PRODUCT LIFECYCLE MANAGEMENT INTRODUCTORY GUIDE
IG1100 Version1.1 November, 2012
©TM Forum 2012. All Rights Reserved.
Product Lifecycle Management - An Introductory Guide
Notice Copyright © TeleManagement Forum 2012. All Rights Reserved. This document and translations of it may be copied and furnished to others, and derivative works that comment on or otherwise explain it or assist in its implementation may be prepared, copied, published, and distributed, in whole or in part, without restriction of any kind, provided that the above copyright notice and this section are included on all such copies and derivative works. However, this document itself may not be modified in any way, including by removing the copyright notice or references to TM FORUM, except as needed for the purpose of developing any document or deliverable produced by a TM FORUM Collaboration Project Team (in which case the rules applicable to copyrights, as set forth in the TM FORUM IPR Policy, must be followed) or as required to translate it into languages other than English. The limited permissions granted above are perpetual and will not be revoked by TM FORUM or its successors or assigns. This document and the information contained herein is provided on an "AS IS" basis and TM FORUM DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY THAT THE USE OF THE INFORMATION HEREIN WILL NOT INFRINGE ANY OWNERSHIP RIGHTS OR ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Direct inquiries to the TM Forum office: 240 Headquarters Plaza, East Tower – 10th Floor, Morristown, NJ 07960 USA Tel No. +1 973 944 5100 Fax No. +1 973 944 5110 TM Forum Web Page: www.tmforum.org
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Product Lifecycle Management - An Introductory Guide
Table of Contents Notice .......................................................................................................................... 2 Table of Contents ............................................................................................................. 2 List of Figures .................................................................................................................. 4 List of Tables .................................................................................................................. 5 Executive Summary .......................................................................................................... 6 1. PLM in the Digital Economy ............................................................................................... 8 1.1. The Background to PLM ...................................................................................................................... 8 1.2. PLM Defined.....................................................................................................................................10 1.2.1. Product Data Management at the PLM Core ..............................................................................11 1.2.2. Holistic PLM ..............................................................................................................................17 2. Making PLM Happen .................................................................................................... 22 2.1. PLM Reference Frameworks .............................................................................................................23 2.1.1. Business Process Framework (eTOM) ........................................................................................23 2.1.2. Information Technology Infrastructure Library (ITIL) ...................................................................25 2.1.3. Software Development Lifecycle (SDLC) .....................................................................................27 2.2. Standing up PLM...............................................................................................................................29 2.2.1. Establishing the PLM Foundation ...............................................................................................29 2.2.2. PLM Design Principles ...............................................................................................................30 2.2.3. Example PLM Process Models ...................................................................................................32 2.2.4. PLM Stages and Gates ...............................................................................................................35 2.2.5. Typical PLM Roles .....................................................................................................................37 2.2.6. Bringing It All Together ..............................................................................................................38 3. PLM Challenges and Opportunities .................................................................................... 41 3.1. Challenges ........................................................................................................................................41 3.2. Benefits and Potential Value .............................................................................................................43 3.3. Measuring PLM Results .....................................................................................................................45 3.3.1. Industry Standard KPIs ..............................................................................................................46 3.3.2. KPI Pitfalls to Avoid ...................................................................................................................46 4. PLM Maturity............................................................................................................. 48 4.1. Maturity Model Definition ................................................................................................................48 4.2. Key Aspects of a Maturity Model .......................................................................................................48 5. Why PLM ................................................................................................................. 50 6. Appendix ................................................................................................................. 51 6.1. References .......................................................................................................................................51 6.2. Document History ............................................................................................................................52 6.3. Company Contact Details ..................................................................................................................52 6.4. Acknowledgments ............................................................................................................................52
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Product Lifecycle Management - An Introductory Guide
List of Figures 9
Figure 1 -‐ Product Maturity Lifecycle. Source: Tribold Limited. Figure 2 – Application Framework Product Management Domain. Source: TM Forum.
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Figure 3 – PLM across the Product Management Domain. Source: Tribold Limited.
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Figure 4 – Product Model. Source: Tribold Limited.
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Figure 5 – Information Framework (SID) Data Domains. Source: TM Forum.
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Figure 6 – Information Framework Product-‐Service-‐Resource Associations. Source: TM Forum.
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Figure 7 – Simple PLM Framework. Source: Tribold Limited.
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Figure 8 – Holistic PLM Framework. Source: Tribold Limited.
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Figure 9 – Goals of PLM. Source: CIMdata.
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Figure 10 – Dimensions of PLM Deployment. Source: Telecom New Zealand.
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Figure 11 – Business Process Framework with PLM Designations. Source: TM Forum.
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Figure 12 – Business Process Framework PLM Domain. Source: TM Forum.
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Figure 13 – ITIL Service Lifecycle. Source: ITIL/itSMF.
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Figure 14 – ITIL to PLM Mapping. Source: TM Forum.
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Figure 15 – Software Development Lifecycle. Source: Wikimedia Commons.
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Figure 16 – Holistic PLM Building Blocks. Source: Telecom New Zealand based on Detecon Model.
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Figure 17 – Organization & Process Alignment. Source: Telecom New Zealand.
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Figure 18 – PLM Process Model. Source: Tribold Limited.
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Figure 19 – PLM Pathways. Source: Telecom New Zealand.
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Figure 20 – PLM Process Model. Source: Telecom New Zealand.
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Figure 21 – PLM Stages/Gates. Source: Tribold Limited.
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Figure 22 – PLM In Practice. Source: Telecom New Zealand.
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Figure 23 – PwC Product Management Maturity Framework. Source: PRTM Study.
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Product Lifecycle Management - An Introductory Guide
List of Tables Table 1 – Benefits of PLM. Source: John Stark.
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Table 2 – PLM Design Principles. Source: Telecom New Zealand.
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Table 3 – Holistic PLM Framework Level 2/3 Processes. Source: Tribold Limted.
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Table 4 – PLM Gate Definitions. Source: Tribold Limited.
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Table 5 – Typical PLM Roles. Source: Tribold Limited.
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Table 6 – With and Without PLM. Source: Telecom New Zealand.
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Product Lifecycle Management - An Introductory Guide
Executive Summary
Product Lifecycle Management (PLM) has long been the reserve of the retail and manufacturing industries. When you are constructing something physical, it is easy to see how the idea and design of individual component parts and their successful assembly into a single saleable product depend directly on clear planning and definition, end-‐to-‐end process coordination, and ongoing delivery management, all of which are key aspects of a PLM framework. The benefits are obvious too – assured interoperability during production, an end-‐state product that closely resembles the upfront requirements and design specifications, and a common understanding of what is being sold and what is required to sell and support it. Applying these same principles to the communications industry, however, was not so obvious in the past. One could point to a number of reasons why operators did not feel the pressure to institutionalize PLM: limited product complexity and features, homogenous network/provider landscape, monolithic infrastructure, and so forth. Fast forward to today’s digital world, and the environment is anything but simple and static. With the convergence of technologies and markets, the abstraction and virtualization of services, and a truly global market of over 6 billion people, digital services are exploding. Thus the traditional landscape of the communications industry has been forever changed. With the seemingly infinite number of moving parts that require coordination in order to produce a seamless offering for the market, against the backdrop of a rapidly changing ecosystem, PLM is becoming an essential enabler of the Digital Economy. PLM, if implemented correctly, can have significant operational, financial, and customer experience benefits: • Operating cost reduction. Decrease execution cost, increase human resource performance, and decrease churn rate. • Time management. Decrease time to market, decrease waiting time, and decrease delay in delivery to the customer through improved collaboration and establishing a consistent product development process across the business. • Innovation. Organizations are looking for PLM to improve the business by enabling more innovation at the idea stage, producing better product designs, increased reuse, improved standards and consistency, and clearer visibility and management of product data. • Product and process quality improvement. Increases can be observed in product management process performance, customer value performance, value net performance, information availability and accuracy, product launch quality, provisioning performance, service quality, and reductions in technical defects.
