About half of the respondents to the 2020 Global R&D Funding Forecast survey expect their 2020 R&D budgets to rise. More than a third also expect to see their capital budgets increase and their organization’s participation in alliances grow as well. Only 16% of the respondents expect to see their acquisition of outside intellectual property (IP) increase and less than 15% expect to boost their IP licensing operations. These survey results are quite similar to those in the 2019 survey.
Changes in an R&D budget can have varying effects on the different budget components. Most components — capital (18% of the overall budget), materials (18%), salaries (20%), supplies (15%), outsourcing (15%) and overhead (14%) — are calculated at mostly fixed rates for the year (except for salaries) and only change due to inflation rates or multi-year contractual agreements.
But changes in the R&D budget are still bound to appear. Some organizations now rebudget quarterly or even monthly so they can make real-time adjustments in a changing economic environment. Regularly changing budgets are more difficult to track. But they make it easier to ensure R&D projects stay focused and on schedule.
Regularly changing R&D budgets can also more quickly expose out-of-control expenses that are in jeopardy of creating program delays. Regularly changing R&D budgets are also more volatile than annual budget protocols and may be too complex for organizations with foreign operations. An organization’s foreign R&D operations may choose to create and track their own budgeted R&D operations to avoid issues with currency inequalities or conversions.
The changes in an organization’s R&D budget can also vary from year to year depending on the specific type of R&D perform or budgeted. A large technology acquisition or merger may bring extensive variations in the resulting new R&D organization. The purchase of a basic research operation by a mostly development of production-based operation could easily result in an operation with a mixture of basic research and development operations (and budgets) It also could have some new applied research operations as well to bridge the technology gap between basic research and product development.
According to the respondents to the 2020 funding forecast survey, all types of R&D are expected to see substantial funding increases in 2020. 43% of the respondents expect funding for their basic research operations to increase in 2020, for applied research this ratio jumps to 54% and for product development this ratio jumps once again to 62%.
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