By Jim Brown, president of Tech-Clarity
Product executives face increasing pressure to launch fresh, innovative products within shrinking product development timelines. They have to beat the competition to the punch, bringing compelling offerings to market before others can react.
They need a wealth of new and improved product concepts to meet this challenge. But successfully commercializing products takes a lot more than a few good ideas. It requires a strong management discipline to select the right product portfolio, apply the right balance of resources to product development and employ strong operational project management to drive products to the finish line.
ERP, PLM and the Missing Link
Where do manufacturing and consumer products companies turn for help? Enterprise systems such as ERP and PLM have helped companies make big strides in improving product-oriented processes and performance.
In the early 1990s, enterprise resource planning (ERP) helped integrate and streamline operations. The software allowed companies to automate their process and information flow across functions, including purchasing, planning, production, sales and accounting. ERP put in place a cohesive infrastructure to manage the business of producing products.
Product lifecycle management (PLM) emerged in parallel to ERP to help organizations design and develop products. This software suite helped companies integrate product development activities and coordinate product information across departments and the supply chain.
These systems have also evolved to help coordinate the relationship between designs and product development projects, as well as the programs they support. PLM provides an integrated suite of solutions to enable product design, engineering, and development.
If ERP supports the business of manufacturing and PLM supports processes and data related to designing products, what happens to the strategic processes surrounding product portfolios? While one could argue that both ERP and PLM should play a role in defining and executing product portfolios, neither has fully stepped up to the plate.
Product and brand managers were left with a myriad of spreadsheets and documents to make some of the most critical decisions impacting corporate success and profitability. They needed a purpose-built solution to help develop and deliver successful product portfolios.
How PPM Addresses the Gap
In the last decade, product portfolio management (PPM) software emerged in parallel with similar software focused on managing IT investments. PPM helps companies improve the process of selecting products, resourcing projects and executing product development and commercialization processes. PPM software incorporates and enables best practices while integrating the flow of product development across the early stages of the product lifecycle.
In recent years these solutions have extended further “upstream” to include ideation and innovation processes. Advanced systems even offer analytics to help determine the fiscal potential of the products and portfolio.
What makes a successful PPM solution? The first step is providing visibility into the product portfolio. Surprisingly, most companies don’t have a consolidated, normalized view of the products in their portfolio. Assembling this information in a common system and data model helps provide transparency to investments and statuses.
Expanding this view with additional business case data allows executives to visualize the balance, risk and profit potential of their portfolios. This information helps product and brand managers translate a product strategy into an optimal portfolio of product offerings so they know where to invest their research and development budgets.
With the right portfolio in place, companies need to ensure that products can be successfully developed. One of the largest success factors in product development is managing resource constraints. Product development programs must be planned and analyzed for capacity requirements. Executives must then take an objective look at the feasibility of delivering the portfolio within given budget and personnel constraints. PPM offers planning capabilities to help companies with this critical stage in portfolio management, allowing planners to evaluate and optimize resource plans and scenarios to deliver the portfolio.
Effective portfolio solutions do not stop there. PPM helps product developers manage the daily tasks, risks and deliverables associated with commercializing a product. Successful companies involve a host of resources from across the business in order to develop the product quickly and correctly. Project execution capabilities in PPM help coordinate and communicate these activities and constraints across the enterprise and the supply chain to keep projects on track and hit product launch dates.
PPM Preferable to Spreadsheets
For many product organizations, a strong solution could not come soon enough. Many companies still rely on spreadsheets as the chief repository for mission-essential portfolio information. Unfortunately, spreadsheets simply don’t provide a dynamic view of the information needed for effective decision-making at any stage in the portfolio process.
At the enterprise level, spreadsheets quickly lose their utility because they are not designed to allow multiple people to contribute and collaborate. Furthermore, they are frequently inconsistent across product lines and are prone to errors. It’s time to support product portfolio processes with the proper level of enterprise software.
PPM is gaining ground with product development companies because, similar to ERP and PLM, it provides a platform for companies to implement common, repeatable processes. PPM helps executives and product managers gain visibility into their innovation and pipeline processes from idea generation through commercialization. This is not possible via spreadsheets. PPM has now established itself with ERP and PLM as a critical element of the manufacturing company’s enterprise systems ecosystem.
Software not Magic
No discussion about PPM would be complete without a word of caution. Any enterprise system requires effective processes and management discipline.
You have probably heard the same said about ERP and PLM systems. But pay special attention here. Unlike more transactional systems like ERP and collaborative solutions such as PLM, PPM is a decision support tool. Without a good process and management support, PPM efforts can disappoint.
On the other hand, the processes don’t have to be complicated and best practices are readily available. But don’t expect to install the software and reap the benefits if you skip steps in implementation and change management.
Jim Brown is the founder and president of independent research firm Tech-Clarity. Jim is a recognized expert in software solutions for manufacturers, with over 20 years of experience in application software, management consulting and research. He has broad knowledge on applying product lifecycle management (PLM), social computing, supply chain management (SCM), ERP, compliance, quality, service management, and other enterprise applications to improve business performance.