2009 Benchmark Study: Product Portfolio Management

Transcription

1 2009 Benchmark Study: Product Portfolio Management Commissioned by Planview conducted by Appleseed Partners and OpenSky Research EXECUTIVE SUMMARY The results of a June 2009 product development market survey indicate that most product focused organizations are managing more projects than resources are in place to support, and the tools with which they manage the work are often no longer equal to the task, both slowing the productivity of assigned project resources, and creating inefficiencies for managers who spend more time in collection of data than its analysis. Key statistics 56% indicated that one of their top 3 pain points was having too many projects for their resources 57% said that the greatest risk in managing their product portfolios was missing critical market windows 37% said that their project delivery projections were highly or mostly inaccurate 44% manage portfolios of more than 50 products 49% described their companies as risk averse and less likely to make bets on new product innovation 11% of companies constantly monitor and stop underperforming projects Key takeaways In many product organizations, more time is being spent on data collection and less on data analysis, preventing swift action to stop underperforming projects and leaving less time to evaluate entry into new markets Microsoft Excel and other project tools are being used and manually combined in lieu of a holistic and analytical product portfolio management solution According to respondents, the two most useful functions of a product portfolio management solution are resource capacity planning and project and resource management Key Findings More than half of the 401 respondents are operating with too many projects for their resources, and are at risk for missing critical market windows; more than a third indicate that time of project delivery is most likely to be highly or mostly inaccurate. Only 11% indicated their organizations constantly monitor and stop underperforming projects. One on one interviews at a preliminary stage of this research confirmed that products and projects often continue receiving resources even when financial return is out of line with expectations. As resources are finite and overcommitted, this is one of the most critical areas to address related to improving time to market for new products. 45% are using Microsoft Excel as their primary tool for managing their product portfolios, which, when considered against the totality of the benchmark survey data, can be conclusively considered not complete enough a solution for the comprehensive job of product portfolio management as described by these survey respondents.

2 TABLE OF CONTENTS I. INTRODUCTION... 3 A. About the Survey... 3 B. Survey Objectives... 3 C. Survey Process, Participants and Methodology... 3 II. DEMOGRAPHICS... 4 A. Responses by Company Size... 4 B. Responses by Industry... 5 C. Responses by Number of Products Managed... 6 D. Use of PLM solutions... 7 III. PRODUCT PORTFOLIO MANAGEMENT ISSUES AND RISKS... 8 A. Primary Pain Points When Managing the Product Portfolio... 8 B. Greatest Risks When Managing the Product Portfolio... 9 C. Accuracy of projections D. Frequency of evaluating investment decisions E. Leaders of the product investment decision process F. Ultimate responsibility for product investment decisions G. Investment Analysis Process H. Ability to take risks I. Policy for underperforming projects J. Policy for underperforming products K. New product introduction process frameworks used IV. PRODUCT PORTFOLIO MANAGEMENT USE AND PLANS A. Current use of Product Portfolio Management B. Uses of Microsoft Excel for portfolio management C. Product functions most valued V. SUMMARY A. Recommendations B. Next Steps Planview, Inc. Page 2 of 24

3 I. INTRODUCTION A. About the Survey As part of a an ongoing focus around Product Portfolio Management, an online survey was commissioned by Planview in June 2009, preceded by a qualitative phone survey of groups and individuals within large organizations that are responsible for product portfolio decisions and management. The survey, data collection, and analysis were conducted by Appleseed Partners and OpenSky Research, independent, third party consulting and research firms. Any inquiries or comments regarding the survey or report, or permissions to use portions of this report in the public domain, should be sent to ProductPPM@planview.com. B. Survey Objectives Active in the product development market, Planview wanted to help members of this community discover peer strategies for more comprehensive, data driven portfolio management. The objective was to qualify insights using statistically valid, quantifiable data to identify: Primary pain points and risks when managing a product portfolio Accuracy of investment, projections and forecasts in terms of cost, time and expected revenue Risk aversion Assessment and ability to end of life underperforming projects Product portfolio management solution use (or lack thereof) and other alternative tools C. Survey Process, Participants and Methodology Appleseed Partners and OpenSky Research conducted the research in June of 2009, collecting 404 valid survey responses. Some questions were mandatory, some were optional; therefore, in the following charts, respondent numbers are provided. The majority of responses geographically originate from North America, given the general territories represented by the invitation mailing list. Note that 56% of responses were received from very large organizations (annual revenues greater than $1.1B) with a likely multinational or global presence. Survey demographics show that respondents represent a diverse cross section of industries and segments. The survey s intended scope was not to capture all types of product development across all industries; industries represented include manufacturing healthcare, software/technology, retail/wholesale trade, finance, and realestate, transportation, and others. Survey respondents included product development management, product management, chief information officers (CIOs), executives, and brand managers Planview, Inc. Page 3 of 24

