INNOVATION MEGATRENDS
Driving Innovation
In a Time of Resource Constraints
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Maureen Carlson
Partner
Appleseed Partners
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The results of the industry’s third Product Portfolio Management Benchmark Study indicate that companies are struggling to drive innovation without adding resources and are taking calculated risks relying on limited, inaccurate data to make critical product pipeline decisions.
This year, 320 product development executives and managers across the globe shared their priorities, risks, and pain points around product portfolio management (PPM). The study provides an assessment and trends on the state of PPM at companies with complex product portfolios. Participation in the survey series has served as a signpost of interest and attention to the state of PPM and its business impact. Following is a summary of the survey findings.
The Challenges
For the third time and by a wider margin, the top three pain points are
too many projects for resources, not being able to drive innovation fast enough, and decisions that go back and forth and get made late or ineffectively (Figure 1).
(Click to view a larger version of this chart)
The pain points are interrelated and lead to questions such as “How effective are companies at prioritizing projects and products?”, “How do companies drive innovation in this economy without adding resources?”, and “What factors are leading to missed time-to-market targets?”
Study responses show that the pain points are a direct result of the lack of available data, inconsistent metrics, limited pipeline visibility, and the absence of effective PPM tools and processes. This year there is a wider acknowledgement of the inability to prioritize the product pipeline, and there are indications of near term plans to address the problems.
The Risks
The top risks are
managing changing priorities as business conditions change followed by
not cutting lower value projects that take away resources from more strategic projects (Figure 2).
(Click to view a larger version of this chart)
Over 50% of respondents indicated that missing the voice of the customer and developing the wrong product was a top risk, yet another question shows that 90%
rely on informal ways to integrate the voice of the customer into the product development process. The results signify that there are serious challenges with data-driven decision-making and increased pressure to utilize portfolio scenario analysis.
Forecasting
Participants were asked to rate their accuracy on
Costs, Schedule, and Expected Revenue. Fifty-four percent rated their organization as
accurately projecting Costs. Thirty-five percent of participants rated themselves
mostly inaccurate at projecting schedule, which can affect time-to-market and expected revenue and margins. Only 28% rated their organization as being
accurate at Forecasting Expected Revenue, a decrease of nearly 10% from 2010.
Resources
Nearly half of the participants reported that they are em>
somewhat poor to
very poor in their ability to manage and forecast resource capacity accurately. Additionally, there was an 11% shift from a neutral rating in 2010 to being somewhat poor in ability to forecast resource capacity in 2012.
The primary challenges to resource capacity planning as shown in Figure 3 are consistent with the top pain point of
too many projects for resources. There is no doubt that conflict between projects that require similar resources is exacerbated by “just do it” projects.
The primary issue is lack of visibility. The perception is that resources are available to a project 100% of the time but they are likely dividing their time to work on multiple projects. More visibility eliminates the #1 challenge and helps management prioritize sales-driven projects and allocate the appropriate resources.
(Click to view a larger version of this chart)
Systems
The use of Automated Product Portfolio Management Systems has doubled since 2010. Evaluation expanded
six-fold in the same period. The percent of those
not considering a solution is only 9% in 2012 (Figure 4).
(Click to view a larger version of this chart)
Summary
Companies have a critical need to support innovation and growth plans while managing resources effectively. To do so, companies must use consistent processes, tools, and metrics to improve data availability, accuracy, and visibility to make more informed decisions. Companies are finding they need purpose-built solutions versus using un-integrated spreadsheets and basic project tools to achieve the next level of PPM performance and effectiveness.
Download Planview's 3rd Product Portfolio
Management Benchmark Survey
The online study was conducted in February 2012 by Appleseed Partners and OpenSky Research and was commissioned by Planview, Inc. To download the full study methodology, demographics, additional results, findings, and recommendations, visit
www.Planview.com/FSBenchmark.
About the Author
Maureen Carlson is a partner at Appleseed Partners, an independent marketing consulting and research firm. Maureen has nearly 20 years of experience in high technology, business-to-business marketing, research, and consulting. She has focused on product marketing for hardware, software, and professional services and has experience in several market segments including manufacturing and healthcare. Contact Maureen at
mcarlson@appleseedpartners.com. Follow Maureen on Twitter: @mocarlson.
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