An Action Plan to Improve Your Product PortfolioJim Brown, President of Tech-Clarity

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Table of ContentsIntroduction

Identifying the Need for PPM

Signs It’s Time to Begin Your PPM Journey

Prepare for the PPM Journey

Select a PPM Partner

Your Next Steps

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5

6

7

14

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People. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Team. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Business Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11ROI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Service Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Vendor Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Software Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . 17Special Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

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The Need for Product Portfolio Management is Growing

Product Portfolio Management

improvements drive top line growth, expand

margins, improve corporate agility, and reduce

overhead costs.Given the value, is it

any wonder that more manufacturers are turning

to PPM?

Product Portfolio Management (PPM) has become mission critical for today’s product development companies. It helps companies drive strategic value by filling the pipeline with the right ideas, selecting the right projects and products, applying the right resources, and providing the right level of visibility to manage and make good decisions. Benchmarks show PPM processes and technology offer powerful business improvements, including double-digit percentage improvements in:

• Efficiency• Project cycle times• Innovation capacity

The financial value of PPM comes from “a combination of increased revenue from higher sales volume and margin lift, alongside reduced costs from better resource utilization, avoiding spending on low-value projects, and improved efficiency.” The ROI of Product Portfolio Management – Tech-Clarity

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A Guide for Your PPM Journey

This guide is intended to help you get started. Tech-Clarity Buyer’s Guides help lead companies through vendor selection for their critical enterprise applications. For the most part, our guides focus on software, service, and vendor requirements. But several things make acquiring PPM different:

• Many organizations are implementing PPM for the first time (at least on an enterprise scale or with enterprise-class business solutions)

• PPM requires a greater degree of domain expertise to implement and adopt

• PPM disciplines, tools, and value are not as well known in most companies (although some might be able to leverage lessons learned from IT Portfolio Management)

This guide offers insights to help companies get started on the path to improve their product portfolios and what to look for when selecting a solution and vendor partner, including:

• Identifying the need for PPM• Preparing for the PPM journey (and making the business

case)• Selecting a solution and vendor partner

Determineand Monitor

Product Value

Selec

t and M

axim

ize

Product

Portf

olio

Resource and Enable

Pipeline

Execute and ManageProjects

Unfortunately many companies have challenges starting their Product Portfolio Management (PPM) journey. Most organizations are well versed in buying and implementing other enterprise applications like ERP, CRM, or PLM. But most R&D organizations have significantly less experience with enterprise-class PPM solutions than their operational counterparts. As a result, figuring out how and when to get started with PPM is new to many.

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Understand the Need for PPM Your company is managing product portfolios today. Every manufacturer is doing some form of Product Portfolio Management (PPM). They make decisions on product portfolios, allocate resources to initiatives, and manage product development projects. But many do it informally and too few do it as strategically and methodically as they should. This leads to suboptimal alignment with strategy, poor portfolio performance, and inefficiency in both planning and execution.

Poor processes are only one part of the problem. Most manufacturers are inefficient and have trouble making informed decisions because they use spreadsheets and other office productivity tools that don’t stand up to enterprise class processes.

Our research shows that very few have optimized their innovation and portfolio processes and even fewer have integrated them from ideation through product launch as well as managing the in-market portfolio. There is a lot of opportunity for improvement through better portfolio management practices and software, and much of it is low hanging fruit!

Manufacturers need to recognize the impacts

that poor processes and technology have on their portfolio processes and their business. The

next section offers some insights on seeing if your

portfolio processes are hurting your business.

“Many companies are stuck managing PPM with complex spreadsheets that have evolved over time, are difficult to maintain, and provide limited value.” Improving Portfolio Decision Making – Tech-Clarity

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Signs It’s Time to Start Your PPM JourneyHere’s a list of telltale signs that your Product Portfolio Management (PPM) needs help:

o Late projects and missed deadlineso Resource shortages, resource conflicts,

and overloaded teamso Low revenue growth / margins compared

to competitiono Low percentage of revenue from

new products compared to industry benchmarks

o Portfolio does not deliver against strategic objectives

o Too many tactical, enhancement-oriented products

o Difficult to fix or kill underperforming or failing projects

o Too much overhead wasted on managing PPM processes and deliverables (including gate reviews)

