Make or Buy: how to design an innovative product?

Make or buy, every company’s dilemma… Between in-house and outsourcing the design of an innovative product, how can you make the best choice for your company?

How do you approach this strategic decision, which will have a significant impact on your profitability?

Make or buy, every company’s dilemma…

Between in-house and outsourcing the design of an innovative product, what’s the best choice for your company?

How do you approach this strategic decision, which will have a significant impact on your profitability and efficiency?

In this article, we’ll explore the pros and cons of each option to help you make the best decision.

Before choosing between Make or Buy: evaluate your internal resources.

What does this mean?

By the time you read this article, you’ve probably already made up your mind. Or, on the contrary, you may be torn between the choice of in-house or outsourced product development.

In either case, a little time to take stock can help you see things more clearly and make a measured decision.

The decision to make or buy will have repercussions on every aspect of your organization.

We’ll guide you through this step.c

Taking stock of your resources

You can start by assessing all your current resources and skills.

What do you need to assess?

– financial resources

– technical skills and human resources

– project management capacity

This assessment will enable you to answer the first question: are we currently able to internalize the design of our solution/product?

It will also enable you to assess any missing resources.

Let’s take some examples:

I’m an SME looking to develop a new IoT platform to complement my offering. I have the financial resources, the project management capacity, and developers, but no experience in this type of platform.

Or I’m a start-up that has just raised funds to develop an innovative product, but I don’t have an engineering team in place.

These two examples allow us to refine the question to assess whether, depending on your objectives, it is more profitable to develop the skills of your team (or to recruit), or whether it is more profitable to outsource the design/development project.

This brings us to the second analysis criterion: a choice based on objectives.

A decision that varies according to your objectives

It may seem obvious, but we often overlook this crucial point too quickly: the choice of whether to insource or outsource all or part of the project depends on our objectives.

And these objectives really, really do vary from company to company (and sometimes even from team to team).

A company looking to expand rapidly into a new market may need to concentrate on its core business or on business development and choose to outsource production.

Why do you do this? To save time and resources.

Outsourcing can give you greater control to ensure a defined time-to-market. In fact, this is one of the challenges we see most frequently with the customers we work with.

A company with a time and success constraint to present the product to investors needs to compare the options available to it.

Why should it do this? To choose the best guarantee of success within the given timeframe.

A decision influenced by various factors.

ROI

Profitability must be calculated and anticipated from the outset. In fact, it’s a central issue in project preparation. A make or buy decision will therefore also be based on this ROI.

Why is this so? Because whatever the final choice, it’s bound to involve significant costs and expenses.

Product and technology complexity

It’s important to take stock of the skills you have in-house, and to understand your strengths and weaknesses.

If your innovation is complex and you are aware of your resources and needs, then you’ll be able to make a clear decision.

The fact that the product is complex, or that it requires specific technologies, will influence your final decision.

The make or buy decision will also depend on the product itself.

Associated regulatory constraints.

When you innovate, you are exposed to specificities, standards, compliance…

These are points to consider when making decisions. Product development is subject to sometimes very strict regulations concerning manufacturing and safety.

The advantage of a competent external service provider is that they are used to designing products, and therefore to complying with the numerous requirements this entails. They know the steps to follow from ideation to market launch. This can save you considerable development costs.

Certain sectors are particularly affected by standards, such as the medical device sector.

Protecting your innovation

When you innovate, you naturally seek to protect your innovation.

When a project involves confidentiality and a company’s own strategic knowledge, you’ll want to retain a great deal of control over it.

But rest assured, if you call on one or more external service providers, there are agreements in place to protect your innovation and preserve your competitive edge from leakage.

At Rtone, for example, the level of confidentiality is part of the preliminary discussions with our customers. We sign an NDA (non-disclosure agreement) and take precautions throughout the project phase.

Let’s look at some case studies.  

The case of a start-up

Let’s take the case of a start-up wishing to develop a new product.

Designing an innovative product requires substantial investment in R&D, technology, equipment, expertise, and resources.

It also requires financial resources capable of bearing the weight of these investments.

But let’s go a step further.

Designing a product, especially a complex, connected product, requires a wide range of skills: mechanical, hardware, firmware, cloud and even mobile.

Not to mention the whole coordination side of the project: project management and the ability to prepare the product for industrialization (yes, we’re looking beyond the prototype).

Imagine having to find, evaluate and integrate all these profiles, and unite them around the project daily. On top of all the other things you must think about on the side, such as preparing the product for market.