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Product Lifecycle Management - An Introductory Guide Implementation of a PLM strategy should and can be underpinned by sound financial targets. These targets help to quantify the benefits of a transformative or improvement PLM project. Examples of benchmarks that have been proven by referenceable case studies in the marketplace include: • 50% reduction in the time to market • 20% increase in revenues by widening the product portfolio • 20% increase in revenues by introducing products faster • 40% increase in revenues by introducing new products/services on existing offerings • 35% increase in product quality • 60% reduction in cost to market This guide explores the rationale for PLM in the Digital Economy, the maturity of the frameworks available, and how such organizations can deploy PLM fit for their purposes. About the authors This guide was co-‐authored in collaboration between Tribold Limited and Telecom New Zealand. It was compiled based on the experience of both organizations in defining, tailoring, adopting, and deploying PLM frameworks in the digital world: • Catherine Michel, Tribold • Sharon Lynch, Tribold • Kiran Amin, Tribold • Ella Obreja, Telecom New Zealand
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Product Lifecycle Management - An Introductory Guide
1. PLM in the Digital Economy Competing in the increasingly commoditized digital service industry, providers are commercially compelled to seek more ways in which they can reduce their time-‐ and cost-‐to-‐ market, while improving innovation and quality. With subscriber saturation in the communications sector at an all-‐time high, the emergence of multi-‐service providers from non-‐traditional sources, the convergence of user interfaces, and increasing network abstraction, the pressure is on to execute a product strategy that delivers simplification and accuracy, personalization without customization, reliability, and flexibility at a low cost. These objectives are demanding a strategy that specifically answers a multitude of business critical questions, such as: •
How do I effectively exploit existing capabilities into more competitive and attractive market offers?
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How do I quickly introduce new capabilities on top of existing infrastructure?
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How do I ensure that my customer’s experience is a satisfactory one, from the point of order to the point of use?
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What can help me manage existing product lines, while launching new ones, without disrupting business as usual?
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How do I simplify the product development process to reduce the cost and time it takes?
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How do I bring the business and IT factions together to collaborate on more effective offerings?
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How do I assure compliance with tax and regulatory rules for transparency and traceability?
To answer these questions and respond to the intensifying pressure, service providers are increasingly focused on deploying a discipline that is turning under-‐managed capabilities and fractured processes into a coordinated effort to design, develop, deploy, and maintain the products around which their business is centered. In this context, Product Lifecycle Management (PLM) is the key to effectively and efficiently innovate and manage a company’s products and related services and resources to assure ongoing sustainability and profitability.
1.1. The Background to PLM PLM has its roots back in the 1960s, when product marketing was becoming better understood and managed. The marketer and university professor E. Jerome McCarthy IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 8 of 52
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Product Lifecycle Management - An Introductory Guide proposed a simplified version of the previously published Marketing Mix concept, suggesting a four Ps classification to articulate a company’s market offering: Product, Price, Place, and Promotion:1 •
Product – An item that satisfies what a consumer needs or wants. It is a tangible good or an intangible service.
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Price – The amount a customer pays for the product.
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Promotion – The methods of communication that a marketer may use to provide information to different parties about the product.
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Place – The distribution of the product at a place that is convenient for consumers to access.
The 4 Ps have evolved into the 4 Cs (Consumer, Cost, Communication, and Convenience), but the implications are the same: these are the fundamentals with which a company defines what it is selling and how it goes to market with it. How to manage these fundamentals is at the core of any company’s Product Management strategy. A few years on from the 4Ps, the Product Lifecycle Model was first published by Harvard professor Raymond Vernon. Vernon observed five stages in the lifecycle of a product, with each stage having specific implications on how products are manufactured and traded across local and international markets2: •
Stage 1: Introduction
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Stage 2: Growth
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Stage 3: Maturity
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Stage 4: Saturation
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Stage 5: Decline
Figure 1 – Product Maturity Lifecycle. Source: Tribold Limited.
McCarthy, Jerome E. (1960). Basic Marketing. A Managerial Approach. Homewood, IL: Richard D. Irwin. Raymond Vernon (1966). International Investment and International Trade in the Product Cycle, The Quarterly Journal of Economics, Vol. 80, No. 2, pp. 190-‐207.
1 2
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Product Lifecycle Management - An Introductory Guide This model was gradually adopted by economics and marketing theorists as a way to describe and define more generically the product lifecycle management concepts and principles in the product development and product management domains. Institutionalized adoption of PLM, however, did not occur until the 1980s, when it was taken up primarily by the automotive industry. This effort was in response to the cyclical market reality, as defined above, that the U.S. automotive industry was facing and therefore its need to compete at lower costs. In other words, in the face of stiff competition and changing market conditions, companies asked, “How do I take my company’s 4 Ps and improve upon them using a process that reduces my time and cost to market, while preserving innovation and quality?” The answer was found in the use of tools such as CAD (computer aided design), CAM (computer aided manufacturing), CAE (computer aided engineering), and PDM (product data management). Eventually, PLM as a discipline in practice emerged from the tools and activities geared specifically towards engineering. As these technologies evolved and moved beyond just the automotive industry, they became the backbone of modern day PLM, which is the creation and central management of all product data and the technology used to access this information and knowledge. But PLM has grown to mean more than just the use of these tools; it is now viewed as the integration of these tools with methods, people, and processes through all stages of a product’s life.3 The same pressures weighing on the automotive industry of the 1980s challenge the Digital Economy’s communications, media, and high-‐tech providers of today.
1.2. PLM Defined In the broader organizational context, PLM is considered one of the core competencies of the Product Management domain, which is the overall area responsible for the organization’s 4 Ps. As defined by TM Forum’s Frameworx Application Framework (TAM), Product Management contains four key facets4: •
Product Strategy/Proposition Management
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Product Catalog Management
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Product Lifecycle Management
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Product Performance Management
3 4
Teresko, John (21 December 2004). "The PLM Revolution". IndustryWeek. Retrieved 26 September 2012. TM Forum document GB929, GB929-‐CP. www.tmforum.org.
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Product Lifecycle Management - An Introductory Guide
Figure 2 – Application Framework Product Management Domain. Source: TM Forum.
In practice, PLM actually extends across the other Product Management competencies in terms of managing how those activities interoperate to produce a successful strategy around the 4 Ps. The transcendence of PLM underpins the premise of this document:
Product Management PLM Product Strategy
Product Catalog Management
Product Performance Management
Figure 3 – PLM across the Product Management Domain. Source: Tribold Limited.
1.2.1.Product Data Management at the PLM Core As previously mentioned, Product Data Management (PDM) as a discipline and as a capability existed before PLM. For manufacturing, managing the underlying data that defines the specifications of a product was seen as a critical component to managing the production of that product. PDM for the digital economy can be viewed as the equivalent to the Product Catalog Management competency in the Application Framework’s Product Domain, as identified above. PDM is an even more fundamental competency in the digital world, where products IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 11 of 52
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Product Lifecycle Management - An Introductory Guide are largely intangible services and therefore data driven in their logical design, physical composition, and customer use. So a large portion of managing the “product” in this case is really managing the data that comprises the product specification, which can be viewed as the following elaboration of the 4 Ps: •
What is being sold
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What it comprises
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How it is sourced, fulfilled, and supported
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To whom it is being sold
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For what cost is it being sold
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How it is sold
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How it is used
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How it is tracked
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How it is rated, taxed, and invoiced
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How it is paid for and booked
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How it should perform
The resources that support the product’s services are important as well. So when referring to a product in the digital economy, the product is often more of a product composite that can be depicted by the following model:
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Product Lifecycle Management - An Introductory Guide
Figure 4 – Product Model. Source: Tribold Limited.
In essence, the product composite is ultimately made up of attractive commercials (Offer), with great features (Product), that are based on the latest technologies (Service), using the best devices and networks (Resource). Each of these elements, including Offer, Product, Service, and Resource, contains Data (information) made up of discrete logical entities with characteristics, values, and rules that together deliver or enable a specific experience for the customer. These elements together comprise the Product Model. Delineating the product composite into a clear model on which specifications can be defined, stored, and managed is a core objective of PDM. The Product Model is the blueprint for structuring the product data in a modular, flexible, and most importantly, reusable way. As a common reference source to illustrate the model, the Frameworx Information Framework (SID) offers a set of standard definitions for the Offer, Product, Service, and Resource data entities relevant to the digital industry5:
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TM Forum document GB922 0-‐P, GB922-‐CP. www.tmforum.org.
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Product Lifecycle Management - An Introductory Guide
Figure 5 – Information Framework (SID) Data Domains. Source: TM Forum.
The data definitions from the Information Framework can be used as a comprehensive guideline for establishing the organization’s common model for Product. They can be tailored to suit the organization’s physical implementation of the PDM model:
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Product Lifecycle Management - An Introductory Guide InvolvedServiceSpecs 0..n
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Figure 6 – Information Framework Product-‐Service-‐Resource Associations. Source: TM Forum.
