the quest of helping companies achieve engineering excellence€¦ · the quest of helping...

50 Years of Growth, Innovation and Leadership

A Frost & Sullivan White Paper

Ronald Gruia, Principal Analyst

www.frost.com

The Quest of Helping Companies Achieve Engineering Excellence

http://www.frost.com

Frost & Sullivan

CONTENTS

INTRODUCTION ..................................................................................................................3

Examining Successful Engineering Companies ..................................................................3

The Relevance of Partners ..................................................................................................6

Delivering the Vision: How HCL Addresses the Challenges Impacting Companies ..........7

CASE STUDY: THALES AEROSPACE .................................................................................10

Thales-HCL History .............................................................................................................10

Thales In-Flight Entertainment Solutions ...........................................................................11

Reasons for Partnering with HCL .......................................................................................11

Benefits of Partnership to Thales Aerospace ......................................................................12

CONCLUSIONS ....................................................................................................................12

ABOUT THE AUTHOR .........................................................................................................13

ABOUT FROST & SULLIVAN .............................................................................................14


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INTRODUCTION

Examining Successful Engineering Companies

Engineering companies historically thought about markets in terms of the offerings they sell. The key goal was always to develop a solid product that pushed the innovation envelope, helping a particular firm to differentiate itself vis-à-vis its competitors via some unique functionality.

But eventually, this model no longer functioned well, as breakthroughs brought upon significant R&D expenditures dramatically increased the rate of change in technology. The rapid degree in innovation coupled with increased competition also contributed to a shorter level of sustainability of a new product feature; eventually, other competitors would incorporate that in a new release in a shorter period of time.

The faster rate of technological change also meant that engineering companies had to shorten their product cycles. In addition, while hardware became more and more commoditized, the value started shifting toward software and services, where companies could maintain significant margins and innovate faster and more cost-effectively. As a result, engineering firms also began re-evaluating their product life cycle, shortening their processes. Not surprisingly, the old hardware-centric “gate” model was replaced by a shorter, more software-centric and time-effective “alpha/beta” software model. By increasing the efficiency of its operations, an engineering firm can deliver better products with fewer defects in a more timely fashion, while achieving a faster certification.

As Peter Drucker pointed out in his research , “What the customer buys and considers value is never a product. It is always utility—that is, what a product does for him.” Customers seek particular outcomes, and they engage in activities to achieve them. By increasing the frequency of innovation, engineering companies can achieve Drucker’s vision of going above and beyond the product, by creating an enhanced “quality of experience” for its customers. As Apple demonstrated with its iPhone4 release, the notion of “incremental innovation” can also serve to deliver product success without the need to introduce cutting-edge features compared to its previous product release. That incremental innovation can go a long way in determining a product’s success if it resonates well with the customer, much more so than some leading-edge innovation that could, for instance, be sometimes too complex for an end user to grasp.

1 Drucker, P.F. “Management: Tasks, Responsibilities, Practices” (New York: Harper & Row, 1973).


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A closer examination of the key elements that distinguish successful engineering companies reveals that their success can be mainly attributed to three key factors summarized in the table below:

Figure 1- Key Success Factors of Enginnering Companies

Success Factor Description Benefit

Product Agility/Velocity

Ability to introduce new products/services in a faster way

• Shorter TTM (time to market)

• Better competitive positioning

• Faster response to competitive threats of new entrants

Operational Efficiency

Ability to streamline and optimize overall product life cycle, including testing, product quality and compliance

• Better automation

• Fewer product defects

• Productivity enhancement

• Obtaining certification faster

InnovationAbility to think “outside the box” and to keep up with emerging technologies

• Deliver new product features/functions that help company stand out versus competition

• Become aware of new potentially disruptive technologies

Source: Frost & Sullivan

One alternative is to have the above success factors be further enhanced organically, via the adoption of new paradigms, such as introducing an agile development process, adopting a corporate CQI (Continuous Quality Improvement) program, or establishing an innovation program geared toward creating new product ideas. However, some enterprises often find it difficult to develop these factors internally because that entails skills, resources, and technology they do not already have in-house. Developing these technology systems and business models requires an understanding of universal industry issues, how customers might use a potential solution in their workflow, and the economic implications of adopting the new solution. Additionally, companies must have extensive know-how in monetizing solutions, which is a very different challenge from traditional revenue models.

