Why Cost Optimization Is Crucial for R&D
R&D costs a lot. In 2022, R&D expenditure from the world’s top 2,500 organizations surpassed $1.39 trillion. The US is the biggest spender, with almost $536 billion spent on product and service innovation each year.
In a time when many organizations look to cut costs, stripping away R&D funding is not an option. To do so would mean falling behind the competition and losing out on product advancements.
But that does not mean it isn’t crucial to manage costs effectively. On the contrary, cost optimization can provide a competitive advantage while leading to lower overall product costs.
Moreover, keeping a firm handle on expenditure is essential for taking advantage of R&D tax credits.
How My Hours Provides Cost Management Solutions for R&D Departments
Let’s dig into why My Hours is a great solution for R&D departments. Besides its comprehensive time-tracking capabilities, the app also features plenty of ways to manage budgets effectively.
Clever Cost Categorization
First, a lot of organizations—particularly software development firms—need an easy way to categorize costs.
With so many projects and tasks going on, it can become very difficult to keep track of expenses and ensure they are assigned to the right area. This is especially true for multi-project teams that work on several activities simultaneously.
Within My Hours, you can assign hourly rates to each of your employees. When they track their time, this assigns the cost of their labor to whatever they were working on.
To capture this information in the right places, you can set up clients, projects, and tasks. Employees can then pick which project or task they are currently attending to and track the time there.
This neatly categorizes the labor so it’s easy to see which costs are allocated to where.
For other expenses, My Hours lets you add them to projects and tasks. When accompanied by receipts and invoices, you get a full paper trail of why the money was spent.
You can also assign tags to expenses. This makes it a lot easier to categorize them for different cost centers.
Easy Budget Management
Managing budgets is necessary to make R&D efforts sustainable and create a balance between innovation and financial health.
To help organizations with this, each project within My Hours can be assigned a budget. Once this is in place, staff labor costs and other expenses will be tracked against it.
To help you stay within budget, you can set up automatic reminders that tell you when a certain percentage has been spent.
Breaking the budgets down to the task level gives you access to important insights. You can pull the historical data into a detailed report and compare the results with your estimated budgets. Additionally, the detailed report features customizable columns and filters so you can get exactly the data you need.
Tax Credit Maximization
R&D tax credits are an incentive worth going for. The savings are significant but the claims process is complex.
One requirement for claiming R&D tax credits is to have accurate accounts of time and money spent on activities. Without this information, your claim will be denied.
Using My Hours to track everything will ensure you have the required information to hand when tax season rolls around. And, to prevent gaps or inaccuracies in the data, My Hours has made it as convenient as possible for your workforce to track their time:
- Staff can complete their timesheets manually or by using the real-time time-tracking feature.
- There’s a My Hours Android or iOS app that allows time and expense tracking from any location.
- The Chrome and Edge browser extensions track time without having to have the My Hours app open all the time.
Timesheets can be submitted daily or weekly, and you can set up automatic reminders within My Hours to remind staff that their timesheets are due. This really helps stop data gaps because it prevents staff from forgetting to complete the information.
When tax season looms, all you have to do is pull a report with the required information. There’s no lengthy preparation process—you just have to click a button!
Effective Resource Management
A big part of staying within budget comes down to effective resource management. And it’s very difficult to do this without solid data to analyze.
The real-time time-tracking feature in My Hours is integral to managing resources because it shows precisely how much time is spent on each R&D project and task.
To gain even more accuracy, you can set up different teams within the platform. That way, the time data is not only collected at the individual level, but it also shows how each department within R&D is collectively spending its time.
Clocking too much overtime is a surefire sign that there is a resource management issue. To understand if this is happening, you can set daily target hours in My Hours. Doing this will notify staff when they have tracked sufficient time for the day or week (and help prevent them from racking up too many hours).
Better Budget Predictions for Future Projects
When you use My Hours to optimize existing projects, you build a solid foundation on which to base future projects. You can make more accurate, data-driven predictions about how much a new project will cost. Also, you will understand what the budget should be and how many resources must be assigned.
My Hours features sophisticated budget allocation and management. We’ve already talked about some of its benefits above, but there are more.
Budgets can be set in multiple different ways:
- Hourly time budgets are great for determining the number of hours you believe will keep projects profitable.
- Cost-based budgets help keep project expenditures within a certain amount.
- Monthly budgets can work for the wider team or larger projects that have a set cost.
For even deeper insight, you can track how many billable and non-billable hours were spent on each deliverable. Doing this will quickly show you which areas of R&D are not profitable and could perhaps be automated or eliminated entirely.
Improved Stakeholder Relationships
Stakeholders constantly juggle the balance between cost savings and the need to drive innovation. Without clear information, they can often push for unrealistic expectations, such as implementing tight deadlines.
However, when stakeholders can access accurate time-tracking data, it facilitates more productive discussions about realistic project priorities, timelines, and resource allocation.
Typically, stakeholders want a readable oversight. Dashboard report is perfect for providing a PDF overview of all the important data without getting bogged down in the details.
Should your stakeholders want to go deeper into the data, you can include meta links within the dashboard report that display more detailed, customized information.
Final Thoughts
Time and expense tracking enables R&D departments to optimize their finances and boost productivity.
Adopting My Hours is a strategic step toward sustainable innovation and financial success. Your R&D department can enjoy a better and more efficient way of working.
