Why Software Development Needs R&D

20th Aug 2021
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Over 70% of people would struggle to get through a day without using technology.

This means that although software developers and tech-savvy entrepreneurs have a captive audience, they have to fight for a position in a market that is crammed full of pioneers with ground-breaking ideas, products, processes and services.

So, to not only survive in this environment but to thrive, software companies need to think outside the box, try new ideas and innovate.

This is sometimes easier said than done though: continuous innovation can be risky, costly and highly pressured.

This post will run through the key reasons why technology and software-based companies need to innovate. It will look at how they can make innovation a central part of their business and it will also divulge how they can minimise the risk, costs and pressure associated with innovation.

Why do software companies need to innovate?

Today, innovation is more than just a buzzword — it’s the thin line that sets successful businesses apart.” – The Scalers

But what exactly does innovation mean in the context of software development?

Innovation in software development
Innovation in software development means creating a new product, service or process that creates value for users and has the potential to be a commercial success for the business.

Software innovation could be anything: From putting an existing programming language to new use and devising a ground-breaking way to capture, manipulate or store data, to developing advanced algorithms and building new operating systems and bespoke software.

As we know, advancements and new developments in technology and software happen at an incredibly fast pace and if software companies don’t innovate, they not only risk being left behind, but they also risk missing out on a whole heap of benefits…

The benefits of innovation in software

Innovative software companies remain competitive
“It is almost impossible to compete where the product has reached stagnancy; innovating and updating the same blueprint can yield higher returns further resulting in a higher customer base as well.” – Harbinger

Because of globalisation and the fast-moving pace of the tech and software market, there are now more software start-ups, entrepreneurs and businesses to compete with than ever before. Innovation can help software companies keep up with their customer needs and keep ahead of their competitors. 

Innovative software companies become known as industry leaders
“Being the first to develop innovative new products or processes can help establish your company as a leader.” - MPA

If a software company is continuously pioneering new software or radically enhancing existing software solutions, they’ll quickly become known in the industry (and beyond) for being at the cutting edge of technology.  And for a software company, that’s the golden ticket!

Innovative software companies entice new customers
When it comes to technology and software, over 1.8 million people like to get the latest updates, gadgets or releases as soon as they come out (think queues for the new iPhone, for example!). If a software company regularly releases new, interesting and ground-breaking products or services, they could have over 1.8 million people eating out of the palm of their hand.

Innovative software companies attract the best talent
Software developers take huge pride in their work and want to work for the best of the best: The companies at the cutting edge of tech. So, if a company is known for consistently innovating and releasing new and exciting products or services, there’ll be a line of highly skilled developers queuing at the door when they next need to hire. And this level of exceptional talent will further the development of innovative products, processes and services.

How to be innovative as a software company  

As we’ve established, the best way for software companies (or any company for that matter) to remain competitive is to innovate. To develop novel products, services and processes that set them apart from the crowd, attract new customers, interest the best talent and turn them into marketplace leaders.

But, although most companies are born out of adventurous, out-the-box thinking, as the company grows, it’s easy to become more cautious and less forward-thinking. So how do companies step of their comfort zone and ensure innovative ideas and projects are executed regularly?

Develop an innovative culture

Employees are at the core of company innovation. They’re the ones that can think up innovative ideas and they’re the ones that have the know-how to be able to execute them. But it’s all too common for software developers to get bogged down in the day-to-day, bread and butter, things: the routine updates, the client work and the daily development tasks. If a software company can make room in their employee’s schedules for “thinking time”, they’ll have the time and space to think creatively, which is when great things happen. 

They could hold innovation days or ‘hackathons’ where staff can come together, brainstorm ideas and discuss implementation methods. For example, Accenture Ireland runs a ‘Festival of Ideas’ where 1,400 employees come together to brainstorm creative ideas. And, after the event, the top 10 ideas get implemented.

Or, they could set aside time each day for employees to develop and test their innovative ideas.  That’s what Google does: They allow employees to dedicate 20% of their day to their creative ideas and projects.

Allowing employees to have “thinking time” is not only good for developing and releasing new, exciting software, but it also boosts workforce morale. They get to work on ground-breaking ideas instead of just routine updates and maintenance work.

Invest in R&D

Having the time to think up innovative ideas is one thing, but developing them into market-ready products, services or processes requires R&D. Companies might be reluctant to invest in R&D simply because it costs a lot, and the reward isn’t always what they anticipated: sometimes innovative projects fail and the investment in time, resource and money is wasted.

But, if they take advantage of the government-backed R&D tax relief incentive, then up to 33% of the costs associated with the research and development of that project will be covered, therefore massively reducing the risk element.

However, many companies think that research and development only applies to scientists in white lab coats, but that couldn’t be further from the truth. In fact, the “Information and Communication” sector is the 2nd largest claimant of R&D tax credits. The sector lodged 12,165 claims in 2019, representing 23% of the total claims in the UK. The majority of these claims were for software development projects such as developing ‘state-of-the-art’ software for new applications; enhancing the functionality of existing ones; creating innovative new techniques to capture or protect data and product and software testing.

To find out more about the R&D scheme, contact Myriad Associates. They’ve been filing R&D claims for over a decade and have built up a reputation within the industry for having a right-first-time approach. This has given them a 100% success rate with their R&D claims and a strong relationship with HMRC meaning claims are always dealt with efficiently.

Visit the website, call them on 0207 118 6045 or drop them a message here.


In the world of software development, the outcome of innovation can range from technical concepts, patents, and algorithms to data models, architecture patterns and functional prototypes.

Creative thinking and R&D leads to the release of these innovative products, services or processes and gives software companies a firm foothold in the highly competitive software market.