Specifically, the Information Framework provides the following support for a common Product Model:
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Standard way of structuring, defining, and implementing information and behavior
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Consistent common terminology
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Reuse of investment
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Single representation from which technology-‐specific data models can be derived
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Product Lifecycle Management - An Introductory Guide The data reproducibility and repeatability of the Product Model is critically important for when specifying products with the aim of supporting the key goals of PLM: •
Standardization: a common design language between customers, product managers, and the rest of the organization
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Simplicity: a single repository for all products
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Profitability: leveraging reusable components to deliver low cost/high yield offers
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Intelligent customer solutions: from a reactive to a proactive solutions set
Hence, the PDM application is considered one of the most important elements of a strong PLM practice. It can manage the entire Product Intellectual Capital created and used in the PLM environment, most importantly the Product Data. PDM gets the Product Data under control. There are many different functions that the PDM application can provide, from data federation (configuring and storing product models) to actual lifecycle management (sign off and approval workflows, project management, updates, and design and build integration). Below are some of the key benefits of a PDM application, which is the equivalent of the Product Catalog Management facet of the Application Framework’s Product Management domain6: Description
Benefit
Product data management
• Provide a single, controlled vault for product data. • Maintain different views of product data structure e.g. Product Model. • Provide fast, real-‐time access to product data. • Manage complex Product Model configurations.
Reuse of product data
• Reuse existing Product Model designs for new products. • Reduce duplication of product data.
Workflow management
• Ensure the appropriate PLM process is followed. • Improve distribution of product data to relevant functional areas. • Provide transparency of PLM activities and PLM stages related to a product. • Ensure PLM engagement and RACI is followed. • Enable agile PLM governance and decision-‐making processes.
st
John Stark. Product Lifecycle Management, 21 Century Paradigm for Product Realisation. Springer, 2011 – content has been adapted from the book.
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Product Lifecycle Management - An Introductory Guide Description
Benefit
Overall business performance improvement Functional performance improvement
• Improve product quality. • Reduce overhead costs. • Increase PLM productivity. • Reduce product inventory. • Develop better cost estimates.
Better management of PLM activities
• Improve project coordination. • Increase the reliability of PLM plans and roadmaps. • Provide high-‐quality management information.
Automation of PLM activities
• Automate the PLM process, including approvals and sign-‐ offs. • Automate the exchange of product data.
Integration of OSS/BSS
• Integrate Islands of Data and Automation. • Link databases and systems, for example, PDM with Business Intelligence. • Remove unnecessary systems. Table 1 – Benefits of PLM. Source: John Stark.
1.2.2.Holistic PLM Products define a company. Without products, there will be no customers and no revenues. So without its products, a company would not exist.7 PLM enables a company to be in control of its products across the different stages of their maturity and marketability. As such, PLM can be defined as a controlled framework for managing the entire lifecycle of the product and its underlying components. This includes all of the processes required to design, build, deploy, maintain, and ultimately, retire the product.
st
John Stark. Product Lifecycle Management, 21 Century Paradigm for Product Realisation. Springer, 2011 – content has been adapted from the book.
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Product Lifecycle Management - An Introductory Guide
Idea ReVre
Plan
Maintain
Design
Launch
Build & Test
Figure 7 – Simple PLM Framework. Source: Tribold Limited.
Generally, these activities require a significant degree of collaboration across the company. When thinking about the company itself, in simple terms, it is organized into functions – sales, marketing, manufacturing, customer services, operations, and so forth. People’s jobs have been created and defined based on those specific functions, for example, sales representative or customer service representative. As business models evolve, a great deal of effort and focus is placed on increasing efficiencies in these functional areas by introducing information and information systems to help these functions do their work. Although operational improvements can be made individually in each of these areas, such initiatives suffer from the law of diminishing returns: while one factor is improved or enhanced, all the other factors stay the same. You then battle against the silo approach, disjointed business processes, a mishmash of systems and lack of collaboration among organizational departments and teams. It is a common occurrence across many organizations, grappling with oceans of information and complex technology ecosystems, for functional areas to become isolated silos with little communication and coordination between them. This is an especially critical challenge in fast-‐ moving industries such as ours, which are struggling to catch up with ever-‐changing customer demands at the expense of shrinking margins. PLM holds the promise of improving product efficiency through a cross-‐functional, holistic approach. By linking different functional areas through shared information, PLM can help IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 18 of 52
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Product Lifecycle Management - An Introductory Guide break down the silo perspective and unlock the organization.8 Sharing of information through an integrated PLM framework is especially powerful: once the information capital is in place, it can be reused, reconfigured, and reutilized, and ultimately easily replaced without braking or reconstructing the whole system, thus enabling a flexible, dynamic, and agile business model. More holistically, PLM combines people, technology, processes, and data into a strategic business approach for developing and managing products across the enterprise, taking them from the cradle to the grave. Holistic PLM is therefore underpinned by five core building blocks:
8
•
People – Puts product practitioners at the center of the approach with clear, simple, and usable functions across the entire lifecycle. It empowers people and teams to develop ideas that are meaningful to customers.
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Product Information – Securely stores and manages the integrity of product information (product-‐service-‐resource) and all the outputs (for example, internal documentation, collateral, service agreements) to allow management of product, including performance at the product-‐line level.
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Process – Facilitates execution of the collaborative process used across the product functions to drive the lifecycle of products from initiation to retirement, including strategy, planning, product management, product service, and experience.
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Governance – Enables an agile, fit-‐for-‐purpose PLM Framework with clear roles, accountability, and a lean governance and decision-‐making model.
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Tools – Enable an integrated and collaborative product management ecosystem.
Michael Grieves. Product Lifecycle Management. McGraw-‐Hill, 2006.
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Product Lifecycle Management - An Introductory Guide Put into practice as part of a broader, more holistic PLM Framework, these building blocks provide the basis on which the organization can strategize, implement, and manage products according to market and competitive demands:
Figure 8 – Holistic PLM Framework. Source: Tribold Limited.
•
Develop Product Strategy. The activities necessary to develop the product strategy to meet the overall company revenue and competitive targets. The organization will analyze product and market data in progress and future product initiatives and operational objectives to arrive at the desired product portfolio. This desired product portfolio is matched up with the budget planned for product development, and a product development plan is created for a period of time (quarter, annual, etc.). The product strategy is a fundamental function of PLM because it ensures that the organizational resources (people, technology, and budget) are focused on developing and managing the products that are the most profitable for the company.
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Design and Develop Products. The activities necessary to execute the product strategy. Resources from across the organization work together to deliver the new and updated products as outlined in the overall product portfolio plan and strategy. The organization works together across functional areas, according to the pre-‐ IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 20 of 52
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Product Lifecycle Management - An Introductory Guide determined responsibilities and processes to meet the product marketing and launch plans. •
Monitor and Update Products. The activities related to ensuring that the desired Key Performance Indicators (KPIs) are measured and monitored to achieve the desired operational results. Includes continually reviewing and analyzing product performance data to make intelligent, quantified decisions about the lifespan of a product and any changes that should be made prior to full retirement.
PLM brings together an eclectic mix of organizational responsibilities, information, and workflows in a structured and holistic way to deliver on the 4 Ps. The efficiencies, or improvements, triggered from a PLM implementation across the enterprise often relate to four key areas:
Figure 9 – Goals of PLM. Source: CIMdata.
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Cost Reduction. Organizations are looking for PLM to increase business value through higher revenue margins against the bottom line – profits.
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Time Management. By improving collaboration and establishing a consistent product development process across the business, organizations are looking to reduce the time required to define and deliver new products and manage existing ones.
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Innovation. Organizations are looking for PLM to improve the business by enabling more innovation at the idea stage, producing better product designs, increased reuse, improved standards and consistency, and clearer visibility and management of product data.
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Quality Improvement. Organizations are looking for PLM to produce a better end result that meets the market and customer requirements and uphold a reputation for excellence and reliability thus reducing any faults through the design, implement, and testing stages. IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 21 of 52
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Product Lifecycle Management - An Introductory Guide
2. Making PLM Happen The practice of PLM is based on an information-‐driven approach to managing a company’s Product Intellectual Capital, represented as Product Data (the fabric of products: product model/product architecture) and Product Knowledge (analytics, collateral). When deploying PLM across the organization to manage these aspects of the Product, PLM deployment should be considered across three dimensions:
Humanics: People Domain
Dynamics: Process Domain Mechanics: Data Domain
Figure 10 – Dimensions of PLM Deployment. Source: Telecom New Zealand.