If you recognize some (or all) of these symptoms, it’s time to start your PPM journey. PPM is a proven best practice that addresses these issues and drives higher profitability. Let’s get going!

o No central visibility to portfolio investments across the business

o High percentage of underperforming product launches

o Poor investment balance across strategic areas

o Meetings spent arguing about the facts instead of making decisions (data integrity)

o Process exceeding the capabilities of complex, difficult to maintain spreadsheets

o Not enough product ideaso Too many product ideas to effectively

evaluateo High uncertainty in portfolio / poor

understanding of risko Executives (and others) not able to articulate

priorities and/or innovation strategy

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Prepare for the PPM Journey

“Some fear that overhead will bog down resources that are already busy, but the opposite actually happens, because of better focus and improved resource management.” Top 5 Misconceptions about Innovation Management Software – Tech-Clarity

Like any journey, it’s important to prepare in advance. The Product Portfolio Management (PPM) transformation will impact people, processes, and technology.

Let’s start with people. That’s a good idea for any enterprise software implementation, but even more important for PPM due to cultural changes and threats to conventional powers of influence that allow the loudest voice to override facts. Processes and technology go hand-in-hand and will be addressed next, but before that we’ll focus on changing culture and making the business case to make sure everyone is on board.

PPM impacts decision-making at the highest level. You often hear about the importance of finding a business champion for any program, but it’s more than a best practice for PPM. Strong leadership is a must have for a PPM implementation. A captain for the PPM journey with positional authority, political strength, and organizational respect will make the journey easier and drastically increase the odds of success.

With PPM it’s important to develop executive

alignment and set the right expectations up front. It

also helps to address some common misconceptions

and fears surrounding portfolio management

solutions. This will drastically reduce resistance and

increase the chance for PPM implementation success.

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Prepare the Team for the TransformationWhen talking about the core team for the transformation, it’s important to have cross-functional involvement, including the key areas of Marketing, Sales, Strategy, Product Management, R&D, Engineering, and Management.

Each department needs to provide a strong representative that is respected in the organization.

They can be formal or informal leaders, but they are likely the ones that most department heads feel they can’t afford to give up.

Teach the team the value of Product Portfolio Management (PPM) at the organizational level as well as at the individual level, and dispel the myth that portfolio management adds overhead. Recognize that there will be people who resist the change and criticize processes and data.

The final step in preparing for the journey is selecting the right guides for the trip. It’s important to identify the need for external experts. You will clearly want help from the vendor who understands their tools, but you should also look for those with knowledge of best practice PPM processes and metrics.

Look for partners who specialize in portfolio and innovation processes who have led transformations for companies like yours.

These should be true business consultants and not just IT resources. Research shows that domain expertise is more important for PPM than other solution enterprise solutions.

Educate everyone that the goal is to improve, not to be perfect. You aren’t trying to

create a magic algorithm that spits out the right answer,

replaces people, and ignores experience or judgment. It’s an information and decision

support tool.

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Prepare the PPM Project

“Companies can accelerate their time to achieve value from PPM by adopting industry best practices, metrics, and tools, and then adapting over time as they learn more about how to make the best product decisions.” Improving Portfolio Decision Making – Tech-Clarity

Once the team aspects are under control, it’s time to create the path to success. First, you need to know your starting point. Take the time to understand the current state of your organization, processes, decision-making criteria, decision lead times, resource requirements, and technology.

Then, set a path that reaches an achievable goal. Think of the Product Portfolio Management (PPM) journey as a series of shorter excursions that add up to a big trip.

Target incremental improvement and prove success as you go.

As one leading innovation consulting

firm likes to say, “Start fast with the end

in mind.”

Start by adopting proven best practices. Develop a reasonable scope and timeline. Prioritize which processes will add the most value and start with one (or at most two) based on business needs and process maturity. You are likely doing this because resources are constrained, so consider conducting a quick pipeline rationalization (cleanout) up front in your journey to free up resources and show success. Target an initial scope that can be accomplished in 60 to 90 days which will add value and set the foundation for future improvements.

It’s important to get started and demonstrate

value in as short of a time as possible.

