BEST PRACTICES FOR HIGH TECH
NPDI:
IMPROVING THE BUSINESS BY
MITIGATING RISK
Research Analyst, Manufacturing, Product Innovation * Engineering
Aberdeen Group
Reid Paquin
Follow the conversation on twitter with the
hashtag #NPDI
BEST PRACTICES FOR HIGH TECH
NPDI:IMPROVING THE BUSINESS BY MITIGATING
RISKOctober, 2014
Reid Paquin, Research Analyst,
Manufacturing, Product Innovation & Engineering
3
TODAY’S AGENDA
Introduction
Building the Right Portfolio
Eliminating Risk in the NPDI Process
Key Takeaways
Questions?
4
REID PAQUIN
Research
Analyst –
Aberdeen
Group
Prior Work:
• Industrial Engineer—Textile Manufacturer
Coverage Areas:
• Product Development
• Portfolio Management
• New Product Introduction
Education and Certifications:
• MS in Statistics from University of New Hampshire
• Graduate Certificate in Industrial Statistics
• BS in Mathematics from the University of New Hampshire
5
BACKGROUND INFORMATION
• Majority of the data comes from a recent
Aberdeen study on New Product Development &
Introduction (NPDI) risk.
– Conducted October 2013 to January 2014
– Over 160 responses from various industries
– Webinar will focus on “High Tech” companies
• Includes computers and components, automation and control
components, semiconductor, consumer electronics, etc.
6
ABERDEEN’S RESEARCH METHODOLOGY
PACE: END-USER INVESTIGATION
!
PRESSURES ACTIONS CAPABILITIES ENABLERS
External and internal
forces that impact an
organization’s market
position,
competitiveness, or
business operations.
The strategic
approaches that an
organization takes in
response to industry
pressures.
The business capabilities
(organizational, process,
knowledge management
etc.) required to execute
corporate strategy.
The key technology
solutions required to
support the
organization’s business
practices.
What is causing
organizations to think
differently?
What strategies are
they using to respond
to pressures?
Why are they achieving
greater success?
What technologies and
services are enabling
them to succeed?
7
ABERDEEN MATURITY CLASS FRAMEWORK
DEFINING THE BEST-IN-CLASS
Selected Performance
Criteria (KPI)
Organizational Goals
Employee Performance
Bench Strength
Total
Respondents
- Top 20%
- Middle 50%
- Bottom 30%Respondents are scored
individually across KPI
Best-in-Class
Industry
Average
Laggard
8
Definition of Maturity Class Mean Class Performance
Best-in-Class:
Top 20% of ALL aggregate
performance scorers
87% of product launch dates met
88% of product cost targets met
91% of product quality targets met
84% of product revenue targets met
High Tech Leaders:
Top 35% of High Tech
aggregate performance
scorers
73% of product launch dates met
80% of product cost targets met
89% of product quality targets met
81% of product revenue targets met
High Tech Followers:
Bottom 65% of High Tech
aggregate performance
scorers
59% of product launch dates met
59% of product cost targets met
78% of product quality targets met
55% of product revenue targets met
HOW DOES HIGH TECH STACK UP?
Source: Aberdeen Group 2014
11
WHAT PRODUCTS SHOULD BE
SELECTED?Top Challenge for High Tech
Companies to Effectively
Manage Project Portfolios:
• Too many projects in pipeline -
28%
• Customer / market preferences
change too fast for length of
development cycle - 20%
• Inability to properly assess risk
in portfolio - 18%
19%
8%
0% 5% 10% 15% 20%
Need to improve portfoliomanagement / selecting the
right products for investment
Percentage of Respondents
Non High Tech
High Tech
Source: Aberdeen Group 2014
12
5 AREAS TO FOCUS ON TO DEVELOP A
PROFITABLE PORTFOLIO
• Align the product to customer needs
• Select the right products for the portfolio
• Fully understand resource constraints
• Continuously manage and monitor the portfolio
• Make decisions of standardized measurements
13
ALIGNMENT WITH CUSTOMER NEEDS
• High Tech Leaders are 81% more likely than
Followers to solicit customer feedback
Source: Aberdeen Group 2014
14
DETERMINING THE RIGHT PRODUCT
13%
47%
0% 10% 20% 30% 40% 50%
Ability to perform 'What-if'scenarios
Percentage of Respondents
High Tech Leader
High Tech Follower
Leaders have greater insight into the impact of portfolio decisionsSource: Aberdeen Group 2014
15
RESOURCE CONSTRAINTS
• High Tech Leaders are 75% more likely than their
peers to have centralized visibility into the
resource workload across their projects
• In addition, Leaders are 65% more likely to have
required skills mapped to project resources
Source: Aberdeen Group 2014
16
CONTINUOUS MONITORING
45%
50%
67%
89%
0% 20% 40% 60% 80% 100%
Decisions are constantly made from a singleversion of the data
Defined owner assesses project health andhas authority to kill projects
Percentage of Respondents
High Tech Leader
High Tech Follower
Source: Aberdeen Group 2014
17
UTILIZE STANDARD METRICS
• High Tech Leaders are 33% more likely than their competitors to use standard performance metrics to assess items like:– market potential
– competitive potential
– commercial risk
– technical risk
Source: Aberdeen Group 2014
19
POLL QUESTION 2?