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Mechanics: the Data and Systems domain. The capture, structure, storing, and maintenance of the Product Intellectual Capital in the Product Data Manager vault, where the Product Data and Product Knowledge are stored.
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Dynamics: the Process domain. The flow and exchange of Product Data and Product Knowledge across the organization and how it is managed and maintained throughout the lifecycle of the product.
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Humanics: the People domain. The functions that own, exchange, and maintain the Product Intellectual Capital and the processes that are used to manage it.
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Product Lifecycle Management - An Introductory Guide Standing up a successful PLM practice across the organization therefore involves: •
A simple, structured Product Model to organize product intellectual information and eliminate complexity where the Product Model is used for all products and stored and managed in the Product Data Manager.
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A dynamic, flexible set of Product Workflows with clear functions to manage the Product Intellectual Capital from cradle to grave, where Product Workflows make up the Product Lifecycle Management for all products.
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An organizational alignment to ensure a resource focus on effectively managing the product model and the product workflows.
2.1. PLM Reference Frameworks Rather than starting from a blank page to define and deploy the different facets of a holistic PLM approach, your best bet is to start with a pre-‐defined reference framework. Depending on the industry, there already exist relevant reference frameworks that help to decompose the different facets of PLM. For communications, media, and high tech providers, there are at least three reference points available. These reference points are not mutually exclusive, but rather complementary in defining the dimensions of PLM across the different functions of the organization, and can be used as valuable input into determining how PLM should be deployed into your organization: •
eTOM (Business Process Framework)
•
ITIL (Information Technology Infrastructure Library)
•
SDLC (Software Development Lifecycle)
Each of the above frameworks is only briefly described in the subsequent sections, primarily to delineate their relevance to PLM. The source material is extensive and should be examined for use as benchmarks and blueprints.
2.1.1.Business Process Framework (eTOM) The Business Process Framework (eTOM) is a comprehensive, industry-‐agreed, multi-‐layered view of the key business processes required to run an efficient, effective, and agile enterprise specifically for the Digital Economy. It is the most widely accepted and adopted standard for business processes in the industry, providing a business process model/framework for use by operators, service providers, and other organizations in the ecosystem. The Business Process Framework, a critical component of Frameworx, has been created and agreed by industry leaders and practitioners. PLM is a well-‐defined domain in the Business Process Framework, which identifies key PLM business processes across a number of organizational competencies that support the IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 23 of 52
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Product Lifecycle Management - An Introductory Guide marketing, offer, service, and resource management of the product, the relevant components of which are highlighted in blue in the diagram below9:
Figure 11 – Business Process Framework with PLM Designations. Source: TM Forum.
Figure 12 – Business Process Framework PLM Domain. Source: TM Forum.
9
TM Forum document GB921-‐P, GB921-‐CP. www.tmforum.org.
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Product Lifecycle Management - An Introductory Guide PLM in the Business Process Framework is formally defined as “end-‐end processes to manage products to the required profit and loss margins, customer satisfaction, and quality commitments, as well as delivering new products to the market. These lifecycle processes understand the market across all key functional areas, the business environment, customer requirements, and competitive offerings in order to design and manage products that succeed in their specific markets. Product Management processes and the Product Development process are two distinct process types. Product Development is predominantly a project-‐ oriented process that develops and delivers new products to customers, as well as new features and enhancements for existing products and services.” Ultimately, the utilization of the Business Process Framework is intended to: •
Create a common language across the organization
•
Add standard structure, terminology, and classification
•
Apply discipline and consistency across departments
•
Understand, design, develop, and manage IT applications in terms of business process
•
Create consistent and high quality end-‐to-‐end processes
•
Identify opportunities for cost and performance improvement
The Business Process Framework highlights that PLM is a core process of the overall functions vital for the operations of a company. The Framework is aligned to the Information Technology Infrastructure Library (ITIL).
2.1.2.Information Technology Infrastructure Library (ITIL) The Information Technology Infrastructure Library (ITIL) is a set of practices for Information Technology Service Management (ITSM) that focuses on aligning IT services with the needs of the business. ITIL describes procedures, tasks, and checklists that are not organization-‐specific, which organizations use to establish a minimum level of competency. It allows the organization to establish a baseline from which it can plan, implement, and measure. It is used to demonstrate compliance and to measure improvement. ITIL advocates that IT services must be aligned to the needs of the business, allowing for the organization to establish a baseline from which it can plan, implement, and support the IT services.10
10
itSMF. An Introductory Overview of ITIL® V3. Published 2007.
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Product Lifecycle Management - An Introductory Guide
Figure 13 – ITIL Service Lifecycle. Source: ITIL/itSMF.
The relevance of ITIL to PLM is the generic service lifecycle that ITIL seeks to manage. ITIL publishes five core guides that map the entire ITIL Service Lifecycle, beginning with the identification of customer needs and drivers of IT requirements, through to the design and implementation of the service into operation and finally, on to the monitoring and improvement phase of the service. Where ITIL focuses on the activities to deliver within IT against business requirements, the Business Process Framework focuses on the overall organizational processes that drive out those activities. It is in this IT Service-‐to-‐Business Process vein that the ITIL standards around service lifecycle and change management comfortably complement the Business Process Framework’s PLM process standards. ITIL highlights that the detailed processes of PLM need to be incorporated into the overall IT fabric of the organization. This relationship is supported by the recent efforts by both TM Forum and ITIL to map the mutual process models to each other:
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Product Lifecycle Management - An Introductory Guide
Figure 14 – ITIL to PLM Mapping. Source: TM Forum.
ITIL ultimately seeks to deliver benefits similar to the Business Process Framework: •
Improved IT services
•
Reduced costs
•
Improved customer satisfaction through a more professional approach to service delivery
•
Improved productivity
•
Improved use of skills and experience
•
Improved delivery of third-‐party service
2.1.3.Software Development Lifecycle (SDLC) Software Development Lifecycle (SDLC) is the process or method applied to create or alter software projects. It defines the way to create a new software module or program11. The different models of SDLC (Waterfall, Spiral, Agile, Incremental, and so forth) each have a process flow that defines the design, build, and test efforts that guide the software development project. For this reason, SDLC is typically a model that is adopted primarily by IT organizations:
11
http://www.sdlc.ws/what-‐is-‐sdlc/.
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Product Lifecycle Management - An Introductory Guide
Figure 15 – Software Development Lifecycle. Source: Wikimedia Commons.
In the context of PLM and the broader organization, SDLC can be viewed as a subset of processes within the whole PLM framework. When the delivery of a product’s capabilities depends on the creation or modification of software, the activities of SDLC support the Design and Implementation stages of PLM. It is logical that the SDLC’s flow conceptually mirrors that of PLM: software has a lifecycle that needs to be managed in and of itself but also in the context of the broader purpose it serves, which is the Product. Getting the organization’s product management activities working in concert with the SDLC model’s activities is a key objective of the Holistic PLM Framework. There are also some synergies between the SDLC framework and the service development principles established in TM Forum’s SES TR168, Software Enabled Services Management Solution and Frameworx Relationships, Version 1.5. Of particular relevance are the lifecycles and roles defined here: http://www.tmforum.org/browse.aspx?linkID=46857&docID=15788 Note: additional work is expected to align the SES Lifecycle Management work included in TM Forum’s SES TR168 and the PLM work outlined in this document.
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Product Lifecycle Management - An Introductory Guide
2.2. Standing up PLM 2.2.1.Establishing the PLM Foundation The purpose of the PLM Framework is to streamline the organization through a structured, dynamic, and human way to make Product change happen faster while enabling value creation for the customers and the company. So any discussion on how to deploy PLM within an organization to achieve that value creation needs to begin with what the product lifecycle actually is and means to the company. One example of how to understand the implications of PLM for the organization is to refer back to the five building blocks of Holistic PLM described earlier. When taken in turn, each building block can comprise specific components or ‘bite-‐sized chunks’ that make a specific contribution to the design and maturity of PLM:
12
Figure 16 – Holistic PLM Building Blocks. Source: Telecom New Zealand based on Detecon Model .
