Silos changing: Our regular expert blog from industry analyst firm, Cambashi

This Silos Changing series explores how manufacturers are likely to deploy new software applications that enable enterprises to implement business initiatives in the new economy. Currently we’re discussing applications that help enterprises implement business initiatives supporting strategies around the product differentiation business driver. 

This blog is looking at one application in particular – portfolio planning. In our last blog, we discussed how R&D management could convert different inputs from voice and video to structured market research to understand the voice of the customer. We pointed out that it’s often the case that v1.0 of a product will not contain all the functionality customer’s require. We don’t see that as a problem, rather it is an opportunity to develop a road map for a family of products meeting differentiated and developing demand.

In August, management consultancy PwC acquired PRTM, another consultancy that pioneered much of the thinking about Portfolio Management.  Mark Deck’s 2003 article Creating a Winning Product Portfolio http://www.prtm.com/StrategicViewpointArticle.aspx?id=94&langtype=1033  is an excellent description of the management issues.

These concepts do not simply check that research projects are on time and on budget. They assess the relevance of the projects to ensure they contribute effectively to business goals, such as when their results can be used in development of the next product instance in a family.  The idea is to bridge the gap between ongoing basic research and development of a specific product instance that meets a customer requirement.

Product development projects need proven research.  A portfolio management approach will help allocate resources especially when outcomes are uncertain. The ideal is to regularly evaluate all research and development projects by peer review, understand those most likely to succeed, then allocate resources to projects that create a funnel of product instances coming to market in a publishable roadmap.

Industry sectors such as automotive and pharmaceuticals adopted the concepts of Portfolio Management some time ago and developed extensive in-house enterprise applications. However, there are now options to deploy applications from specialist or generalist software developers.

 A word of caution; whatever route is taken, deploying Portfolio Management applications requires considerable professional services support.

Sopheon is a leading specialist software provider of Portfolio Management. About four years ago it took over support of customers of its financially unsuccessful rival IDe. It now has about 1,000 customers in industry sectors from Food and Beverage, such as Heinz and PepsiCo, to Aerospace and Defence, such as BAE Systems and Bell. Sopheon’s product portfolio management software, Accolade, enables companies to more effectively prioritise product ideas, focus resources on the most promising opportunities and bring the right products to market on time. The solution pulls information from projects as they go through the development process, enabling cross-functional users from marketing, engineering, manufacturing, and other key functions involved in product lifecycle management to establish a consensus to drive successful product portfolio planning. 

There are other specialist Project Portfolio Management applications. Often they have evolved to serve specific industry sectors. Oracle’s Primavera comes from the construction industry.  There are a host of suppliers specializing in software products such as Compuware. As embedded software becomes a more important part of many manufacturers’ products, some of these stretch their capability beyond software alone.  One such example is BigLever Software’s Gears application used in software intensive products at Lockheed Martin, General Dynamics and GM. Another is PowerSteering whose customers include Ingersoll Rand and Bombardier.

Leading PLM suppliers Dassault, PTC and Siemens PLM, and Enterprise Application Suppliers such as Infor and SAP include Portfolio Planning modules in their suites. These have the advantage of incorporating integration with other product development applications. Nonetheless, the battle between using a best of breed specialist or an integrated suite still has a long way to run. 

In future blogs we will go on to talk about other potential applications that support product differentiation, such as Requirements Management, Cost Effective Sourcing, and Visualisation and Simulation.