4 II. DEMOGRAPHICS There was a wide variety of titles and roles across respondents. More than a third of respondents were from the development organizations of their companies (this includes research and development, engineering, project management and program management roles). Less than 10% of the respondents were from marketing or product marketing roles. A. Responses by Company Size Which range best describes your organization s annual revenues? N=290 Figure 1: Company Size More than half of survey respondents work for companies with more than $1.1B in annual revenues, 20% reported revenue between $251M and $1B, and 24% reported revenue of up to $250M Planview, Inc. Page 4 of 24

5 B. Responses by Industry Which of the following best describes your company s industry? N=291 Figure 2: Industries represented by respondents Survey respondents represented wide and varying industries, with the majority representing the Manufacturing and Healthcare verticals Planview, Inc. Page 5 of 24

6 C. Responses by Number of Products Managed Approximately how many products do you manage in your portfolio? N=290 Figure 4: Number of Products Managed Approximately a third of survey respondents manage more than 100 products in their portfolio Planview, Inc. Page 6 of 24

7 D. Use of PLM solutions Does your company currently use a Product Lifecycle Management Solution? N=292 Figure 6: Use of Product Lifecycle Management Solutions Only about a quarter of the survey respondents report that their company currently uses a PLM solution Planview, Inc. Page 7 of 24

8 III. PRODUCT PORTFOLIO MANAGEMENT ISSUES AND RISKS A. Primary Pain Points When Managing the Product Portfolio What are your primary pain points and issues when managing your product portfolio? (Select top 3) N=404 Figure 7: Primary Pain Points More than half the respondents selected Too Many Projects for our Resources as one of their top three primary pain points and issues when managing their product portfolio Planview, Inc. Page 8 of 24

9 B. Greatest Risks When Managing the Product Portfolio What are your greatest risks when managing your product portfolio? (Select top 3) N=376 Figure 8: Greatest Risks Time to market was the risk selected most often with regard to managing a product portfolio Planview, Inc. Page 9 of 24

10 C. Accuracy of projections How accurate do you generally find your investment projections/forecasts are in terms of costs, expected revenue, and time? N=355 Figure 9: Accuracy of Projections One third of respondents indicated their investment projections/ forecasts in terms of time of project delivery are mostly inaccurate. Almost half of the survey respondents believe their cost projections are mostly accurate Planview, Inc. Page 10 of 24

11 D. Frequency of evaluating investment decisions How often are investment decisions evaluated within your organizations? N=350 Figure 10: Frequency of Investment Evaluations Half the respondents reported that investment decisions are evaluated on a quarterly or monthly basis Planview, Inc. Page 11 of 24

12 E. Leaders of the product investment decision process Who primarily leads the product investment PROCESS within your organization? N=335 Figure 11: Leaders of Product Investment Decision Process More than half the time, executives, middle management or brand managers lead the product investment process Planview, Inc. Page 12 of 24

13 F. Ultimate responsibility for product investment decisions Who makes the ultimate product investment decisions in your organization? N=335 Figure 12: Decision maker for Product Investment decisions Most often, executive committees are ultimately responsible for product investment decisions Planview, Inc. Page 13 of 24

14 G. Investment Analysis Process Which of the following best describes your investment analysis process, i.e., what determines which initiatives get funding? N=344 Figure 13: Investment Analysis Process 42% of respondents indicated their investment analysis process is both relationship and data driven. Nearly a third of respondents believe their organization s analysis process is solely data driven Planview, Inc. Page 14 of 24

15 H. Ability to take risks How would you rate your organization s ability to take risks or make bets on new product innovation? N=328 Figure 14: Ability to take risks Nearly half of the survey respondents believe their organization is risk averse, while 30% indicated their organizations encourage risk Planview, Inc. Page 15 of 24

16 I. Policy for underperforming projects Which of the following statements best describes your organization s policy for underperforming PROJECTS? N=325 Figure 15: Policy for Underperforming Projects 41% of respondents believe a project must be severely off track in order to be stopped. Only 11% indicated their organization constantly monitors and stops underperforming projects Planview, Inc. Page 16 of 24

17 J. Policy for underperforming products Which of the following statements best describes your organization s policy for underperforming PRODUCTS? N=325 Figure 16: Policy for Underperforming Products Only 11% of respondents constantly monitor and retire underperforming products. 43% indicated that products are reviewed periodically and sometimes underperforming products are removed from the market Planview, Inc. Page 17 of 24