As the building blocks are further decomposed, you can ensure correct alignment with key processes to organizational responsibilities. The net result is to deliver a connected Product operating system with the building blocks working together to achieve a common purpose:
12
Building Blocks Design Blueprint based on the Detecon Consulting PLM Framework; Detecon Consulting. Next Generation Telco Product Lifecycle Management: How to Overcome Complexity in Product Management by Implementing Best-‐Practice PLM. September 2010.
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Product Lifecycle Management - An Introductory Guide
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Figure 17 – Organization & Process Alignment. Source: Telecom New Zealand.
The outcome is a PLM Framework that brings together all of the stages of the product lifecycle, from idea through to retirement. The framework connects all the touch points of the product lifecycle across the organization, from customer through to IT platform, ensuring that that product information is captured, shared, and managed without any gaps. The ultimate objective is performance improvement in the way of14: •
Time – Decrease time to market, decrease waiting time, and decrease delay in delivery to the customer
•
Cost – Reduce execution cost, increase human resource performance, and decrease churn rate
•
Process quality – Increase PLM process performance, increase customer value performance, increase value net performance, and increase information availability and accuracy
•
Product quality – Improve product launch quality, increase provisioning performance, reduce technical defects, and increase service quality
2.2.2.PLM Design Principles When developing a PLM Framework for your organization, it is important to establish a set of principles to guide the design of the framework. The design principles need to be specific and then socialized, agreed to, and endorsed by the appropriate leadership and bought into by the key stakeholders. Examples of such principles are as follows:
13
Organization & Process Alignment – Local & Global. Julian Lonsdale, Telecom New Zealand. Detecon Consulting. Next Generation Telco Product Lifecycle Management: How to Overcome Complexity in Product Management by Implementing Best-‐Practice PLM. September 2010.
14
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Product Lifecycle Management - An Introductory Guide # 1
2
3
4
5
6
7
Principle
Description
PLM is strategic and holistic
Spans across all Product functions, and all lifecycle stages of the product, from cradle to grave. PLM Is designed Focus is on the outcomes, with the end in with the aim of creating a mind path to mature the Product practice. PLM realization Connects the company with uses prototyping its customers through co-‐ and creation and an agile, human/customer iterative approach to centered design product development. PLM is information Delivers a structured, based information-‐driven approach to managing the Product Intellectual Capital, aligned with best practice international standards, e.g. eTOM. PLM is a process Puts product creators and with a human-‐ managers at the center of centered design the new model with clear, simple and usable processes across the entire lifecycle. PLM creates a path The PLM process can be to maturity both manual and automated. PLM enables Product process and practice harmonization with the wider company ecosystem
Is in synergy with the relevant processes and functions within the wider company ecosystem.
What this means to the organization A consistent set of processes, methodologies, and tools to manage the lifecycle of products and product-‐related initiatives. A clear set of outcomes to ensure an efficient realization of the PLM process across all domains and workflows. Best practice methodologies and tools to be able to turn opportunities and ideas into value for the customer and the company. A structured, consistent and repeatable methodology to manage the Product Intellectual Capital in a Single Source of Truth Product Data Manager.
A simple, usable PLM framework that is optimized to match the needs of people’s roles.
An introduction to the PLM framework in ‘bite-‐size chunks’ to minimize disruption and complexity. Interfaces and tools working seamlessly with the wider company ecosystem.
Table 2 – PLM Design Principles. Source: Telecom New Zealand.
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Product Lifecycle Management - An Introductory Guide 2.2.3.Example PLM Process Models Understanding what PLM processes to execute on to deliver the Product and its resulting value creation is the ultimate goal of a PLM framework. It is the PLM process model that helps to define those processes, how they are to be executed, and by whom. A process model encompasses a functionally similar grouping of processes together into a complete set of activities. It is intended to be used repeatedly against the grouping of functions. In this case, the PLM process model is the set of repeating processes grouped together to achieve an organizational PLM practice. A process model helps to depict how the processes will work together, while the detail lies within the actual processes. A process model should be descriptive, prescriptive, and explanatory. Some example process models are highlighted in the following sections. Tribold PLM Process Model The Tribold PLM Process Model breaks down the Holistic PLM Framework described earlier at the Level 1 and Level 2 layers into an increasingly detailed layer of processes. The resulting Level 3 processes are grouped within key functions in the order in which they logically flow. At a high level, you can then understand how the PLM processes would flow through the organization.
Figure 18 – PLM Process Model. Source: Tribold Limited.
The detail that underpins the Level 3 processes forms the activities that deliver on those process objectives: IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 32 of 52
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Product Lifecycle Management - An Introductory Guide L2 Process
L3 Process
Develop Product Strategy
Analyze Market Data and Product Portfolio Data Establish Market and Product Strategy Develop Product Portfolio Develop Product Plans
Design & Develop Products
Manage Product Portfolio Generate Product Ideas
Develop High-‐ Level Concept Develop Detailed Concept
Monitor & Update Product Data
Implement Product Product Launch Develop & Generate Product Reports Track Product Performance & KPIs Analyze Product Report Data
Identify Product Update Opportunities
Description Gather and analyze market and competitive data as an input to the product portfolio strategy. Focus on the strategic, long-‐term vision and product plan for the future. Manage the product portfolio roadmap and make decisions that align with the strategy. For each product that has been included in the product portfolio, develop the implementation plan including effort, timeline, and resources. Manage the product implementation plans to ensure the products are delivered as scheduled. This is a continuous, systematic search for new product opportunities involving sources of new ideas and methods for generating them. Includes the capture of requirements. Turning the idea /mockup of requirements into a high-‐level design that screens the suitability of the new idea into a realistic form/feasibility. Enhancing the high-‐level concept through further analysis that clearly and accurately describes the business and technical design to a lower level of detail to meet the requirements. Build and test the product design ensuring the development and ultimately the testing carried out ensure the product is fit for purpose. The distribution of product data from Tribold to target applications. Create product reports that provide useful information. Through the use of analytical tools to asses and analyze product performance against the KPIs. Performing a deep dive of product reports that determine ongoing product development but also as input to innovate new product development. Following any analysis, the outcome that identifies product change, including retirement and grandfathering opportunities.
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Product Lifecycle Management - An Introductory Guide L2 Process
L3 Process
Description
Submit Updates to the Product Portfolio
Steps carried out to implement the new changes.
Table 3 – Holistic PLM Framework Level 2/3 Processes. Source: Tribold Limted.
Telecom New Zealand Process Model The Telecom New Zealand process model aligns what it terms as “Pathways” to the inputs and outputs of a particular stage in the lifecycle of products. A PLM Pathway has a clear purpose and describes the lifecycle of events that lead to the delivery of an outcome. PRODUCT LIFECYCLE MANAGEMENT FRAMEWORK
A PLM Pathway is a logical grouping of inputs and outputs within a specific functional domain. A PLM Pathway has a clear purpose and describes the lifecycle of events that lead to the delivery of the outcome.
PORTFOLIO STRATEGY (1) Insight to Strategy
PORTFOLIO PERFORMANCE
PORTFOLIO PLANNING
(7) Performance to Insight
(2) Strategy to Plan
GLOBAL PLM Pathways
LOCAL
(3) Idea to Definition
(6) Launch to Change
PRODUCT 2 MARKET
PRODUCT MANAGEMENT (5) Realisation to Launch
IDEA
DEFINE
REALISE
(4) Definition to Realisation
SUPPORT/ENHANCE
RETIRE
Figure 19 – PLM Pathways. Source: Telecom New Zealand.
The process model provides a clear connection between the business PLM processes you are trying to execute as part of Product Management and the underlying IT processes that help to achieve the desired outcomes. It is then easy to understand at a high level the key functions of the PLM process model, the required inputs and expected outputs, and interactions with the required IT processes.
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Product Lifecycle Management - An Introductory Guide
Figure 20 – PLM Process Model. Source: Telecom New Zealand.