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With these answers in mind, you should chart out your buying process from requirements through decision. Software selection is a project by itself. One key thing to consider is how to keep requirements at a reasonable level of detail to prevent paralysis by analysis. Then, it’s time to identify potential vendors to invite. There are a number of sources to look for this information, including:• Stage-Gate ® Ready Certifications

Directory• Tech-Clarity PPM Landscape• Innovation consulting firms• Other analysts such as Gartner or

Forrester Research

Prepare to Purchase PPMMost likely, part of your journey will involve buying new software. It’s important to understand your company’s buying process. For those that haven’t done this before, it can be a learning experience. You can find some questions to ask below.

1. Do we have existing applications we could leverage for PPM?2. What kind of business case do we need?3. How will we calculate cost versus ROI?4. Who needs to be consulted?5. Who needs to approve the project?6. How will PPM be funded?7. What company standards need to be considered?8. How much education do we need from consultants and vendors?9. How much and when will we involve IT? 10. Do we prefer a Saas or On-Premise installation?11. Do we need an RFP?12. Do we need to involve Procurement?13. Who will own the PPM system once implemented?

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Prepare the Business Case

“The primary benefit of innovation technology is visibility, reporting, and communicating in a common, timely, and organized way to aid decision making.” Creating the Environment to Innovate – Tech-Clarity

Some companies recognize the strategic value of Product Portfolio Management (PPM) and don’t require much justification to move forward. This is most often the case when someone from a business with an effective portfolio process moves to a business without one. Others might require a more formal benefits statement or even a formal ROI.

The first thing to recognize is that PPM can solve a range of different challenges. It’s important to take the time to know what you want to improve. A good tactic is to start with the biggest pain to provide the most visible returns. This makes funding for future phases easy.

Make sure the business case focuses on business and market results, not just process improvement. Tie the benefits to the business strategy and align your business case with a corporate objective if possible. If there is an

initiative to “increase revenue by 25% by 2018 through the delivery of net-new, innovative

products,” explain how PPM can help you get there and provide measureable results.

The ROI of Product Portfolio Management shares benefits companies should expect that lead to higher levels of profitability by:

• Selecting higher value products• Improving time to market• Aligning the product portfolio with company strategy• Making better – and more timely – decisions to correct or cancel

product development projects with limited return• Improving product development efficiency• Balancing product development work with available resources• Balancing the risk in the product portfolio

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Leverage credible industry reference metrics to calculate improvements. There are numerous sources for industry benchmarks. Consider using materials from:

• Gartner• Forrester Research• Tech-Clarity• Aberdeen Group

You can also find a lot of these metrics from management consultants focused on product innovation and development or from PPM software vendors. Many of these even have ROI calculators to help with your business case and will work with you during your PPM journey. For some of the less specialized analysts, it may be necessary to review some of these metrics for IT portfolio management and extrapolate value to product portfolios. These are particularly useful for cost savings. Many of the savings are similar, although the top-line benefits of PPM likely far outweigh those of IT portfolio management due to top-line impact.

Calculate Hard Benefits and ROIIt’s important to develop enough of an ROI to satisfy your company’s needs to invest, but don’t do more analysis than necessary. Here are some tips for those who need to prove hard benefits. First, understand what makes up the ROI. Use our sample ROI below as a guide. Start with some basic facts and figures about your business. Some of this is available from your annual report, but you will probably need to do some digging to get the rest. These are the basic building blocks.

You will need to gather some basic company information to determine your potential ROI:

• Annual R&D spend• Number of product development projects• Average project scope • Average project timeline• Average full-time equivalent (FTE) resources per project• Cost of resources by role• Percent of projects finishing on time• Percent of projects completed within budget• Percent of revenue from new products• First mover advantages for revenue and margin• Productivity and cost savings from PPM• Cost of project delays (including missing fixed market

windows like holidays)

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Sample ROIThe following sample is derived from The ROI of Product Portfolio Management. It’s offered as a starting point to give an order-of-magnitude benefit projection to compare with expected software and implementation costs. Work with management to make sure it’s tailored to your business and their needs. Elements that should be considered are:

Revenue oriented benefits:• Selecting better portfolio mix resulting in more competitive

products in the market, raising market share and resulting revenue

• Accelerating time to market means a larger percentage of revenue from new products, where new products capture premium prices and drive higher margins

 Cost Savings:• Avoiding expense of initiating non-strategic projects • Avoiding cost through early termination or correction of low

value or floundering projects • Reducing labor cost by more effective resource planning

and improved staff utilization, reducing project clutter and resource “thrashing” due to frequently changing priorities

• Improving efficiency of the strategic planning process

These results are conservative and will vary by company, but it should be very clear that even a conservative improvement easily pays for the PPM investment.