By establishing an R&D partnership approach, a company can augment its intellectual capital, bring new perspectives to the process, reduce costs, and, when the partner is located in a

2 A Buyer’s Guide to the Innovation Bazaar, Harvard Business Review, June 2007



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previously untapped overseas market, open access to that market. Not surprisingly, in order to tackle the innovation gap, most firms are beginning to seek help outside their organizations, be that innovation of a raw idea or a market-ready product. Mohan Sawhney, the renowned McCormick Tribune Professor of Technology at Northwestern University, explored the methods for sourcing innovation outside an organization in one of his papers in which he concluded that a continuum of solutions can address this need.

Each external solution brings in a set of tradeoffs in terms of cost, risk, breadth of choice and time to market. For instance, raw ideas offer the lowest cost, but are highly risky and take the longest to come to fruition. Conversely, market-ready products are generally lower in risk and are faster to come to market, but entail much higher costs. In the middle, a market-ready idea offers a tradeoff to the two extremes, but it might not offer the same high reach of a raw idea or low risk of a market-ready product. This tradeoff is depicted in the next figure:

Figure 2 – The Innovation Bazaar Approach to External Innovation Sourcing

The External Sourcing Continuum

Companies can shop for innovation in various stages of development- from raw ideas to market-ready products-withthe help of a variety of intermediaries. At the two ends of the continuum, however, there are trade-offs: Sourcing rawideas costs less and allows a company to increase its reach (the number of options it is able to consider) but involveshighter risk and a longer time to market. The reverse is true for acquiring market-ready products. The middle of the continuum offers balance among the four factors.

-Licensing Agent-Patent Broker-Electronic R&D Marketplace-Idea Scout-Invention Capitalist

-Innovation Capitalist -Internal Business Incubator-External Business Incubator-Venture Capitalist

RAWIDEAS

MARKET-READY

PRODUCTS

INNOVATION INTERMEDIARIES

HIGH

LOW

HIGH

LOW

MARKET-READYIDEAS

Source: Frost & Sullivan, adapted from Prof. Sawhney’s HBR article

3 Erhun, F., Gonçalves, P., and Hopman, J. The Art of Managing New Product Transitions, MIT Sloan Management Review, April 1, 2007.


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Similar tradeoffs exist in the other two areas. For instance, it is not surprising to witness that the company that is first to market with a viable new product or service holds a key advantage over latecomers, who have to rush to catch up. Many companies are faced with the challenge of having to do the balancing act of “being first” versus “being ready.”

In addition, achieving a better operational efficiency can also be a challenge, as the cost-benefit relationship between protecting proprietary resources and having efficient operations has to be examined deeper. In addition, there is always the tradeoff between streamlined operations and superior service for the more resource constrained-type firms that need to judiciously allocate their resources.

The Relevance of Partners

Given the need to achieve excellence and the complexity involved in striking a balance between competing alternatives associated with each success factor, it is not surprising to see an increased need for an external trusted advisor that can assist companies in navigating through those decision points.

Moreover, the current engineering marketplace dynamics dictate that enterprises have to increasingly focus on their key core competencies, while other rapidly changing areas such as business processes and technology could be “plugged in” via external parties.

Sawhney made the following key observations in a keynote address at a Toronto conference :

• “Global firms will look like geographically differentiated network of capabilities and resources, instead of geographical subsidiaries in the traditional multinational model.

• “Each geographical entity will have a strong set of local market-facing capabilities. Some geographical entities will become ‘global leaders’ for specific products, resources or services, which they will provide to the entire firm, as well as to external customers.

• “The firm as a whole will rely more on partners for non-core activities and resources—so the core will shrink and the periphery will expand.”

This partnership trend represents a natural evolution of modus operandi of successful engineering firms: companies seek to outsource some tasks that would normally take much effort and time within their own organizations.

But is “one-off partnering” enough? As we previously observed, there is also the need to develop a stronger bond with the solution provider. In other words, to find and harness a good relationship with a partner that can not only provide “point solutions” along the way, but also play an integral role in the development of a product, its related ecosystem and end-user QoE (Quality of Experience).

4 “Outsourcing, Outlocation and the Future of the Firm,” Keynote at TiE Toronto Chapter, Toronto, Canada, Feb 2003.