2.2.4.PLM Stages and Gates Product innovation begins with an idea and ends with the successful launch of a new product. The stages between the idea and launch can be check-‐pointed by gates. Stages are where the action occurs. Gates are where the decisions are made. The players on the project team undertake key tasks to gather information needed to advance the project to the next gate or decision point. Stages are cross-‐functional (for example, there is no specific Research and Development or Marketing stage), and each activity is undertaken in parallel to enhance speed-‐to-‐market. To manage risk, the parallel activities in a certain stage must be designed to gather vital technical, market, financial, and operations information to drive down the technical and business risks. Each stage costs more than the preceding one, resulting in incremental commitments. As uncertainties decrease, expenditures are allowed to rise and risk is managed. Gates are employed at major decision points in each stage, where a strategic decision should be made on whether and how to proceed with product development and deployment. Decisions at the gates typically involve executive or steering committee level personnel who are responsible for ensuring the products align with the organization’s strategic goals and objectives:
Figure 21 – PLM Stages/Gates. Source: Tribold Limited. IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 35 of 52
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Product Lifecycle Management - An Introductory Guide Gate 0
The idea’s technical, economic, and financial feasibility is scrutinized. In this way, it is possible to understand if the new product complies with the company’s strategy and if an explicit customer benefit is in evidence. Typically, a governing board has a crucial role in this stage because it sees if the new ideas are in accordance to the strategic direction followed by the company. Output: Idea is ready for Planning
Gate 1
A rough concept with a description of the product and of the customer’s benefit in detail is presented. A coordination of the basic technical feasibility and a formulation of the first cost estimation take place. For the implementation of the project there is an approximate delineation of the operating plan. Setting the market estimation with market-‐intelligence tools and the product placement provides the initial information about the probability of success on the market. The valuation of legal and regulatory aspects is especially important and is estimated here. Output: Plan is ready for Design
Gate 2
The product concept is completed and any other relevant conceptual design. Creation of business cases and formulation of KPIs are other significant cornerstones of this milestone. The general scope of the project is established with the detailed project plan (time, resources, efforts, reporting, and performances prosecution). Output: Design is ready for Build & Test
Gate 3
The product is built and tested. An examination of possible deviations or differences in comparison with the plan (time and cost) is done here. In some cases, a project review at management level is necessary. Output: Build is ready for Launch Table 4 – PLM Gate Definitions. Source: Tribold Limited.
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Product Lifecycle Management - An Introductory Guide The structure of each gate is similar: •
Deliverables: Inputs into the gate review. What the project leader and team deliver to the meeting. These are defined in advance and are the results of actions from the preceding stage. A standard menu of deliverables is specified for each gate.
•
Criteria: What the project is confronted with to make the go/no go and prioritization decisions. These criteria are organized in a scorecard and include both financial and qualitative criteria.
•
Outputs: Results of the gate review. Gates must have clearly articulated outputs including: a decision (go/kill/hold/recycle) and a path forward (approved project plan, date, and deliverables for the next gate agreed on).
2.2.5.Typical PLM Roles Responsibility for executing the processes in each stage depends on the roles defined in the framework. Examples of common PLM-‐related roles include those that follow:
Role
Description
Product Manager
Designs new products (typically within a certain product line) and coordinates and manages all product-‐related changes. Typically this role leads any product-‐related implementation. Coordinates and manages the marketing-‐related aspects of a product change, often involved with product decisions, including time schedule, budget, and issue resolution. Manager responsible for creating and managing component specifications and managing the underlying data configuration of the application. Manager responsible for creating and managing charges, prices, and price lists. Manager responsible for approving and staging entities – product entities, generic entities, and charge entities based on user permission. Manager responsible for launching entities – product entities, generic entities, and charge entities based upon permissions. Business Manager with read-‐only access to all areas. Manager responsible for defining, tracking, and managing project entities. Coordinates and manages all technical, IT-‐related changes, often involved with service and resource management and then product. Used to support Product Management.
Marketing Manager
Configuration Manager
Pricing Manager Approvals/Staging Manager Launch Manager Business Manager Project Manager IT Lead
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Product Lifecycle Management - An Introductory Guide Role
Description
Customer Services
Supports other roles for validation of all changes, being the forefront to customers before, during, and after a purchase. Communicates requirements for the sales and customer service aspects of the product. A representative group from across the organization. These roles are typically involved in sign off gates in the process. Some of the groups are: Legal, Network, Operations, etc. Responsible for administrative aspects of the application, including security access.
Corporate-‐Wide Operations Administrator
Table 5 – Typical PLM Roles. Source: Tribold Limited.
Other examples of relevant roles, specific to the Service Management domain, can be found in TM Forum document GB924, Service Framework Guidebook, V1.0. This guidebook describes the stages and the gates needed for the Service Lifecycle, which has a set of actors involved in the governance of the product composite lifecycle. http://www.tmforum.org/browse.aspx?linkID=28454&docID=2198
2.2.6.Bringing It All Together PLM delivers a structured, dynamic, and human way to make product innovation happen faster and enables value creation, sustainably and profitably. •
It is structured, because it simplifies and organizes the Product Intellectual Capital to eliminate complexity.
•
It is dynamic, because it creates an evolving, flexible system of end-‐to-‐end workflows to create and manage the Product Intellectual Capital from cradle to grave.
•
It is human, because it puts product creators and managers at the center of new approaches with clear, simple, and usable functions across the entire lifecycle.
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Product Lifecycle Management - An Introductory Guide
Figure 22 – PLM In Practice. Source: Telecom New Zealand.
Most importantly, PLM is collaborative, iterative, and customer centered: •
Collaborative. All of us are smarter than any of us. The fundamental nature of PLM is interdisciplinary and therefore requires everyone to be involved in an active, participatory way. Today, a typical decision-‐making or project environment is multidisciplinary, and each individual is an advocate for their own function or technical specialty, and the idea or product becomes a protracted negotiation among them, likely resulting in a gray compromise. In an interdisciplinary team, there is collective ownership of ideas, and everybody takes responsibility for them.
•
Iterative. Prototyping wins arguments. PLM enables building an idea in bite-‐size chunks rather than trying to get everything done all at once. Instead of debating for days whether a new idea is possible or what the best way to build something is, it is better to put the idea to the test and run a prototype. The Product Data Manager makes this possible. Both Simple (new Offer involving a price change) and Complex (new Product) ideas can be prototyped in the Product Data Manager to validate the concept. The idea can be tested further by taking the prototype concept from the Product Data Manager and building it in a live environment, such as a lab or a production network sandpit.
•
Experience Centered. The value of the product transcends its basic utility. Customers don’t need products. They need experiences to satisfy their needs. They apply their skills to generate an exchange of value (an interaction/encounter) and obtain satisfaction. PLM shifts the focus from the static, often isolated components of the marketing process and the mere physical aspects of the product (quality and IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 39 of 52
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Product Lifecycle Management - An Introductory Guide functionality of the product, brand, price, delivery) to a far more dynamic, integrated system, where the customer is at the center of the exchange process, both as an active participant and as a co-‐producer. With this shift, which is part of a wider marketing transformation, the value creation process is realized through designing, engaging and lasting experiences for the customer.
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3. PLM Challenges and Opportunities As an organization turns its focus to improving its PLM process, it commonly faces some of the following cross-‐industry challenges. These pain points need to be turned into opportunities for growth and achieving a sustainable organization. It is important to note that an improvement in PLM can range from minor adjustments to major transformation. If an organization focuses wisely on the most inefficient areas of the process, broad benefits can be gained.
3.1. Challenges •
•
Lack of executive commitment and enforcement of PLM. o
PLM cannot be successfully implemented and then adopted throughout the enterprise without thorough commitment and endorsement from the executive management team. This team should be fully educated and aware of what PLM brings to the table.
o
All too often, PLM is something of which people are aware as a concept and principle but are unsure of in terms of the practicality of executing on PLM fundamentals. In addition, decision makers may not be clear on how adopting a PLM framework can help solve critical problems in the organization. Without the executive commitment and understanding, it is difficult to enforce any PLM framework that is in place.
o
Individuals in the organization who are responsible for financial and productivity targets related to PLM and understand the benefits of PLM should focus on educating executives and decision makers on PLM and seek out and achieve endorsement from an executive. Ongoing organizational initiatives that support and drive the embedding of the PLM standard and areas for improvements should be common.