Area of Improvement

Base$/€

Improvement Increased Profit$/€

10% revenue increase (higher market share)

1 billion in revenue 10%

100 million new revenue, 5 million net profit

60% increase in % revenue from new products  (conservative 10% margin advantage)

150 million new product revenue

60%

90 million in revenue converted to higher margin revenue, resulting in 9 million in new profit

Higher margin advantage for new products (+10% margin advantage, or 100% increase)

150 million new product revenue

100% margin increase

15 million in new profit

Cost savings from killing failing projects

50 million, 25 million on failures

kill 20% failing projects, save 50% on each

2.5 million in direct cost

Improve product development efficiency by 5%

50 million 5% 2.5 million in cost savings

Total Profit 34 Million

Assumptions Value

Company revenue 1 billion

Revenue from new products 15%, or 150 million

Net profit margin on products 5%, or 50 million

R&D spend as a percent of revenue 5%, or 50 million

Percent of NPD projects failing 50%, or 25 million

Cost of NPD spend early in lifecycle 50%, or 25 million

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Select a Partner for Your PPM Journey

Software functionality is obviously important, but service and vendor characteristics should have higher priority than usual.

This guide provides a starting point for criteria in the following categories:

• Service Requirements• Vendor Considerations• Software Requirements• Special Considerations

This guide doesn’t provide an exhaustive requirements list, but focuses on the most differentiating capabilities of PPM solutions. We believe they’re the ones that can help you choose the best-fit solution and partner with the least effort. Use these criteria as a starting point and add any specific requirements needed to support your business’s unique portfolio needs.

Ask vendors to demonstrate their capabilities using your products in a realistic scenario in the context of your business.

Tech-Clarity PPM Evaluation Framework

With business case in hand (or more likely in parallel) it’s time to start looking for the right software. With Product Portfolio Management (PPM), however, the vendor is just as important as the solution. In most of our buyer’s guides we start with functionality first. For this guide, we intentionally re-arranged the order of the criteria (see graphic).

Enterprise ClassSolutions

IndustryReferences

PPMBest Practices

Implementation

Integration

Adoption

Support

Target/AcquireIdeas

Select/MaximizePortfolio

Resource/EnablePipeline

Execute/ManageProjects

Determine/MonitorProduct Value

ServiceRequirements

VendorRequirements

SpecialConsiderations

SoftwareRequirements

PPM Evaluation Criteria

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Service RequirementsPPM isn’t a “plug and play” solution. It’s a decision support system that enables disciplined product development and innovation processes. Your chosen partner should have a proven implementation process that helps drive business transformation and new process adoption. The approach should focus on adoption, not just implementation, including post-implementation process coaching to ensure processes are adopted properly.

Requirement Considerations

Proven Methodology Focuses on adoption, not just implementation 

Process Templates Predefined best practices

Predefined Metrics Predefined best practices

Training Software and process training

Process Coaching and Adoption Support To guide the business and ensure adoption after “go-live”

Out of the Box Reports and Analytics

Best practice metrics and the ability to easily create custom reports

Change Management To help guide the organization to new organization structures, culture, and processes

Integration to ERP Toolkit and standard integrations

Hosting Options Cloud / SaaS implementation option if desired

Support for Mobile Devices Support for BYOD as needed

IT Stack Alignment Supports your standards and/or existing infrastructure

Find a partner that doesn’t expect you to recreate the wheel. Adopt proven best practices in PPM as a starting point and customize them for the nuances of your business. Look for a partner that provides this knowledge in the form of process, metrics, and reporting templates. Pay special attention to reporting and analytics; it’s important to be able to get data you can trust out of the system! The vendor should also provide tools to integrate with other systems like ERP and provide out of the box integrations to popular packages.