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Delivering the Vision: How HCL Addresses the Challenges Impacting Companies

HCL Technologies Limited (HCL), a leading global engineering and IT services provider, constitutes one such partner; in other words, a firm committed to both “solutions engineering” and long-term innovation.

Headquartered in Noida, India, with operations in 31 countries, HCL’s various practices leverage its unparalleled product engineering acumen to offer a plethora of fast and cost-effective services, including:

• Engineering delivery

• Quality and compliance

• Productized solutions

• Innovation

The 35-year-old company also delivers key intangibles to its customers, including:

• Interdisciplinary domain knowledge

• Wide experience in all facets of a particular industry: product, ecosystem, end-user experience

• Strong acumen in solving engineering problems

• A portfolio that is aligned to solve customer issues (market acceleration, operations optimization, emerging technologies), not the other way around (i.e., having a portfolio that is in search of solutions to solve)

Three years ago, HCL launched the “Engineering Out of the Box” (EOOTB) concept as its own market proposition of how to take its services, plus platform ecosystem innovation, to its product and technology customers. It is no longer sufficient to only think about product development by itself, because one has to also consider the entire ecosystem, platform and user experience. EOOTB delivers all of these items together for a given customer, while also integrating the perspectives of HCL’s customers’ customers via platform extensions, ecosystem innovation and the customers’ end-user experience. The key objective is to encourage a higher adoption of the technology in the long term.

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Figure 3 – HCL’s Engineering Out of the Box (EOOTB) Approach

Looking from product point of view andproviding servics accordingly

Engineering

Core Product

Domain Based ServicesPDLC ServicesSystem Design

VA/VE, Product Testing

Ecosystem

Agora, Athena

Solution AcceleratorsService AcceleratorsProduct Components

User Experience

UxD, UECP -x

Real Time ExperienceRole Based ExperienceForm Factor

Source: HCL

For more than one and a half decades, HCL has performed core product development work for its clientele based on domain-based engineering services that provide comprehensive product development and life cycle services. The company has now added platform ecosystem innovation to its product-based solutions, which is instrumental in helping its customers deliver products to markets faster. As such, HCL has more than 20 productized solutions for distinct market segments, including cloud, mobility, social media, convergence, medical devices, automotive and other industry segments.

In addition, HCL can draw upon its real-time, role-based user experience in order to stimulate the adoption of these technologies. HCL clients are also able to increase their product or service agility by being able to launch products faster because they are not developing everything from the ground up.


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By focusing on business outcomes, HCL’s ERS (Engineering and R&D Services) can have a multiplier effect for the company’s customers’ success, as illustrated in the figure below:

Figure 4 – HCL ERS Services: Multiplier Effect for Customers’ Success

Source: HCL

HCL also has two more important differentiators that set the company apart from its competitors: an innovation toolkit, amassed throughout the company’s 35+ year history, and a strong ability to collaborate with its customers.

The concept of an “innovation toolkit” was first introduced by Prof. Eric von Hippel (from MIT’s Sloan School of Business). The idea is to develop a set of key enablers that can be applied to certain situations that can be identified and matched against HCL’s customers’ needs and requirements. Then, these enablers can be applied in order to generate ideas that can spur the creation of new innovation.

The ability to collaborate with its customers is a sine qua non component of a successful partnership with a client. With strong collaboration, HCL can become an integral part of its customer’s project team, becoming so embedded within the organization that HCL employees practically become an extension of that customer’s own staff.

5 Tapscott, D. “Wikinomics: How Mass Collaboration Changes Everything” (200x)..

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Don Tapscott, Adjunct Professor of Management from the University of Toronto and CEO of New Paradigm (a well-known international think tank) made the following remark about the growing importance of collaboration in a company :

“The corporation is undergoing the biggest change in a century. Due to deep changes in technology, demographics, business, the economy and the world, we are entering a new age where people participate in the economy like never before. This new participation has reached a tipping point where new forms of mass collaboration are changing how goods and services are invented, produced, marketed, and distributed on a global basis. This change does not wreck corporate profit. If understood, it presents far-reaching opportunities for every company and for every person who gets connected.”

In conclusion, a close collaboration with a R&D partner such as HCL can drive significant results within a relatively short amount of time.

