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Product Lifecycle Management (PLM) - The Billion Dollar Lever

Accenture discusses how the ability to deliver innovative and impactful products is becoming the key lever for competitive success.

Overview

Kevin Prendeville, Managing Director with Accenture’s Product Lifecycle Services service line for the Communications, Media and Technology operating group, explains how a key lever for competitive success is the ability to deliver innovative and impactful products that, leverage smarter investments in the all-important product development arena.

Just a few years ago you may remember the market-leading companies in the communications and high-tech sector such as smartphones and PCs. Now the tables have turned for a number of them. Some of these leaders are now followers while some followers are now leaders.

This change has pivoted on the ability of companies to deliver innovative and impactful products leveraging and maximizing their large financial and personnel investments in the product development arena. This core business process area, known as Product Lifecycle Management (PLM), extends from idea generation, through product market launch, to product retirement.

Large communications, media & high-tech companies can spend one billion dollars or more per year on Product Lifecycle Management processes, according to Accenture analysis. By improving these processes, they can substantially increase revenues and reduce costs.

Background

Efficient execution of Product Lifecycle Management (PLM) processes has become crucial to deliver products to market on time and to meet customers’ specific requirements.

Complementary with PLM activities are PLM capabilities. These numerous capabilities drive activities, decisions and data within the end-to-end PLM process. Examples include part and intellectual property management; product structure and reuse; engineering changes; stage-gate approvals; ideas/requirements; software configuration; quality tests and defects; product cost; and development project status.

For a global enterprise to maximize the business impact of PLM processes, they need to examine two dimensions: effectiveness and efficiency.

Product Lifecycle Management process effectiveness – The What

Companies are making substantial investments, often 5-to-25 present or more of revenue, inside the PLM business process. But according to Accenture’s analysis, nearly half of spending inside PLM ends up wasted on products that do not meet market needs or timing. This translates into huge improvement opportunities in PLM process effectiveness.

But according to Accenture’s analysis, nearly half of spending inside PLM ends up wasted on products that do not meet market needs or timing. This translates into huge improvement opportunities in PLM process effectiveness.

Product Lifecycle Management process efficiency – The How

Typically, these companies have thousands of highly skilled and well-paid designers, scientists and engineers working each day inside global PLM processes across hundreds of current and future products. But because of a frequent lack of central coordination, prioritization and integration of processes, systems and data, a substantial number of non-value-added or redundant tasks are necessary. This translates to substantial improvement opportunities in PLM process efficiency.

Together, effectiveness and efficiency impact corporate spending inside the PLM process and the potential market revenue impact from PLM, making PLM a billion-dollar lever of corporate performance.

Analysis

Improving the Billion Dollar Product Lifecycle Management Lever

Enabling the PLM process with technology can have a big impact but generally needs to be implemented in tandem with an integrated plan focused on a distinct business process.

Within the end-to-end PLM process, most global companies have deeply fragmented systems of 20 or more applications that cause efficiency and effectiveness drags. This provides an excellent opportunity for PLM process streamlining and PLM application rationalization. The PLM technology market has a number of leading software vendors providing powerful and field-tested applications. The challenge is that none of them provides end-to-end business process coverage available, for example, across customer relationship management and enterprise resource planning.

As such, communications and high-tech companies will always be operating with three or more PLM vendors needed to completely span the various PLM capability areas, including idea/requirements management; portfolio and project management; design and scientific tools; product data management; direct material sourcing; and product quality and analytics. Such complexity becomes amplified by various types of design and development activities needed to support a company’s portfolio of offerings, including styling/industrial design; mechanical, electrical and integrated circuit engineering; artwork/packaging design; apparel design; formulation, software development and technology research.

Recommendations

True enterprise PLM requires an organization to build an architecture for its PLM capabilities. This encompasses an end-to-end framework that spans multiple solutions and accommodates business processes and data from many functions ranging from marketing, to design, to product portfolio management.

A one one-size-fits-all answer does not exist. But Accenture has found that four key themes merit the attention of executives regardless of industry sector or experience with PLM elements.

Specific steps companies can take to turn Product Lifecycle Management into the billion-dollar lever

  1. Create an enterprise-wide framework that defines the organization’s Product Lifecycle Management capabilities

  2. Link the Product Lifecycle Management framework’s capabilities to key corporate and product priorities

  3. Use the new enterprise Product Lifecycle Management framework and the link to corporate priorities as an ongoing PLM investment planning tool

  4. Establish and empower a group whose job it is to own, review and update the Product Lifecycle Management framework and corporate roadmap