Why do semiconductor organizations benchmark product development productivity?
Why do semiconductor organizations benchmark product development productivity? Two reasons. The first is obvious—to determine how their product development competitiveness compares against the industry. R&D prowess is a matter of long-term survival. Second, measuring their productivity enables reliable forecasting of engineering headcount requirements when planning new IC projects. Accurate forecasts equate to both on-time schedule performance and high schedule predictability. It's a matter of competitive advantage.
Creating consistently reliable project plans requires a solid grasp of the R&D organization's development productivity. That's because productivity dictates how many engineers a project needs to finish on time. Too few engineers and the project slips schedule—a common occurrence. Organizations measuring their productivity calculate exactly how many engineers projects need.
Quantifying productivity also enables organizations to create better product roadmaps. R&D managers calculate how many chips (across the target design complexity range) the organization can develop annually.
Organizations whose productivity is higher than the industry quickly find they're able to allocate fewer engineers per project than competitors. That yields a big competitive advantage—lower headcount translates to lower development cost. High productivity also means the R&D organization has additional resources that otherwise wouldn't be available.
They use those "additional" engineers in a number of ways. First, the organization typically develops more products than competitors. Second, it often develops products that have higher functionality/performance and therefore more value-add, which brings higher profit margins. Third, they frequently "overstaff" critical projects to reduce development time and time-to-market. Larger project teams almost always exhibit higher development throughput, or output per unit of time.
Lastly, they measure productivity to get greater visibility into the bottlenecks and inefficiencies in their development processes. That enables them to isolate and fix problems more quickly than competitors. As the saying goes, "you can't fix what you don't measure."
Organizations failing to rigorously benchmark their R&D performance often fool themselves into thinking their productivity is improving. It might be improving, but the question is whether it's outpacing the competition.
Semiconductor organizations ignoring productivity measurement and benchmarking do so at their peril. Most will eventually cease to exist because they consistently miss schedules and have fewer new products coming to market. Know any?
Ronald Collett is president & CEO of Numetrics Management Systems Inc.