CASE STUDY: THALES AEROSPACE

Thales Aerospace is a part of Thales Group, a global leader in designing and implementing mission-critical information systems for defense and security, aerospace and transportation industries. The conglomerate maintains operations in 56 countries and 67,000 employees, leveraging the best talents from around the world.

The aerospace division is a world-class provider of onboard and ground systems for the civil aerospace market. This business unit employs 13,000 people who assist in defining tomorrow’s air transport solutions: cleaner, quieter and more efficient aircraft designed to fly safely in ever-more crowded skies. Thales offers products for all types of aircraft, ranging from commercial airliners to regional, business aircraft, and helicopters. The company is a top-tier supplier of the world’s leading manufacturers, such as Airbus, ATR, Boeing, Bombardier, Gulfstream and Sukhoi. In addition, it delivers top-notch expertise in onboard electronics, leveraging its recognized engineering know-how; a proven ability to innovate and an in-depth knowledge of customer needs; and local operations around the world.

Thales-HCL History

Thales Aerospace engaged with HCL to help it further refine its IFE (In-Flight Entertainment) system. Thales went through a very formal tender process, narrowing its final list down to three vendors and ultimately choosing HCL to help it develop an IFE system against a defined specification.

HCL maintains a solid relationship with Thales, as evidenced by ongoing discussions that go above and beyond the project specifics, including receiving insights on improving team collaboration,


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managing risk and investigating future technologies. In addition, HCL keeps employees on site at Thales and is able to provide resources “on demand” as one project winds down and another one increases in urgency.

Thales In-Flight Entertainment Solutions

Thales is a preferred IFE option for commercial aircraft, amassing a reputation in this space that is synonymous with flexibility and innovation. The company’s big leap forward in IFE came in 2000, when it chose a Web-based platform as the optimal approach to a new IFE system design. This subsequently led to the introduction of its TopSeries IFE system in 2002 and a market acceptance that allowed this product line to grow into a strong global line of business catering to the world’s top airlines.

Another first for Thales was its IFE system that did not entail seat boxes, an innovation that enabled passengers on short-haul flights to get a wide array of entertainment, allowing airlines to achieve on-board service commonality across their fleets.

TopSeries, the company’s flagship offering, delivers passengers a gamut of possibilities, ranging from in-seat audio and overhead video to sophisticated on-demand applications. The product provides a scalable architecture that empowers the configuration flexibility necessary to meet the demands of any airline.

Reasons for Partnering with HCL

Thales engaged with HCL in order to ensure its IFE products met product quality and compliance specifications. HCL played a key role in ensuring test cycle times met the IFE system release schedule by introducing reusable harnesses that automated the testing process. In order to achieve this, HCL was able to leverage its Software Testing Framework to improve the test code coverage.

According to Stuart Dunleavy, Vice President of the Media & Connectivity Business Unit at Thales Inflight Entertainment & Connectivity at Thales, the following factors made HCL stand out against its competitors in an operations optimization bid:

• Employee caliber: Thales was impressed with HCL’s ability to pick up the Thales proprietary embedded system, with the ramp-up happening fairly fast. In addition, HCL demonstrated excellent collaboration among its team members by employing not only its own tools but also Basecamp, which was the tool used by Thales.

• Corporate culture: The people-oriented culture of HCL, from the top levels down to the most junior software developers, also made an impact on Thales. By putting its employees first, Thales felt that HCL’s staff is empowered and more productive; a higher level of self-worthiness translates into better efficiency.


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• Strong work ethic: The work ethic shown by its employees in various engagements with Thales was another strong point for HCL. “I often have to work late hours, and when I leave there are always some folks from the HCL team still here working during those late hours. It’s hard to find that dedication with other companies,” Dunleavy said.

Benefits of Partnership to Thales Aerospace

The partnership with HCL brought a host of benefits to Thales Aerospace in its quest to deliver its IFE system in a timely and cost-effective way.

1. Flexibility: Throughout all of its engagements with Thales, HCL has shown the ability to ramp up and down resources very quickly in a variety of different products. This capability is considered key for Thales, given the necessity to produce multiple customized, high-quality user interfaces for in-flight entertainment systems. Consequently, Thales has been able to develop multiple product streams concurrently and to rely on HCL whenever needed to meet tight deadlines or additional requirements against a given specification.