18 K. New product introduction process frameworks used What New Product Introduction (NPI) Process framework do you use? N=320 Figure 17: Use of New Product Introduction Process Frameworks Almost 40% of the survey respondents use an internally developed phase gate framework. More than a fifth of the respondents reported that they don t use a common process framework Planview, Inc. Page 18 of 24

19 IV. PRODUCT PORTFOLIO MANAGEMENT USE AND PLANS A. Current use of Product Portfolio Management Which of the following best describes your use of Product Portfolio Management Software? N=314 Figure 18: Current use of Product Management Portfolio Software 45% of the respondents reported using Microsoft Excel as the primary tool for managing product portfolios. 16% of the respondents currently use a product portfolio management solution, and another 12% are either deploying or considering the purchase of one in the next 12 months. Note: titles of these respondents indicates a possibility that some of the 27% of respondents who reported We don t use a solution and do not currently plan to purchase one are not aware of the company s product portfolio management status and plans. Including a Don t Know option may have reduced the number of respondents choosing the We don t use a solution and do not currently plan to purchase one option Planview, Inc. Page 19 of 24

20 B. Uses of Microsoft Excel for portfolio management For which of the following activities, if any, does your organization use Microsoft Excel? (Select all that apply) N=229 Figure 19: Uses of Microsoft Excel for Product Portfolio Management The top four uses of Microsoft Excel in product portfolio management were project ratings/rankings, NPV analysis, investment analysis, and resource capacity planning (all complex and time consuming activities when using Microsoft Excel as the primary tool). During the one on one interviews conducted in the earlier part of the research study, respondents indicated that they spend large amounts of time collecting the data they need and then manipulating it in Microsoft Excel. In addition, results from a poll during a recent Webcast conducted by Planview on the topic of product portfolio management showed that two thirds of respondents indicated that they spend more time collecting than analyzing data. This indicates that even though many portfolio management teams are regularly using Microsoft Excel to manage products, their needs may have outstripped this tool s intended use, and thus they are not working as productively as they might be with tools developed for their current and specific needs Planview, Inc. Page 20 of 24

21 C. Product functions most valued How useful do you/would you find the following product portfolio management solution capabilities? N=284 Figure 20: Most Useful Product Portfolio Management Product Functions The three product portfolio management solution functions most often described as very useful were resource capacity planning, project and resource management, and total cost of development. 38% of the survey respondents found resource capacity planning very useful and 38% found project and resource management very useful. In addition, total cost of development and reporting and product analytics were considered very useful or somewhat useful by more than 70% of respondents. Below are the definitions provided to respondents for each product function: IDEATION: Capturing, scoring, and ranking ideas to drive innovation into the product lifecycle process and bring the best customer driven products to market PRODUCT ROADMAP and RELEASE MANAGEMENT: Planning product roadmaps and releases that generate the maximum revenue and to capitalize on market opportunities RESOURCE CAPACITY PLANNING: Effectively balance and match resources with business demand, ensuring the capacity to deliver new products and enhancements AUTOMATE THE PHASE GATE PROCESS: Application to govern the process and supporting collateral for consistently evaluating new product ideas/enhancements and efficiently bringing them to market PROJECT and RESOURCE MANAGEMENT: Planning, organizing, and managing project schedules and resources to deliver new products to the market on time, on budget, and with the proper scope 2009 Planview, Inc. Page 21 of 24

22 TOTAL COST OF DEVELOPMENT: Accurately tracking the costs, both labor and non labor, required to develop a new product, maintain an existing product or sunset a product PROJECT and RESOURCE MANAGEMENT: Planning, organizing, and managing project schedules and resources to deliver new products to the market on time, on budget, and with the proper scope REPORTING and PRODUCT ANALYTICS: Providing product development specific analytics and dashboards for product comparisons and decision making PORTFOLIO MANAGEMENT: Comprehensive information via dashboards, reports, and drillable analytics that enable informed, priority focused, timely decisions on products and projects PRODUCT CATALOG MANAGEMENT: Visibility into all products, product lines, product families, and supporting projects, enabling product management to make product comparisons, trade off decisions, and prioritization to drive revenue 2009 Planview, Inc. Page 22 of 24

