybrid (technology + domain + design) skills: Service providers and enterprises are increasingly looking at hiring people not just with the right domain knowledge, but also with cross-functional expertise. There is heightened demand for engineers with niche technology skills, such as IoT and artificial intelligence. For instance, Altran, one of the world’s largest engineering service providers by revenue, has an innovative way of recruiting talent. It filters talent through case studies based on its own real-time projects, such as “connected car” and Solar Impulse . This enables it to select candidates who have both the right skill sets and an innovative mindset, which has become critical for people in the industry.
  2. Capitalize on data to drive business value: New technologies and social media have led to a gush in the amount of consumer data that can be tracked and mined to deliver a better customer experience. Players in the engineering services space are realizing the value of customer data, and taking steps to build infrastructure for analyzing it. For example, ALTEN Calsoft Labs, a global engineering service provider, recently announced that it will acquire ASM Technologies Ltd’s software business division to augment its cloud, analytics and mobility capabilities.
  3. Reimagine product development: With shrinking product lifecycles and ever-changing customer demands, the focus is on providing end-to-end solutions rather than just point solutions. Service providers are partnering with clients to deliver solutions in an as-a-service model. Customer expectations are putting pressures on product lifecycles, and enterprises are trying to innovate and create newer and smarter products at warp speed.
  4. Move towards co-innovation model: The shift in technology complexity and consumer demand for a “connected” ecosystem is increasing collaboration between enterprises and providers for innovation and new product development. For example, Jaguar Land Rover is partnering with Altran to develop and market a unique software platform for vehicle internet connectivity, driver assistance systems, autonomous driving, and analytics. The partnership is aimed at delivering increased customer value by combining Jaguar’s automotive experience and Altran’s expertise in providing solutions for the automotive sector.
  5. Drive efficiencies in design to deliver cost savings: New technologies and methodologies in software development and testing are transforming the product development landscape for enterprises and they are increasingly adopting automation tools to accelerate time-to-market for products. For example, Wipro has a defined test automation framework (Wipro Endur Test Automation Framework) that can help clients reduce overall TCO of test automation by as much as 45 percent.

Implications for the industry
So what does this all mean for the ER&D services industry outlook, and for players in the domain? As it becomes increasingly crucial for enterprises and service providers to gain new capabilities in engineering and technology, there will be increased merger, acquisition, and partnership activity. Enterprises will look at partnering with niche technology firms or innovative startups for new product development. Service providers will pursue targeted acquisitions, and try to strengthen their value proposition for clients by increasing investment and focus on the segment. It will be exciting to see what happens in this space in the next 5-ten years.

For more insights and information on the ER&D services industry, please refer to our latest report, “The Evolving Demand Paradigm in the Engineering and Research and Development (ER&D) Services Industry.”

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