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OUTLOOK

Faster, fitter, better: Why product innovation is going digital

It’s time to adopt a digital model for product lifecycle management— or get left behind.

Overview

The ability to maximize the impact of product innovation has never been more important. And to accomplish this goal—getting desirable products to market faster and at the right price—businesses are spending more than ever on R&D. For some industries, like high tech and biotech, the outlay for R&D can top 20 percent of revenues, according to Accenture research.

Yet many companies still struggle to make the most of their R&D investments, which total a whopping $680 billion annually for the 2000 largest global public companies. We also found that only 30 percent of executives are “very satisfied” with their performance in converting ideas into market-ready products, services or business models. Just 21 percent believe they have an effective process for capturing ideas from outside their company. And 28 percent cite lateness to market as a key reason for product innovation failure.

That’s scarcely surprising when you consider that many companies are still leveraging a linear, sequential model for PLM.

Such models, where the multiple processes and systems live in silos, inhibit the flow of relevant information needed to optimize product development. Engineers, for example, are often disconnected from the new-product introduction process. As a consequence, new-product launch teams don’t always hear about critical last-minute design changes. And because vital insights are not shared, the solutions that eventually emerge from this fragmented system just aren’t meeting customer expectations for innovation and relevance. Moreover, because of this linear approach, product launch is often delayed.

But our experience indicates that a digital model could significantly increase the efficiency and effectiveness of PLM processes—and thus deliver substantially higher ROI on R&D.

Top performers are taking PLM to another level. They have started to recognize that a digital approach can boost the effectiveness of the PLM process dramatically. These leaders understand that digital technologies—social, mobile, analytics and big data, and cloud—can drive significantly more rapid, scalable, intelligent and connected PLM by helping to link all functions and constituents in an efficient network. (see chart)

More nimble, more responsive

The technologies that sustain the digital PLM model enable more agility and responsiveness both within and beyond the enterprise.

Take, for example, social media. By leveraging social networks, companies can solicit not only their customers’ ideas for product improvement, but also their feedback on product performance. For example, one food manufacturer has used “votes” on social forums to develop new flavors of potato chips.

Social media can also help companies customize products. Case in point: NIKEiD, which allows the sporting goods maker’s customers to customize their own shoes, bags and apparel. Some companies also use data about consumer preferences to design the next versions of their products.

Analytics and big data enable data capture from vast and disparate audiences, which can lead to sharper insights and better decision making. Leading manufacturers can see how people are using their products, as well as what features are and are not popular. They can then leverage that information to help prioritize which new features to include in the next generation of vacuum cleaners, dishwashers, refrigerators and TVs.

By developing mobile applications that respond to what they learn about customer needs, top players are positioning themselves as potential winners in the connected world of the “Internet of things.” Smartphone apps let property owners control domestic security systems while away from home; “intelligent” scales linked by WiFi to a pedometer app on a phone let exercisers know how many calories they’ve burned.

Mobility, of course, also enables greater PLM connectivity. Customers, employees and suppliers can communicate and participate in PLM processes more quickly and easily, reducing wait time and accelerating speed to market.

Then there’s the cloud model. With its pay-per-use commercial framework, swift implementation and flexibility, it allows a company to quickly and efficiently scale up its computing needs during the early phase of product development and then scale back down later. This alleviates the need to continually build new engineering infrastructure to support product development—as well as the need to pay for such infrastructure when it’s not in use.

Integrated, collaborative and efficient

Companies are driving significantly more value from using a digital PLM model. One industrial equipment manufacturer, for example, saved $20 million as a result of the more streamlined processes that the digital model enables, as well as an estimated $200 million in lower inventory carrying costs. A global consumer packaged goods player has accelerated speed to market by as much as 20 percent and improved R&D productivity by more than 30 percent by using digital tools.

Progressive companies are using digital technologies to map new efficiencies and effectiveness in their PLM processes (see chart, above). As more companies recognize that a digital approach can increase the ROI on R&D, look for a growing focus and investment on end-to-end PLM improvements, driven by digital and spanning cross-functional needs.

Authors

Kevin Prendeville is a managing director in Accenture Strategy—Product Lifecycle Services (PLS) practice. Mr. Prendeville is based in Denver.

Ajay Chavali is a senior manager in Accenture’s CMT Aerospace and Defense industry group, and is a member of the Product Lifecycle Services (PLS) practice. Mr. Chavali is based in Seattle.