This shouldn’t be a hindrance to you and shouldn’t prevent you from embarking on a project.
That’s exactly what Alexis Richard de Montvel thought when he turned to Rtone to outsource the design of his high-end connected barbecue.

The case of a large group

Another example is the case of a large group. On the face of it, a large group potentially has more resources to develop its project. If, however, it wishes to develop a new product involving several new skills, recruiting may not be the most cost-effective/wise choice.

The decision to outsource all or part of a project can be a wise one when it comes to

– test a new technology not mastered in-house

– to keep teams focused on their core business

– to speed up development.

And yes, today many multinationals continue to outsource for the good of their businesses, because it’s an economically strategic decision, and that’s okay!

That’s the choice ACOEM made, for example, when it turned to Rtone to develop their new IoT platform with Cadence.

Jérémie Boisset talks more about this in this podcast episode, in which he explains in detail this “make or buy” choice and the elements that led to

– good collaboration

– the creation of a team between customer and service provider

– the successful completion of the project

To sum up, developing an innovative product or solution requires many different skills and specialties.

– Assembling an in-house team is therefore likely to be very costly (and time-consuming) and poses a major problem in terms of project management.

Is my team competent and available for this project?

Do I need to recruit?

Do I need to train my teams?

What does this mean for my budget?

– Calling on different external skills also implies a different approach to the aspects and focus of the project.

Who can I call on?

How can I maintain control over my project?

But don’t panic, there are solutions!

We’re here to help you understand the different strategies you can adopt!

Outsourcing an innovative project (BUY)

Outsourcing means using one or more service providers to procure one or more resources.

This practice is often referred to as subcontracting because the company carrying out the project will delegate its activity. The decision to outsource is a decisive one in a company’s value creation and involves a major commitment.

The advantages of outsourcing :

There are several advantages to this choice.

• cost reduction and budget optimization: outsourcing certain tasks or components can help reduce production costs.

• lower investment costs: outsourcing can reduce or avoid certain major investments.

• solving recruitment problems: outsourcing avoids the challenges of recruitment by calling on already-qualified teams.

• External service providers bring cutting-edge expertise to enhance product quality.

• possible acceleration of time-to-market: by delegating certain tasks, product development can be accelerated.

• flexibility: outsourcing offers great flexibility in adjusting the team and resources to the needs of the project.

But as with any solution, there are also limitations that may or may not affect your decision-making.

Disadvantages of outsourcing:

A priori, the risks of outsourcing could be as follows:

• loss of some “control” over the project: by entrusting certain parts of the project to external service providers, you may lose some visibility and control over development processes.

• sometimes complicated adaptation to your company: external service providers may have different working methods, which can make integrating their services into your company complex.

• additional responsibility: you remain responsible for the project, even if certain tasks are outsourced. Coordination and overall management therefore remain your responsibility.

• communication problems: geographical distance and different business models can lead to communication problems, hindering effective collaboration between the parties involved.

• dependence on the external service provider: if you outsource key aspects of the project, you may become dependent on the external service provider to keep your product running smoothly.

• risk to project monitoring: the supervision of an external service provider may be more complex, entailing a potential risk to project monitoring and quality.

It’s all a question of slope and management.

When properly managed and supervised, outsourcing can give you peace of mind when it comes to developing your project.

To offset the risks of dependency and loss of control, all you need to do from the outset is set up systems for documentation, training and passing on skills to your in-house teams.

There’s one thing we’re convinced of, and that’s that, when developing an innovative project, choosing a service provider who has all the resources you need for your project to run smoothly is the best solution!

Designing a connected object is complex and requires constant interconnection between the various areas of expertise involved in the project. The various trades need to be coordinated and work hand in hand.

We’re aware that it’s sometimes a tricky thing to achieve when several external service providers are working on the same project, but on different aspects.

We share with you our vision of the advantages and disadvantages of involving several service providers in a project or choosing one.

As you’ve probably guessed by now, we’re clearly leaning towards the choice of a single provider.

Why do you ask?

Because, with all the projects we’ve worked on, we’ve found that this choice facilitates communication within the project and, above all, interconnection between the various professions.

Let’s get into the details.

One-stop-shop as part of an outsourcing project

You’re looking for a service provider to help you design an innovative, intelligent product.

The following questions arise:

– who to choose?
– what criteria should you use?
– who can you trust?

The one-stop-shop is an advantageous solution.