Lack of control outside product management/definition process. o
When a defined PLM process is in operation, it often only controls the activities related to the functional planning, design, and deployment of a product, for example product and marketing. There are critical, dependent IT/systems processes that are required to be completed or the functional product to be launched into market, but these processes are not governed by the PLM process.
o
PLM should span across the entire enterprise and typically involves many organizational departments working collaboratively to support all phases of the lifecycle. Because business organizations and IT organizations typically have different executive leadership, it is critically important that sponsorship is achieved from both organizations. Ideally the two (or more) organizations
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Product Lifecycle Management - An Introductory Guide will jointly endorse the enterprise PLM process. The resulting PLM processes should encompass all areas in equal detail and understanding and ensure that touch points and handoffs between the organizations are clearly understood. •
•
•
Lack of definition of the idea generation and planning phase. o
There is often little structure and rigor around the activities of gathering product ideas and planning and prioritizing those ideas into the strategic product portfolio. A fundamental objective for any organization to stay competitive and ahead of the ever-‐growing market needs and customer requirements is to be able to support new and innovative ideas and concepts.
o
PLM will help support what should be a repeatable upfront early product stage, allowing for all organizational departments to push forward ideas in a coherent, straightforward, and easy manner. A working area where this can be managed can pay huge dividends. All too often, good ideas are not developed and bad ideas end up in the market, because a process does not exist to effectively sift through the ideas to move forward the best, most competitive, and lucrative ideas. Innovative organizations are the sustainable organizations of the future.
Synergy across product development projects is not capitalized upon. o
Due to lack of centralized control, there is often an inability to gain synergy across multiple, related product development projects. This leads to duplicate work efforts as well as loss of efficiency.
o
PLM supports not only the governance and centralization of all projects across the organization but provides far better allocation of resources, time, and effort, so these projects can be managed and run much more efficiently. Also the information and data used across projects can potentially be reused, and therefore organizations can avoid reinventing what may already exist, whether it is an exact product copy or something very similar.
Lack of true product data visibility. o
When organizations are asked what data and information they have on their products and how this information is stored and managed, there is often confusion and no clear way of finding this information. It is not uncommon for this information to be uncoordinated and fragmented across a number of systems and documents and with people who have worked with the products for many years.
o
PLM gives clear visibility of this data and information, how it is being used, and for what purpose. With the access to this intellectual capital, the organization can manage its information far more accurately to be able to make better decisions.
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Product Lifecycle Management - An Introductory Guide •
No in-‐life processes that support retiring products. o
The product portfolio of a company should only contain the products (and associated offers, services, resources) that are actively being sold to customers and being maintained for customers. All other products and supporting product data should be retired from the available product catalog. This retirement includes removing the data and functionality required to support those products from all systems, processes, and documentation throughout the organization. Unfortunately, this area of PLM is typically lacking in definition and execution. Understandably, many companies face the dilemma of investing time, budget, and resources towards new products to meet competitive demand or retiring a lean product catalog.
o
However, maintaining a lean product catalog that contains only the products that are currently sold and active in the customer base can lead to great gains in efficiency and decrease the cost of future software and product roadmap goals. It is recommended that a percentage of resources (time, budget, and people) are allocated annually to the task of retiring (removing from sale and internal support) or grandfathering (removing from sale but supporting for the customer base).
3.2. Benefits and Potential Value Some of the financial targets that help to quantify the benefits of a transformative or improvement PLM project follow. They are benchmarks that have been underpinned by referenceable case studies in the marketplace15:
15
•
Achieving a 50% reduction in the time to market. By reducing the time to market from idea to sale of products, organizations can stay ahead of the competition and adapt to market trends and customer requirements.
•
Achieving a 20% increase in revenues by widening the product portfolio. By having more control and management, organizations can add many similar and new products onto the portfolio, increasing the customer product choice and attracting new customers.
•
Achieving a 20% increase in revenues by introducing products faster. By offering products faster to the market, products stay in line with demand and increase product purchases.
•
Achieving a 40% increase in revenues by introducing new products/services on existing offerings. By allowing for more variety and customer choice covering all angles a customer’s requirements
John Stark Associates and SofTech, Inc. 10 Critical PLM Facts Every Executive Should Know -‐ Executive Briefing White Paper. July 2006.
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Product Lifecycle Management - An Introductory Guide •
Achieving a 35% increase in product quality. By allowing for better control of the product designs and implementation stages, in particular the testing activities, organizations have more rigor, efficiency, and accurate throughput to meet the customers’ high expectations.
•
Achieving a 60% reduction in cost to market. By reducing the overall project cost from idea to availability for sale, including the cost of resources and how they are being utilized, organizations save through the reduction of activities in the product design and implementation stages that can bear a heavy cost.
A Case Study16 A renowned company in the telecommunications industry carried out an extensive restructuring program that would enable it to maintain its position in a deregulated market environment. The objective was on the one hand to convert the previously technical-‐driven approach for the product design and an orientation towards technical performance features to an approach focusing on the customers’ needs and requirements. On the other hand, the aim was to develop and implement the integrated management approach Next Generation PLM. In the initial situation, the PLM and the platform were not “state-‐of-‐the-‐art“(e.g. no withdrawal phase, missing of decision gates, long “time-‐to-‐market” etc.). A portfolio management process was not designed and implemented. The current portfolio structure was oriented on the organizational or technical structure and not organized from the customer’s point of view. The product portfolio was characterized by a large number of product variants and features. All these products needed to be handled individually from an IT management perspective. This broad variety of products needed to be realized and implemented within all operative processes, IT applications, and systems, as well as in sales information tools. This led to an enormous complexity that impeded the maintenance of the IT landscape and the management and optimization of the processes. No integrated IT solutions were available at the company and at its affiliates. During the project, the integrated PLM approach valid for the company and its affiliates was developed. Implementation of Next Generation PLM at this company showed the valuable benefits for solid product development, marketing, and strategy: PLM Strategy •
Sound marketing strategy due to the early recognition of market needs, standardized information, and environmental issues.
•
More detailed input for controlling the exact allocation of revenue and costs to products.
•
Simpler allocation at cost centers and cost unit.
Julius Golovatchev, Oliver Budde, Detecon International GmbH, Bonn, Germany. Sustainability through Next Generation PLM in Telecommunications Industry.
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Introduction of the harmonized product portfolio for all national and international affiliate companies.
Product Architecture •
Easier know-‐how exchange and use of the “same language” during product development, as well as fast and efficient communication between international partners.
•
Introduction of the harmonized product definition and product portfolio for all national and international affiliate companies.
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The product portfolios across the company were to be reduced by 50% and integrated into a modular structure.
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New ways to reuse materials.
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Adoption of the product data platform at all international subsidiaries.
PLM Process •
Acceleration of time-‐to-‐market of up to 25% for several product groups.
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Reduction of quantity of energy and material used in product development and production up to 20%.
•
Efficient cost savings along the PLM process by using standard support system and reuse of modules and components (process costs saving up to USD$170 million/year in the product realization phase).
•
Effective and similar procedure of innovation and market management projects execution.
PLM IT Architecture •
An implemented shared platform for document and project management.
•
One physical server used to support separate product lifecycle management processes in all divisions and subsidiaries.
3.3. Measuring PLM Results Key Performance Indicators (KPI) help an organization to define and measure progress towards organizational goals. Once an organization has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to quantifiably measure progress toward those goals. KPIs are those measurements. KPIs will differ depending on the organization. A business may have as one of its KPIs the percentage of its income that comes from return customers or a revenue target per customer. Whatever KPIs are selected, they must reflect the organization's goals, they must be key to its success, and they must be quantifiable (measurable). KPIs are usually long-‐term IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 45 of 52
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Product Lifecycle Management - An Introductory Guide considerations. The definition of a KPI and how it is measured does not change often. The goals for a particular KPI may change as the organization's goals change, or as it gets closer to achieving a goal. KPIs are valuable for teams, managers, and businesses to quickly evaluate the progress made against measurable goals. KPIs will be split across the organization, for example the marketing department will most likely have a different set of goals than the IT department. In this document, the focus is on those KPIs that have an impact on product-‐related goals.
3.3.1.Industry Standard KPIs The table below outlines those KPIs that are common and typically regarded as industry standard. The following list outlines specific KPIs and a description: •
Time to Market (TTM) –The length of time it takes from a product being conceived until it is available for sale
•
Cost to Market (CTM) –The expenditure to take a product from conception to availability for sale
•
Quality to Market (QTM) –The measure of bringing efficient, effective, and robust products to the market
•
Average Revenue Per User (ARPU) –The measure used to calculate the total revenue divided by the number of subscribers/users
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Customer Take Up –The total number of subscribers/users typically measured from previous months/years
3.3.2.KPI Pitfalls to Avoid To ensure the full benefits of realization of the KPIs already defined, the organization should consider and avoid the following pitfalls: •
Measures not linked to strategy –Critical to do initially, but also revisit when either the organizational strategy or structure changes.
