BY RICH McANDREW
Chairman and Founder,
Zaiq Technologies Inc.,
Woburn, Mass.

Ahead of us is an opportunity to respond to fundamental shifts in the marketplace and put the foundation in place for sustained growth. One key component, as we look to the future, is a shift to strategic outsourcing of product development. Historically, outsourcing was wholly tactical, geared to the acquisition of additional resources. Today, mounting pressure on development costs, while maintaining time-to-market goals, requires us to rethink the outsourcing model.

Regardless of the industry, gone forever are the days of building up high internal cost structures without improving time-to-market. Instead, the gauge today and in the future will be: "Is this activity a core competency to my business? Can I acquire and retain this activity more cheaply in-house or out-of-house?"

Traditionally, functional verification has been relegated to the back burner in the product-planning process, even though by some estimates it can account for as much as 70 percent of a project's cost as well as determine when a product will ship. A new, more efficient product development model directly links the design and verification functions, employing processes, standards-based intellectual property and open tools that can dramatically affect time-to-market, product quality and development costs.

Two significant industry-wide changes have made this outsourcing model a reality. First, the emergence of widely available intellectual property (IP) based on emerging standards allows developers to buy, rather than make, components and software. Acquisition of third-party IP becomes even more cost-effective as the complexity of the IP increases. Today, commodity IP does not have a significant buy-vs.-make advantage, because the cost to acquire and integrate is about equal to the cost to design. Complex IP, by its very nature, is application-domain specific and thus has an improved buy-vs.-make advantage.

In addition, complex IP can be configured to the specific customer's requirements. Finally, because of performance requirements, complex IP can be made available in a hardened form increasing its value.

Second, the emergence of third-party providers whose core competencies differ from those of their customers is making outsourcing key to a company's competitive success. Strategic outsource providers focus on new types of configurable design and verification environments, allowing extensive reuse of design and verification IP. That dramatically improves product development efficiencies and can cut the 70 percent development cost in half.

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