It’s important to make sure you can support the system after adoption. Look for a solution that fits with your available IT resources. For example, a SaaS / cloud option might be better if you have limited resources. Look for ease of configuration so you’re self-reliant and don’t have to pay the vendor or a third party for services every time you update or streamline your processes. Also look for mobile device support as needed, including “bring your own device” (BYOD) needs.

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There are some things to look for in your vendor as well. Look for a deep understanding of portfolio management and product development best practices. You’ll want your partners to be true business consultants and not just experts in their software. You should ensure they have good availability of trained consulting resources.

It’s critical to make sure your vendor of choice has successful customers that are similar in size, maturity, and industry as you. References are essential in PPM. Speak with at least one company like yours to understand their experiences. It’s important to know how the vendor works with their customers, how responsive they are to issues, and how well they listen to ideas for future product enhancements.

Vendor RequirementsRequirement Considerations

PPM Knowledge and ExperienceVendors and/or their partners should have deep expertise on product innovation, portfolio planning, and product development in addition to software skills

Focus on Product Portfolio Management

Make sure the vendor has made a significant investment in supporting product innovation and development and not just IT portfolio management. They are similar but the differences are very important

Product Support Readily available, responsive, and knowledgeable customer support

References Make sure your vendor of choice has successful customers that are similar in size, maturity, and industry as you

Customer Community Availability of a customer user group / forum to share ideas and learn from others

Openness / Collaboration Willing to take customer input on product plans and roadmaps

Vendor ViabilityReview vendor financials and strategy to make sure your vendor will be capable of investing in the software and providing quality service over time

Available Resources Make sure the vendor can provide resources to help you implement, adopt, and support your new processes and software

Product Maturity Make sure the product is still in investment phase and current in technology

Contract Flexibility Do they have licensing, SaaS, or subscription licensing flexibility that meets your needs?

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Software RequirementsOf course it’s important that the software does the job it’s intended to do! It’s important to verify software capabilities and not make too many assumptions about the capabilities a solution offers.

This guide highlights key requirements broken down into the five Product Portfolio Management (PPM) sub-processes in the Tech-Clarity PPM Framework:

1. Target, Collect, and Nurture Innovation Opportunities2. Select and Maximize Product Portfolio3. Resource and Enable Pipeline4. Execute and Manage Projects5. Determine and Monitor Product Value

This is not intended to be a comprehensive requirements list, but instead focuses on the areas that differentiate PPM solutions. Although the requirements are broken down by sub-process, be sure to look for an integrated suite. Disparate tools, even from a single vendor, will require a lot more implementation work and drive higher maintenance cost and effort. On the other hand, integration helps drive continuity and efficiency across the entire innovation landscape.

1Target, Collect,

and Nurture Innovation

Opportunities

Select and Maximize Product Portfolio

Resource and Enable

Pipeline

Execute and Manage Projects

Determine and Monitor Product Value

2

3

4

5

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Software Requirements1. Target, Collect, and Nurture Innovation OpportunitiesProduct Portfolio Management (PPM) has extended in scope to cover the front end of innovation. Once an area that was dominated only by smaller, specialty vendors, you can now expect to have ideation and open innovation capabilities within the integrated innovation software suite. The requirements defined here help companies solicit ideas in strategic areas and provide a collaborative way to analyze potential product value and further product concepts.

Requirement Considerations

Targeted Innovation Ability to target ideation toward specific, strategic themes or problems

Capture Ideas The ability to capture concepts and track their source and related history

Classify Ideas Associate ideas with one or more categories or themes

Collaborate and Develop IdeasProvide ability to provide feedback and opinions on ideas and collaboratively enhance product concepts through voting and discussion, both internally and externally

Rank and Rate Ideas The ability to provide feedback ranging from a simple “up vote” to expert feedback

Combine Ideas Package / combine ideas for project submission / proposal

Determine and Track Value Track potential financial value and business case of ideas, concepts, potential projects

Manage the Innovation Process Reporting on idea submission, evaluation, collaboration, and business case

Integration The ability to promote product ideas and business evaluation for portfolio consideration

1Target, Collect,

and Nurture Innovation

Opportunities

Select and Maximize Product Portfolio

Resource and Enable

Pipeline

Execute and Manage Projects

Determine and Monitor Product Value

2

3

4

5

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Software Requirements2. Select and Maximize Product PortfolioPortfolio decision-making is what most people think about when they hear the term “portfolio management.” They imagine bubble charts and decision-making dashboards that help them make product and project investment choices based on objective criteria. This is one of the largest payback areas for PPM because it helps companies develop a portfolio of programs that will return the highest level of profit and alignment with company strategy.

