At OPEXEngine, we continue to bang the drum on the importance for business and finance leaders to measure and benchmark the return on R&D spend. We encourage all SaaS companies to do a simple calculation of their R&D ROI:
Divide last year’s R&D expense into this year’s change in revenue
(End of 2022 revenue / ARR) – (Start of 2022 revenue / ARR)
2021 R&D expense
R&D ROI simply shows you how many dollars of revenue growth you’ve generated for every dollar that you spent on R&D last year. Then compare it to your peers to see if you are getting the return that you want or expect from your R&D investment. Meanwhile, our peers at Bain & Company have been working with the leading tech companies to improve R&D performance. We share here Bain & Company’s latest report on R&D and the state of R&D spending, outsourcing, talent management and how innovation during a recession can help talented R&D organizations pull ahead of the competition. Click to read the full Bain and Company article here.