Embedded software is critical for the proper functioning, performance and reliability of a wide range of embedded systems, many of which have become an integral part of our daily lives and are essential for industry.
The bill of materials for the embedded software used in embedded systems typically comprises in-house software development, custom software development by third parties and standard license-based software sourcing. But companies developing embedded systems often lack insight into what drives the final cost of their embedded software – especially if they source that software externally. This absence of transparency is in large part due to the fact that they lack the tools they need to estimate costs correctly. As a result they are unable to optimize the cost of their software in the same way they have done for their hardware in recent years.
Understanding what drives the cost of embedded software enables companies to tap into significant potential savings. Not only can they optimize their spending, they can also align investments with strategic targets.
Price/performance assessment
To identify which software features offer the best value for money, a detailed overview of the cost structure is essential. Customers are more likely to remain loyal when provided with software features that have a high price-performance value.
Decision-making
Understanding the cost structure of the software helps with early decision-making and enables companies to make the necessary tradeoffs, such as cost vs. time. It also means that they can decide which areas need improvement and which cost-saving measures are feasible.
Budget planning
Knowing the software costs helps companies see the financial impact of their software spending. Improved planning of the cost of products with embedded software ultimately leads to better product pricing.
Supplier negotiations
Insights into cost drivers, pricing models and cost benchmarks improve a company's negotiating position, helping avoid excessive costs when agreeing initial contracts or making change requests.
Roland Berger offers a 360° costing approach. Our proprietary model analyzes and evaluates the cost drivers for embedded software using "should-cost" methodology. It can show the total cost or the cost at different levels – for example, in different development phases or for different work packages.
Our parametric approach consists of five phases:
Experts from Roland Berger and our subsidiary POLARIXPARTNER work hand-in-hand on software cost optimization in the embedded space, helping key players in a range of industries improve their software journey. The results are inspiring, generating opportunities and optimizing costs at every stage of the journey.
Roland Berger works with top level executives in various industries, helping them understand cutting-edge digital topics and equipping them with the skills they need to succeed in the digital world. We inspire leaders and transform organizational culture.
POLARIXPARTNER, a Roland Berger Group company, specializes in technical benchmarking for embedded systems, performing bottom-up target cost analyses and identifying potential savings on the technical, commercial, process and supply chain levels. Drawing on our extensive database of cost reduction levers, we deliver exclusive insights to clients, generating measurable results.
Contact our experts to find out how you can gain transparency into the software should-cost of your product.
_large_image.png)
