Eliminating Challenges in NPD – A PPM Approach

Introduction
Today, the business dynamics of New Product Development (NPD) is harsh. Even the most successful product development companies are faced with complexities like keeping up with evolving standards, technology requirements, client / user demands, innovations and time-to-market. Other trend is product development cycles are getting shorter and shorter, and the successful ones are finding ways to deliver the most innovative, cost-effective solutions in the shortest span of time. Some of the key challenges in NPD are discussed below.

Challenges in New Product Development

The emerging best practice for NPD is to decouple product design and build (development) elements in the product life cycle. Separating the development process enables organizations to understand the value proposition of each stage and return on investment (ROI). The key challenges faced by NPD Company’s are as follows

• Lack of real-time visibility into NPD project status in terms of time, resources & budget.
• Lack of planning & poor definition of project scope and unrealistic timescales - Often project dependencies are discovered after project design phase is completed.
• High turnover due to "burn out" of key project contributors because they are working on too many projects and spending too many overtime hours.
• Frequent change of status of projects (i.e., moving from "active" to "on hold" to "top priority" and back) leads to increased resources & decreased productivity.
• Lack of formal process to fully evaluate & prioritize NPD projects based on the greatest business benefit.

Product Life Cycle

Linking Business Strategy to New Product Development
To address the above challenges, NPD companies started to link their business strategy with product development by using Project & Portfolio management (PPM) solutions.

Project & Portfolio Management (PPM) is a term used by project managers and project management (PM) organizations to describe methods for analyzing and collectively managing a group of current or proposed projects based on numerous key characteristics. The fundamental objective of the PPM process is to determine the optimal mix and sequencing of proposed projects to best achieve the organization's overall goals.

For instance, at any point of time a project manager can identify the gap in demand and supply of resources in relation to the requirements of the project. For the higher management, PPM enables to identify mid and long tem viability of the projects and also helps in calculating ROI regarding investments.

Characteristic of PPM in New Product Development

• Create "high resolution" project plans that accurately spell out, in vivid detail, the resources required to complete each task and activity.
• Capture the actual hours spent by all project players in completing project tasks and activities.
• Create summary tables showing planned and actual time spent by each person in the organization on every project to which he or she is assigned in order to demonstrate who's overloaded.
• Document all incidents of resources that are "stolen" across projects, excessive overtime, large-effort-but-ultimately-useless projects, and so on.

By conducting project "post mortem" evaluations, gather information about how systematic PPM might have prevented problems and encouraged successes.

Benefits of PPM in NPD
PPM solution helps a product development company align its project workload to meet its strategic goals, while making the best use of limited resources. Furthermore, existing projects can be accelerated, terminated, or de-prioritized by the allocation or re-allocation of the resources that deliver project tasks. The following are some of the key benefits of PPM in the NPD arena.

• Faster response to changing conditions: Portfolios can be constantly reviewed and altered if necessary to produce the highest returns based on changing situations.
• Improve overall NPD effectiveness through improved IT project visibility & historical insights.
• Improve resource utilization through accurate exposure of project work loads.
• Blending business and IT projects and treating both as contributors to the same goal.
• Focus on what will achieve the product development rather than on the project itself.
• Balances risk across all projects.
• Justifies killing projects that do not align.
• Increase the predictability of NPD project delivery: on time, on budget.
• Maximizes the return on product development investments.
• Increase competitive advantage.

The major benefit however is that PPM allows flexibility to meet changing circumstances and focus on quick deliverables & solutions that are totally targeted to achieve a particular outcome.

About PPM Studio
SemanticSpace’s “PPM Studio” is a collaborative, end-to-end, scalable, enterprise solution that helps organizations in managing projects from inception to delivery.

Why Industry need PPM?

There are a variety of broken operational processes driving the move towards the portfolio approach.

Consider the following:

• »Over 80% of companies do not conduct business cases for technology projects and are unable to adjust budgets midstream more than once or twice annually1
• »By 2005, 70 percent of IS organizations will have adopted a mix of project portfolio management application services for team collaboration, resource allocation, utilization and cost tracking2
• »Through 2006, IS organizations lacking stringent risk assessment procedures will cancel more than 20% of projects in the execution phase3

1 Source: META Group-2002 Worldwide Trends and Benchmark Report

2 Source: Gartner Inc.

3 Source: Gartner, Inc.

An organizational context of portfolio management

a.

• a.Define the organization’s overall strategic goals and objectives at the executive level;
• b.Pass these goals to the portfolio management function;
• c.The portfolio manager selects, prioritizes and approves proposed portfolio components, ensuring that they are aligned to achieve the organization’s goals; and
• d.The portfolio manager reviews the portfolio to ensure it is balanced (short-term versus long-term return, risk to benefit) and negotiates the contributions of relevant strategic stakeholders (e.g., executive management, operations, program management)

Portfolio management can best be described as either: (1) business line portfolios or (2) customer support portfolios. This approach would cover all types of business or government organizations, with all of their products or services within business lines and various types of projects to support those business lines.

Business Line Portfolio Management:

• »A computer hardware manufacturing company producing household products has four major product lines. One of them is laptops. Within the laptop product line one of the sub lines is ultra lightweights. Ultra Lightweights is under the management of a portfolio manager who is responsible for ensuring:

(1) that current products continue to be marketed and produced and

(2) that new products are identified and developed. Under the second category will be projects to accomplish the goal.

Customer Support Portfolio Management:

• »An IT consulting company has a number of clients. The clients are grouped by industry type: financial, auto manufacturing and telecom. Within each of these industry client types are a number clients. Each client is considered a portfolio under a portfolio director who will have a number of client projects.

"PPM Studio" is a collaborative, Enterprise Change Management Tool that enables an Enterprise to model its business processes, deliver them through processing as they Manage and Maintain them all in a Single, Unified Environment." "PPM Studio" is a comprehensive, end-to-end, scalable enterprise solution." Addresses the entire spectrum of life cycles from concept to delivery of software projects, products and solutions." Enforces the best practices set by your organization" Reduces the need for manual intervention, administrative work and costly errors in software development." Suitable for small group in one location to a globally distributed workforce with multiple vendor and partner resources."