A connected object project calls on multiple areas of expertise, such as hardware, firmware, software, cloud…

So, it’s inevitably “simpler” to turn to a service provider capable of combining all these skills. That’s what can save you time and money.

At Rtone, we integrate all these skills so that we can support you every step of the way:

Our approach

A single service provider can provide you with an overall vision of the project, ensure that the same performance criteria are applied to all areas of expertise, and reduce the risk of delays and back-and-forth between the different professions.

And, as we said earlier, the need for coordinated project development is a factor to be taken into consideration. The one-stop-shop makes this much easier.

But as we’ve said, outsourcing is not the only solution.

Internalizing your project (MAKE)

On the face of it, this is the ideal scenario.

We’ve already discussed this solution in the first part of this article, but let’s take a closer look at this approach.

Internalizing your project and carrying it out from A to Z – that’s quite an achievement! No need to call in an external service provider.

Having total control over your project is an important factor, and one that takes up a lot of room in the minds of decision-makers when the time comes.

However, this choice must represent a benefit for the company, and this depends on several factors:

– the type of product to be manufactured

– short- and long-term development objectives

– company size and resources

To make things clearer, here are some of the advantages and disadvantages of insourcing.

Advantages of insourcing

The advantages of going in-house are clear to see:

• Better control of the manufacturing and production process: you have direct control over all stages of the process. This enables better management, quality optimization and adaptability.

• Complete overview of the entire project: keeping all stages of the project in-house facilitates team coordination and contributes to a global understanding of the project’s challenges.

• Total quality management and control: you can implement strict quality control standards and apply them to all stages of the manufacturing process. This ensures that end products meet requirements.

• Control over your company’s reputation: keeping production in-house strengthens customer confidence in your company and preserves your reputation.

• Potential development leverage: successful in-house production can be used as a lever to develop new markets, broaden your product offering and strengthen your competitive position.

• Independence and protection of know-how, confidentiality: By keeping manufacturing processes in-house, you can better protect your know-how, industrial secrets, and confidential information.

Disadvantages of inscourcing

• Substantial investment: in-house management requires substantial investment to build up and maintain a qualified team and appropriate equipment and facilities.

• Limited technical skills: the technical skills required for certain aspects of the project may be limited in-house, which can affect the timeframe and budget of your development.

• Often high production costs: costs may be higher due to initial investment, maintenance, and management costs.

• Internal supply chain management can be complex, requiring special attention to avoid delays and logistical problems.

• Time to market often lengthened: in-house development may take longer, delaying product launch.

• Higher risk of error: internal errors can have serious consequences for the project and its economic viability.

• Risks of non-compliance: all regulations and safety standards are rigorous and require perfect mastery of the subject.

You need to consider all the potential advantages and disadvantages before deciding to internalize production of your product.

The advantages are always attractive, and it’s easy to want to launch the GO, but the potential disadvantages can sometimes be daunting.

Now that you know the pros and cons of Make or Buy, you may think you have to choose between insourcing and outsourcing.

But you can still take a different route.

You can choose not to…

We explain.

Combining insourcing and outsourcing

You don’t have to see everything in black and white. Grey is also a good mix.

The Make and Buy strategy is also a strategy. Above all, it still depends on the company’s business, its environment, and the nature of its project.

We’d like to emphasize this nuance.

You may decide to internalize the manufacturing/production of your project. However, if you’re short of resources, you don’t have to outsource your entire project.

An expert can work with you on certain aspects of your project.

You can call on a service provider for

• a missing skill
• a project phase,
• to help you choose the right technology,
• review a development in progress through an audit…

In fact, it’s often the start of a collaboration (start small, then see how it goes and outsource the project further).

You don’t have to go it alone

That’s what we want you to understand.

The important thing is to be able to build your project as you wish.

If you’re afraid of the step that involves bringing an external player into your project, which we understand, you can find good compromises.

So: Make or Buy?

As you can see, the decision to design or outsource the production of your innovative product is an important strategic one.

The advantages and disadvantages of each approach need to be carefully considered, based on your company’s resources.

Internalizing may offer you better control over quality and confidentiality but will be more costly and risky.

Outsourcing gives you access to new expertise and greater flexibility but requires considerable project management and a careful choice of partner.

Combining the two makes it possible to advance a project without necessarily having to make an “all or nothing” decision. It’s a question of nuance.

The important thing is to make a choice that’s in line with your challenges and objectives.

Here we are, the Make or Buy dilemma no longer holds any secrets for you.

If you’d like to find out more about outsourcing options and the different contracts available,