2. “On-Demand” Technical Expertise: HCL has the ability to complement in-house technical know-how in diverse areas such as in-flight entertainment and avionics, among others. The very nature of Thales’ business dictates that it must address three key distinct customer constituencies: airlines, plane builders and passengers. In order to achieve that, Thales needs to have in-house expertise in a variety of different disciplines, some of which might not necessarily be part of its own core competencies. This requires the company to be able to rely on external expertise, which can be brought “on demand.” HCL has successfully met this requirement, taking the risk out of Thales’ equation.

3. Cost Efficiency: Cost savings as a result of relying on an engineering outsourcing partner, while not as important as the other two factors above, certainly was part of the list of Thales objectives. Cost arbitrage might not be as “sexy” as other considerations, but it definitely impacts Thales’ bottom line. In addition, it allows the company the opportunity to direct its internal resources to what it deems to be the key areas for competitive differentiation in the future, while transferring some of the more comprehensive testing and validation activities to an external partner such as HCL.

CONCLUSIONS

As Thomas Friedman wrote in his best-seller “The World is Flat,” “…Introducing new technology alone is never enough. The big spurts in productivity come when a new technology is combined with new ways of doing business.”

In this white paper, we looked at how engineering companies are striving to improve their competitive positioning. As these enterprises seek to enhance their standing, they are focusing on finding a reliable external partner that can help them in solving key problems impacting their business. These issues include enhancing product agility, improving operational efficiency, and stimulating new innovation, among others.



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Given the above needs, engineering companies need to rely on much more than a traditional provider of IT services. Instead, a “trusted advisor” type of relationship would provide an ideal way to help them differentiate themselves in the marketplace. Such a partner would be able to provide a comprehensive set of offerings that can help them improve their engineering processes and push the innovation envelope. An experienced global player with a strong acumen in transformational projects, such as HCL, can be that partner.

ABOUT THE AUTHOR

Ronald Gruia is the Principal Analyst for Emerging Telecom at Frost & Sullivan. His main focus areas include NGN migration strategies, IMS (IP Multimedia Subsystems), 4G (LTE, WiMAX), FMC, VoIP, Next-Gen Carrier Messaging Platforms, IPTV, Triple Play Services, Application Enablement, Software Development, Enterprise Communications Systems and Unified Communications, among others. He has authored several reports, managed subscriptions and has also led and played a key role in strategic consulting projects in these areas.

Since joining Frost & Sullivan in February 2001, Gruia has spoken at conferences such as Supercomm, VON, 3GSM, CTIA (IMS Summit), IMS Expo, Futurecom (Brazil), IP Comm, Fierce IPTV, Intel Communications Summit, IMS World Forum, TMIA, VMA, VON Canada, IP World Canada and Comdex Canada. He also writes articles for various publications (such as IMS Magazine, VoIP Magazine, Telecommunications Magazine and Telemanagement), has appeared on CNBC (U.S.), BNN, Report on Business Television and TechTV (Canada), Decision TV (Brazil) and Telecom TV (UK), and has been quoted in publications such as Business Week, Financial Times, Forbes, Wired, API, DJ Newswire, Reuters, MarketWatch, Network World, IT Business, IT World, Los Angeles Times, San Jose Mercury News, Wireless Week, National Post, San Jose Mercury News and CIO Magazine.

Gruia is an MIT graduate in electrical engineering, and has accumulated years of experience in the telecom industry, having held several roles at Nortel Networks’ Enterprise Division, where he earned a U.S. patent. He also possesses years of experience in all aspects of the software development cycle, including programming, code review, unit/system testing, and SCM (Software Configuration Management). Ronald fluently speaks Portuguese, Spanish and Romanian and has working knowledge of Italian and French.

877.GoFrost • [email protected]://www.frost.com

ABOUT FROST & SULLIVAN

Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company’s TEAM Research, Growth Consulting, and Growth Team Membership™ empower clients to create a growth-focused culture that generates, evaluates, and implements effective growth strategies. Frost & Sullivan employs over 50 years of experience in partnering with Global 1000 companies, emerging businesses, and the investment community from more than 40 offices on six continents. For more information about Frost & Sullivan’s Growth Partnership Services, visit http://www.frost.com.

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