23 V. SUMMARY Companies that are best in class at product portfolio management are four times more likely to achieve margin premiums of 75% or higher for new products Aberdeen Group Managing complex product portfolios is a challenging and highly strategic role at any company. With a tight economy and limited resources the stakes are high for decision makers. Executives and portfolio managers must constantly make data driven, strategic decisions based on three key axes: 1. A roadmap for market driven products and development 2. Maximum return on investments 3. Maximum utilization on finite resources on the best set of projects Because most of the companies represented in this study represent large, multi million and billion dollar organizations with hundreds or thousands of products and distributed operations, the challenges are particularly acute. According to the study, most organizations have product portfolio and R&D managers who are expected by the executive committees with which they work to provide information that drives decisions on new product investment, end of lifing non performing products, and proper resource allocation for maximum stakeholder return. However, the study further indicates that the spreadsheet and other piecemeal tools so broadly in use do not adequately support these activities nor were they designed to. A. Recommendations The discipline of product portfolio management may be able to mitigate against the pains that survey respondents have reported; consider these items based on this research report: 1. Understand the opportunity cost of using spreadsheet tools: Evaluate the number of disparate spreadsheets being used across the organization for data collection. Are they easy to access, share, and manipulate with large collections of information? Is there opportunity for inaccurate data to be included in executive reporting? Could automating the data collection process improve productivity? What efficiencies could be gained by being able to analyze data in a consistent format for better decision making? Portfolio managers may feel acute pain in this area but may not be aware of other options for tools or automation. 2. Take time to understand the big picture: Determine the revenue impact of missing time to market targets. What percent of products miss their launch dates? What benefits could be achieved if launch dates were more predictable through automated, repeatable processes? Are there solutions and process improvements that can be implemented to help address these challenges? Many firms face similar issues and there are solutions that can help. 3. Determine the true cost and value of product portfolio management solutions: Unlike many large enterprise systems, product portfolio management solutions have a proven track record of or rapid implementations that can drive fast ROI. Many can be up and running within a few months and additional components can be rolled out incrementally. Are there modular opportunities to address a specific pain point around product portfolio management? Are there hosted or Software as a Service options? More importantly, what is the value of a good portfolio decision and the cost of poor ones? Work with vendors and peers to become more knowledgeable about your choices. The cost of a product portfolio solution may well be offset by your ability to make timely, effective decisions that speed time to market with the right product mix, while leveraging the right resources Planview, Inc. Page 23 of 24

24 4. Learn more about product portfolio management principles: Mature product portfolio management processes can lead to better product decisions and financial returns. Will you be able to implement a process that is consistent across the company? What best practices already exist that can be adapted for your environment? How will an acquisition or merger affect your process? Can you get everyone get on the same page in a distributed organization? Look to vendors that are domain experts and can offer best practices libraries and guides, e learning resources, and similar services, that spur adoption and maturity. 5. Gain executive buy in: There are several players in the organization involved in making investment decisions about the product portfolio. Determine what it takes in your organization to deliver quality information for effective decision making. What happens when market conditions change? How long does it take to re assemble the team and adjust executive reports? What is the biggest risk factor for your portfolio? How far out can you predict resource capacity changes? Sharing the types of reports and ongoing analysis delivered through portfolio management solutions is an eye opener for executives. With product portfolio management solutions, producing these types of reports can more expedient than ever before. B. Next Steps If you would like to learn more about product portfolio management, please access these resources. 1. Join a Product Portfolio Management LinkedIn Group One of the best ways to learn about solutions, strategies, and best practices is to connect with your peers on free social media sites such as LinkedIn. Connect to colleagues to share information and solutions at: 2. Visit the Planview Web site: Visit for information, datasheets, whitepapers and Webcasts about Product Portfolio Management solutions, best practices, and more. If you have any questions or comments regarding this report, or if you would like additional information, please contact ProductPPM@planview.com Planview, Inc. All rights reserved. Planview is a registered trademark of Planview, Inc. Planview, Planview Enterprise, PRISMS, OpenSuite and the Planview logo mark are trademarks or registered trademarks of Planview, Inc. Microsoft and Excel are registered trademarks of Microsoft, Inc. Stage Gate is a registered trademark of Stage Gate, Inc. PACE and PRTM are registered trademarks of Pittiglio Rabin Todd & McGrath. All other names may be trademarks of their respective organizations. This document may not, in whole or in part, be copied, photocopied, reproduced, translated, or reduced to any electronic medium or machine readable form except as provided by prior written consent from Planview, Inc. Every effort has been made to ensure the accuracy of this report. However, Planview, Inc. makes no warranties with respect to this documentation and disclaims any implied warranties of merchantability and fitness for a particular purpose. The information in this document is subject to change without notice. Planview, Inc N. Mopac, Suite 100, Austin, TX 78759, USA Planview, Inc. Page 24 of 24