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How Product Lifecycle Management makes a difference in your industry: 
AEROSPACE
AUTOMOTIVE
CONSUMER
CONSUMER ELECTRONICS
DEFENSE
EDUCATION
INDUSTRIAL EQUIPMENT
HIGH-TECH ELECTRONICS
LIFE SCIENCES
PLASTICS
SHIPBUILDING
TELECOM
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Energizing Product Development By Kevin P. Hopkins A Product First approach to PLM helps companies to optimize product development processes--and produce winning products that create lasting value. Over the past four months, we have taken you through what we believe to be one of the most exciting stories in manufacturing today--the renewed focus on product development as the most powerful way to drive both growth and profitability. As the research firm IDC recently emphasized, "Firms that consistently introduce innovative, high-quality products gain increased market share, brand differentiation, and an enduring competitive advantage." On the other hand, the research group concluded, those companies that fail to master the process of designing and manufacturing superior products are likely to fall further and further behind. This renewed focus on product development has been made possible, in part, by a new class of technologies and processes called "product lifecycle management," or PLM. As defined by IDC, PLM is an enterprise solution designed to ensure that all of the elements bearing on product development (e.g., customer preferences, CAD models, bills of materials, schematics, vendor lists, etc.) are seamlessly integrated throughout the product lifecycle. This integration enables information to flow to where it is needed and empowers work teams to collaborate in real-time, even if they are in different locations. The Product First Strategy The most successful approach to product lifecycle management, as discussed throughout this series of articles, is an innovative concept called "Product First." Originated by Needham, Mass., based product development software maker PTC, Product First is a business model built on the idea that great products make great companies. It places product at the center of business strategy, creating an adaptable framework for leveraging other business imperatives, such as building customer relationships, optimizing the supply chain, and efficiently allocating resources. Product First begins by helping customers to define and articulate their own product development strategies, which are then used to create and configure a PLM solution that fits their specific needs. Product First and the broader PLM concept are clearly catching on. IDC estimates that the market for PLM applications reached $1.5 billion in 2001 and projects that it will grow by 34% per year to more than $6.5 billion by 2006. And with good reason. In a brutally competitive global market, manufacturers are using Product First to create strategies and execute initiatives that will dramatically increase the value of their firms. Nine Value Opportunities As we have outlined in this series of articles, PTC's Product First Road Map details nine different areas where manufacturers can capture value for their firms. These "Value Opportunities," as PTC describes them, come in two types: profitability-oriented opportunities that enhance bottom-line performance through revenue preservation and increased efficiency and growth-oriented opportunities that enhance revenue. To recap, according to PTC, there are four main profitability-oriented Value Opportunities: •Design to realize a price premium (increased per-unit revenue) •Lower product costs •Reduce lifecycle costs •Improve asset utilization The above are widely accepted and often form the centerpiece of successful product lifecycle management programs. But they are a small part of the ways in which companies can benefit from PLM. In fact, research reported earlier in this series indicated that such profitability-oriented opportunities account for only 20% of the potential value that can be derived from effective product lifecycle management. The majority of the value, some 80%, comes from an area whose benefits are harder to document but that promises much greater potential than cost and productivity improvements: top-line revenue growth. The six growth-oriented Value Opportunities are: •Grow share with customer-focused products •Protect product position •Improve ability to fulfill demand •Design for ongoing revenue streams •Develop/define new markets •Design to realize a price premium (increased overall revenue) Despite the fact that these Value Opportunities account for such a significant proportion of PLM's potential economic value, they are more complex and, therefore, less frequently pursued. Yet those companies that are willing to implement them will receive ample reward for the additional risks that they take. Meeting Companies' Unique Needs As we discussed earlier in the series, both top-line growth and bottom-line profitability create value and raise stock price, and their importance to any individual company is likely to change over time. A Product First perspective recognizes this and acknowledges that every company and market is unique. Effective strategy demands intelligent choices and difficult trade-offs. To be successful, manufacturers must carefully select those Value Opportunities that most effectively satisfy their particular needs and competencies. We hope that this series of articles has helped you to understand how Product Lifecycle Management and a Product First approach can enable you to make those choices for your company. |
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Copyright 2003, by The McGraw-Hill Companies, Inc. |
