The Role of Simulation Service Providers in the Simulation Revolution

Where do External Service Providers Fit into your Modeling and Simulation Strategy?

Where do External Service Providers Fit into your Modeling and Simulation Strategy?

The rapidly growing complexity of products and compressed product development cycles are driving an on-going “simulation revolution”.  The adoption of digital, or virtual, prototyping strategies is determining the winners and losers of today’s competitive markets.  Yet adoption is constrained by personnel expertise availability.  This article addresses the role of external simulation service providers in a corporate simulation strategy.

If you are reading this, then you probably already know that computational methods developed in structural mechanics, fluid mechanics, electrodynamics and many other fields of engineering can be an enormous aid to understanding complex physical systems.  You may also know that companies using modeling and simulation for new product development are outperforming their peers thanks to a reduction in time and costs associated with bringing new products to market.  According to a 2014 Aberdeen report titled "The Value of Virtual Simulation," the top 20% Best-In-Class companies are 3 times more likely to use virtual prototyping in product development than their competitors, and those that do use virtual prototyping reach quality goals, revenue product targets and product launch dates more frequently than those that don’t. 

What is less well known is that most companies feel massively unequipped to fully leverage virtual prototyping.  In fact, as Aberdeen notes, 60% of companies feel understaffed in the highly skilled technical positions required to adequately digitize the design cycle.  Considering these data points, it is wise to consider the role of external experts and simulation service providers in augmenting internal capabilities.

First, Define your Need for Modeling & Simulation

When considering the role of an external service provider in your company’s simulation strategy, the first step you should take is to define the business problems that are not being addressed by your current strategy.  In fact, initiating a conversation with an experienced service provider can actually help you form a clearer understanding of your business problem.  An external perspective with previous experience addressing a diverse set of client business problems will bring into focus how computational simulation can be more fully leveraged in providing answers that reduce uncertainty and provide peace of mind.  Once your real business problems are defined, the benefits will also become clear and Return On Investment (ROI) will become a straightforward calculation.

In our experience, common problems companies face related to simulation can be categorized as follows:

  • Startup companies and small businesses that are developing wholly new products or processes: Startup companies and small businesses often do not have the internal technical capabilities to address technical performance or product optimization and thus would benefit from a firm able to contribute holistically to product development as a strategic partner more so than as a one-off service provider. 
  • Companies who acknowledge the need for computational simulation in reducing uncertainty relating to the performance of products or processes, either being developed or already in production, and recognize that they do not have the internal expertise needed to perform accurate studies:  These companies most acutely benefit from partnering with a firm with experience in their industry that can provide relevant insight and program planning as part of their participation.
  • Companies who acknowledge that they are probably “leaving money on the table” by not fully exploring the design space associated with their products in early-stage design cycles:  Often, a design is conceived, simulated, and if it doesn’t perform too poorly, goes directly into physical prototyping.  These firms have little to no expertise in what is known as design space exploration or numerical optimization.  These firms will benefit from working with a firm with experience applying design of experiments methodologies and artificial intelligence algorithms in realizing more fully optimized products. 
  • Companies that believe their product or application is outside the boundaries of what is predictable through computational simulations, but who otherwise have a full suite of computational engineering know-how and tools:  With the perception of having no resources able to tackle the challenging simulation problems , this group defaults to expensive physical  prototyping and excessive safety margins and still sometimes ends up with products that are unreliable.  These companies will benefit from working with a firm with domain specific expertise in the physics of the application and can demonstrate to the client through prior studies or limited scope preliminary studies that simulations can indeed be utilized effectively and reliably on their application.  

When are External Resources Needed?

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Most companies will benefit from adopting a balanced approach to blending internal and external simulation expertise.  The precise division of labor between the two resources will depend upon the specific problem that your company is trying to solve and your company’s culture.  The chart to the left demonstrates the correlation we typically see between company simulation needs, internal simulation capabilities and the utilization of external service providers.  Both simulation needs and a lack of internal simulation capability drive an increased share of the workload to external resources.

Along these lines and given the growing demand for simulation, companies now frequently find themselves in the position of deciding whether to increase internal capabilities or increase their external resource utilization rate.  It is good to consider the pros and cons of each strategy.  

Table 1:  Pros and Cons of Meeting New Simulation Demand with an External Service Provider

Table 1:  Pros and Cons of Meeting New Simulation Demand with an External Service Provider

In favor of the use of external service providers is their wide experience base and solitary focus on computational engineering.  External simulation experts are required to stay up-to-date of innovations in their field, which provides and enables them with a specialized skill set that is difficult to compete with.  Generally speaking, external service providers will be able to perform simulation tasks more quickly and accurately than internal resources whose time is divided between simulations and other job functions.  They will also have experience using the latest and greatest tools and techniques.  When you can find a consultant with more than 10 or 15 years of experience in broad applications, you find someone who will bring all those years of acquired knowledge to the table to tackle your problem. They may have already met a similar challenge and can help you learn from another's experience, or they may help determine or anticipate the best solution through a fresh perspective and unbiased approach.

Table 2: Pros and Cons of Meeting New Simulation Demand by Growing Internal Capabilities

Table 2: Pros and Cons of Meeting New Simulation Demand by Growing Internal Capabilities

In favor of growing internal capabilities, in my opinion, is that providing employees with simulation know how and access to simulation software will improve the chance that they make new, beneficial discoveries and develop new, innovative products of their own volition.  Another key advantage of developing internal simulation capability is that if the technology being analyzed is complex, and if resources are devoted to a sufficient degree, the expertise of an internal analyst will grow over time to a more advanced level to meet the specialized technical needs of the company.

Of less importance, in most cases, is the significant cost savings typically realized through the use of external service providers.  While costs are critical to some, especially those companies early in their development, the value impact of the solutions provided by external firms typically far outweighs the relative cost differences such that I consider the cost difference between internal and external of little significance.  Much has been written on the subject though, including a recent study by the New York State Department of Transportation that reported a cost optimal blend of 25% internal engineering and 75% external engineering.  A useful calculator for comparing internal salaries with external rates can be also be found here.  

Getting Started

So, how do you decide if the right fit for your company involves an in-house simulation engineer, or if your company is better off hiring an engineering consultant to work with your team on an as-needed basis? This will depend on your simulation needs as a company. If you are unsure, initiating a conversation with an external service provider may help you make a decision. An experienced and honest consultant will be able and willing to tell you if out-sourcing makes sense.  Make sure you insist that consulting firms pay attention to the problem you are experiencing as a customer and tailor a solution to fit it as opposed to focusing on what they are comfortable selling without considering if this service is actually the best solution. An astute firm would ask questions pertaining to "why” and would make sure to find out what the client has already done to address the problem to try and pin down whether or not a CFD model can even help fix it.

(If you want to talk to someone about your individual needs, developing an in-house simulation program, or out-sourcing, you can fill out our contact form by clicking here.) 

Stewart BibleComment