•
Measures not driven into organizations –Breaks the linkage with overall strategy. Should be driven into staff performance agreements at all appropriate levels.
•
Too many measures –Creates lack of focus on what is really critical to managing your business.
•
Focusing only on the short-‐term –A cross-‐section of past (lagging), present, and future measures is critical.
•
Measuring progress too often –Could result in unnecessary effort and excessive costs, resulting in little or no added value.
•
Not measuring progress often enough –May not know about potential problems until it is too late to resolve easily.
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Collecting too much data –Could result in a mountain of data that really doesn’t tell you anything more than a lesser amount of the same data.
•
Driving the wrong performance –Be careful that the measure(s) you select will result in the desired result.
•
Failure to base business decisions on data –Developing performance measures or collecting data only to comply with a requirement does nothing to improve the position of the company.
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Not enough critical measures – Missing information vital to Product management or Marketing.
•
Collecting inconsistent, unrepresentative, or unnecessary data – Critical to understand up front what the data will look like, when it will be collected, at what frequency, by whom, and what it means.
•
Reducing the value of data –Too much data roll-‐up (summary) can mask the impact of potentially significant events or trends.
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4. PLM Maturity 4.1. Maturity Model Definition Understanding the maturity of a company’s end-‐to-‐end PLM process is an important step in a PLM program, whether the company is just embarking on the transformation, is in the midst of the transformation or has completed the transformation with the deployment of the initial goals. As it is now clear that PLM has clear benefits to the success and sustainability of a company, many companies want to understand how they are performing against a neutral benchmark. Until recently (early 2000s), the only benchmarking option available to companies was to use insights provided by similar companies. Now, there are many maturity models in the industry of which to apply the principles to an organization. A maturity model should accomplish the following goals: •
Evaluate an organization’s maturity against a neutral standard.
•
Provide input for planning and strategy for future PLM improvements.
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Help define short, medium, and long-‐term roadmaps.
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Assist with the socialization of PLM progress in the organization.
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Contribute to a business case for future PLM development.
The maturity model presents a view of an organization across a number of key measurable PLM activities and stages. Each incremental stage and corresponding PLM activity highlights a level of maturity.
4.2. Key Aspects of a Maturity Model An advanced maturity model should have the following characteristics: •
Produce quantifiable and actionable results.
•
Assess aspects across the entire organization, for example, processes, product data, products, PDM applications, PLM applications, people, facilities, locations, metrics, and organizational structure.
•
Have in-‐depth questions for each of the areas.
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Address the typical PLM process areas from idea through retirement.
•
Take into account all the applications involved in product development, management, and launch.
•
Include the interaction between the customer and the product to the organization. IG1100, Version 1.1 ©TM Forum 2012. All Rights Reserved. Page 48 of 52
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Product Lifecycle Management - An Introductory Guide An example of a maturity model created by PricewaterhouseCoopers (PwC) follows: Moving from Stage 2 to 3 leads to : • ~60% further increase in average growth • 20% further reduction in PwC time to market index • 15% additional productivity increase Moving from Stage 1 to Stage 2 leads : • 50% increase in average growth • 50% reduction in PwCs time to market index • 10% increase in productivity
Stage 0 Informal Management Informal practices based on individual experience
Stage 1 Functional Excellence Excellence within functions, but not across functions
Stage 2 Program Excellence Functions aligned for effective execution from concept to market
Managing Across Functions
Stage 3 Portfolio Excellence Processes aligned to achieve platform leverage, portfolio balance and excellence in program selection and execution
Managing Across Programs
Stage 4 Collaborative Development Excellence Integrated innovation chain formed by linking processes across internal and external business partners for maximum leverage
Managing Across Portfolios & Partners
Figure 23 – PwC Product Management Maturity Framework. Source: PRTM Study.
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5. Why PLM With PLM becoming ever more pervasive in the industry, it is apparent that the trend is growing whereby more and more organizations will soon be adopting PLM systems, practices, and approaches. Organizations are clearly seeing the benefits and reaping the rewards of PLM, having spent valuable time and effort to incorporate PLM into their business practices. Because PLM focuses on providing a controlled framework for managing and tracking product data with the use of people, technology, processes, and data, the only way it works coherently and successfully is if these interlinking pieces work in a coordinated and collaborative fashion. Given the backdrop of the technical and commercial environment, the alternative is almost unthinkable: Without PLM
With PLM
•
Think Process
•
Think People
•
Think Functions
•
Think System
•
Think Product & Service
•
Think Experience
•
Think Money
•
Think Value
•
Think Product Development
•
Think Product Design
•
Think Assumptions
•
Think Analytics
•
Think Build
•
Think Prototype 17
Table 6 – With and Without PLM. Source: Telecom New Zealand.
The approach to delivering a structured, dynamic, and human PLM is based on the simple assumption that all people care primarily about building and being a part of great things that are successful and make money. This approach can be summed up in the following ‘sticky’ benefits:
17
•
Empower product accountability: have end-‐to-‐end visibility and control of products.
•
Enhance product knowledge: gain a deep understanding of the fabric of the products.
•
Encourage collaboration and fast thinking: have access to a common, reusable, and flexible pool of marketable entities across portfolios and a dynamic PLM engine.
•
Enable speed to create and deliver: build intelligent products that people want to buy.
•
Enjoy work: eliminate complexity and frustration from day-‐to-‐day jobs.
Inspired by John Stark. Product Lifecycle Management, 21st Century Paradigm for Product Realisation. Springer, 2011.
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6. Appendix This Appendix provides additional background material about TM Forum and this document.
6.1. References McCarthy, Jerome E., 1960, Basic Marketing. A Managerial Approach. Homewood, IL: Richard D. Irwin. Raymond Vernon, 1966, International Investment and International Trade in the Product Cycle, The Quarterly Journal of Economics, Vol. 80, No. 2, pp. 190-‐207. Teresko, John, 21 December 2004, "The PLM Revolution". IndustryWeek. Retrieved 26 September 2012. TM Forum Frameworx and related documents (including Holistic Product Lifecycle Management, TMForum Report -‐ TR137 Conceptual Framework for PLM v1-‐3). www.tmforum.org. CIMdata Reports John Stark. Product Lifecycle Management, 21st Century Paradigm for Product Realisation. Springer, 2011 – content has been adapted from the book. Michael Grieves. Product Lifecycle Management. McGraw-‐Hill, 2006. itSMF. An Introductory Overview of ITIL® V3. Published 2007. SDLC. http://www.sdlc.ws/what-‐is-‐sdlc/. Detecon Consulting. Next Generation Telco Product Lifecycle Management: How to Overcome Complexity in Product Management by Implementing Best-‐Practice PLM. September 2010. John Stark Associates and SofTech, Inc. 10 Critical PLM Facts Every Executive Should Know -‐ Executive Briefing White Paper. July 2006. PwC Product Management Maturity Framework, PRTM Study.
MphasiS. http://www.mphasis.com/pdfs/white-‐papers/introduction-‐product-‐lifecycle-‐ management.pdf. “Sustainability through Next Generation PLM in Telecommunications Industry,” Golovatchev.J, Budde.O,2011), Research Institute for Rationalization and Operations Management at RWTH, Aachen, Germany. “Service Product Architecture for Telcos”, Golovatchev. J, Budde, O, Institute for Industrial Management at RQTH, Aachen, Germany. PLM Interest Group. www.plmig.com. Organization & Process Alignment – Local & Global. Julian Lonsdale, Telecom New Zealand. ITIL. http://www.itil-‐officialsite.com/.
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6.2. Document History Version Number 0.1
Date Modified 17/10/12
Modified by: Kiran Amin
0.2 0.3 0.4 0.5 0.6 1.0
02/11/12 13/11/12 18/11/12
Sharon Lynch Catherine Michel Ella Obreja Keith Willetts Catherine Michel Tribold Telecom New Zealand
Description of changes Introduced document structure and added context to each section Additional content Additional content, master draft Additional content Editorial review Final updates for review Final version
6.3. Company Contact Details Company Tribold
Telecom New Zealand
Team Member Representative Ernest Margitta VP Marketing
[email protected] +44 (0)20 7665 4000 Ella Obreja Product & Service Design Manager
[email protected] +64 (21) 07 555 07
6.4. Acknowledgments This document was prepared by the members of the TM Forum PLM team: Catherine Michel, Tribold Sharon Lynch, Tribold Kiran Amin, Tribold Ella Obreja, Telecom New Zealand
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