1Target, Collect,

and Nurture Innovation

Opportunities

Select and Maximize Product Portfolio

Resource and Enable

Pipeline

Execute and Manage Projects

Determine and Monitor Product Value

2

3

4

5

Requirement Considerations

Strategy Definition and Prioritization

Ability to capture, prioritize, and communicate corporate and product strategy at different levels of granularity

Portfolio Alignment Ability to evaluate products for alignment with strategy

Portfolio BalanceAbility to evaluate the balance of product enhancements and extensions with net new products, balance risk, and balance investment across brands, divisions, and other attributes

Portfolio TradeoffsAbility to create and analyze multiple “what-if” scenarios and do trade-off analysis between scenarios

Portfolio ValueAbility to see potential financial impact of products at the portfolio level, including both in-flight projects and proposed projects

Brand Analysis Ability to analyze portfolio impact by brand or other segmentations

R&D and RoadmapsAbility to develop non-product, technology roadmaps with or without linkage to projects and product dependencies

In-Market Product Analysis Ability to include in-market products in portfolio analysis

Lifecycle Status Ability to plan for lifecycle maturity and product end-of-life

Analytics Ability to create custom metrics in addition to common best practice ones

Integration with Innovation Portfolio

Integration with resource planning, product value, and project execution

Reporting Ability to generate management reports to support decision-making

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Software Requirements3. Resource and Enable PipelineResource planning is where theoretical portfolios start to become realistic plans. The following requirements ensure that product development and research projects have the resources they need without overbooking resources and special skillsets. It’s not intended to detail schedules down to individuals and tasks, but instead determine if plans are feasible based on resources and identify any shortfalls.

1Target, Collect,

and Nurture Innovation

Opportunities

Select and Maximize Product Portfolio

Resource and Enable

Pipeline

Execute and Manage Projects

Determine and Monitor Product Value

2

3

4

5

Requirement Considerations

Manage Rough Cut Capacity Ability to develop a rough cut capacity plan by FTE or team comparing requirements to capacity and highlighting exceptions

Resource Tracking Ability to track critical resources by role and any other applicable attributes (location, type, etc.)

Non-Personnel Resources Ability to define critical resources such as facility or equipment for capacity planning

Determine Resource Requirements

Ability to calculate time-phased resource requirements by role, skillset, or other resource

Resource Scenarios Ability to develop multiple scenarios and do trade-off analysis between them

Reporting Ability to generate management reports to support decision-making

Integration with Planning Tools Integrate with detailed planning tools

Integration with Innovation Portfolio Integration with portfolio planning, product value, and project execution

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Software Requirements4. Execute and Manage ProjectsProject execution is where portfolio plans are realized. The following requirements ensure that products are managed effectively throughout product development and launch. One key consideration is that projects should not only be managed by schedule (aka as a tunnel) but should be actively managed for portfolio value as the project progresses (aka as a funnel). This includes the management of product development stages with appropriate gates to ensure continued investment is warranted, correct programs are on track, or whether it’s necessary to kill projects.

1Target, Collect,

and Nurture Innovation

Opportunities

Select and Maximize Product Portfolio

Resource and Enable

Pipeline

Execute and Manage Projects

Determine and Monitor Product Value

2

3

4

5

Requirement Considerations

Project PlansAbility to manage high level work breakdown structure, dependencies, deadlines, tasks, and milestones

Change Management Track baselines and changes

Time Management Ability to track actual time spent

Cost Management Ability to track actual costs

Stages and Gates Ability to manage gates including decision-making criteria, gate documentation, and deliverables

CommercializationAbility to track product development through commercialization, including tasks and budgets outside of R&D

Routing and Approval Ability to share gate information with appropriate people and track approvals

Risk Tracking Ability to track realized and unrealized risks

Launch Readiness Ability to analyze and communicate product launch status and readiness

Integration with Project Planning Tool

Ability to integrate with detailed project management tool such as Microsoft Project

Integration with Innovation Portfolio

Integration with portfolio planning and resource planning

Project Health Analytics Ability to analyze project health including budget and cost performance

Reporting Ability to report on projects including program management dashboards

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Software Requirements5. Determine and Monitor Product ValueOne of the most commonly overlooked things in PPM is analyzing the potential value of projects. Product value should be estimated systematically. Project risks may cause significant uncertainty of potential outcomes and should be accounted for, and estimates should be modified as risks are either realized or mitigated and more is learned through program execution.

1Target, Collect,

and Nurture Innovation

Opportunities

Select and Maximize Product Portfolio

Resource and Enable

Pipeline

Execute and Manage Projects

Determine and Monitor Product Value

2

3

4

5

Requirement Considerations

Determine Financial Value Determine potential product financial impact based on objective criteria, past experience, and expert input

Account For Risk Recognize the range of potential project outcomes based on market and project / technical risk

Business Case Ability to calculate ROI / business case for portfolio candidates

Monitor / Update Value Ability to evaluate risk-adjusted value based on up-to-date project risk and status

Financial Rollup Ability to roll up portfolios to budget / responsibility levels

Time-Phase Risk Ability to quantify technical and program risk by project phase

Compare Dissimilar Products Ability to evaluate the relative value of product enhancements and extensions with net new products with risk-adjusted financial impacts

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Special ConsiderationsThe primary technical consideration for buying Product Portfolio Management (PPM) is to make sure to buy an enterprise-class solution. As “Creating the Environment to Innovate” finds, “All but the simplest companies outgrow spreadsheets and other manual approaches due to complexity and the inability to share information.”

Too often companies try to manage their portfolios with office productivity tools. Managing innovation, portfolio decision-making, and product development execution are not jobs that can be managed at scale with spreadsheets. Look for solutions that meet the following criteria:

Requirement Considerations

Enterprise Visibility Ensure users from across the organization and the globe have (secure) visibility to real-time information in a central location

Performance Systems are global in nature and require speedy response times in all areas of the world

TailorabilityBe sure that the system allows businesses/brands/regions to tailor the system to best fit their particular portfolio, idea management, project execution roles/needs based on a set of common standards

Scalability Ensure the system can scale to the number of users in your organization and be usable to both casual and power users.

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Let’s Get Started!Product Portfolio Management (PPM) provides meaningful business results that can visibly impact company performance. Understand the benefits and use them to develop a business case to start your PPM transformation journey. Recognize PPM is different from many solutions your business may have implemented in the past. Take the time to identify your business goals and prepare your project for success. Remember, some of the most critical success factors in PPM are not software-related.

Best practices for any enterprise transformation are even more important for PPM. Find the right sponsor. Get the right people on the cross-functional team. Bring in outside help with domain expertise to augment the internal team. Pick a vendor based on their ability to help you implement and adopt new processes.

Don’t be a pioneer. There is no need to be. PPM is a proven discipline with solid best practices. Find a provider with proven experience, industry knowledge, partners, templates, and references from companies similar to your business.

Focus on getting the solution in and gaining value, looking for strong adoption in your first phase. Get a small win and grow over time.

Most importantly – act! Find a problem, solve it, and grow from there. The benefits are proven and compelling. Let’s get started!

Ideas

Innovation

Portal

Targeted

Ideas

Social

RankingAnalysis/

Scoring

Potential

Projects

Value

Management

Portfolio

Planning

Maximized

Portfolio

Project

Execution

High Margin

Products

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About the AuthorJim Brown is the President of Tech-Clarity, an independent research and consulting firm that specializes in analyzing the business value of software technology and services. Jim has over 20 years of experience in software for the manufacturing industries. He has a broad background including roles in industry, management consulting, the software industry, and research.

Jim’s experience spans enterprise applications including PLM, ERP, quality management, service lifecycle management, manufacturing, supply chain management, and more. Jim is passionate about improving product innovation, product development, and engineering performance through the use of software technology.

Jim is an experienced researcher, author, and public speaker and enjoys the opportunity to speak at conferences or anywhere he can engage with people with a passion to improve business performance through software technology.

Jim Brown, President of Tech-Clarity