• What is the top pressure driving your company
to make better decisions during product
development?
20
PRICE COMPETITION ON THE RISE
Source: Aberdeen Group 2014
8%
17%
38%
21%
12%
20%
24%
27%
0% 10% 20% 30% 40%
Need to grow / protect market share
Time to market pressures / shrinking windows ofopportunity
Customer demand for lower cost products /price competition
Competitive pressures to differentiate productswith better quality / reliability
Percentage of Respondents
All Respondents High Tech
21
CAN YOU GET AT YOUR DATA?
29%
38%
33%
38%
24%
29%
31%
39%
0% 10% 20% 30% 40% 50%
Product information is too detailed and technical forexecutive decision making
Takes too long to collect required metrics fromproduct development team
No method for obtaining insight / visibility to neededinformation / data to support decisions
Too many manual processes (spreadsheets)
Percentage of Respondents
All Respondents High Tech
Source: Aberdeen Group 2014
22
KEY NPDI RISK COMPONENTS
• Cost Management
• Compliance Management
• Supplier and Material Management
• Requirements Management
23
WHAT COSTS DO YOU HAVE
VISIBILITY INTO?Type of Cost Best-in-Class High Tech
Leaders
High Tech
Followers
A full view of costs is essential; compliance costs cannot be an
afterthought
Labor Costs 74% 93% 67%
Manufacturing Process Cost 74% 64% 52%
Compliance Associated Costs 39% 52% 38%
Source: Aberdeen Group 2014
24
COMPLIANCE MANAGEMENT
• Compliance is the
most overlooked risk
in NPDI
• RoHS, REACH,
FMD, Dodd-Frank
Act, EU Battery
regulations all affect
High Tech companies
50%
39%
70%
20%
69%
20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Audit trail available to supportcompliance
Ability to identify the presence andconcentration of substances and
materials in products
Best-in-Class High Tech Leader High Tech Follower
Source: Aberdeen Group 2014
26
SUPPLIERS CAN BE YOUR BEST
FRIEND OF WORST ENEMY
67%
47%46%
64%
33% 33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Real time visiblity into supplierprogress
A make vs. buy analysis isconducted on components
Perc
enta
ge o
f R
esp
on
den
ts
Best-in-Class High Tech Leader High Tech Follower Top Challenge for High Tech
Companies to work with
suppliers:
• Lack of visibility to supplier’s
manufacturing capabilities
- 38%
• Meeting project schedules
- 26%
• Lack of visibility to supplier’s
capacity - 25%
Source: Aberdeen Group 2014
27
REQUIREMENTS MANAGEMENT
• Half of High Tech Leaders see requirements as
a problem that must be continuously monitored.
• Leaders already align their products to customer
needs from the beginning, setting themselves
up for success.
28
UTILIZE THE TOOLS YOU HAVE
• High Tech Leaders are more likely to use tools and enterprise systems to get information into the hands of decision makers at the right time.
• Best-in-Class/Leader tools include: – Enterprise innovation management (EIM)
– Decision modeling
– Business Intelligence (BI)
Information like:
• Cost
• Suppliers
• Requirement
s
• Compliance
30
WHAT SHOULD YOU DO?
• High Tech Followers:– Focus on the 5 areas identified for effective PPM
• Customer needs, the right products, resource constraints, continuous monitoring, and standardized measurements
– Work towards mitigating risk in the NPDI process• Managing cost, compliance, supplier interactions, and
requirements are all areas that Followers need to improve.
– Turn to technology tools to bring the necessary data access and visibility to decision makers
31
WHAT SHOULD YOU DO?
• High Tech Leaders (and the industry as a whole):
– Move past the audit trail, stress real time visibility into
compliance.
– Extend that visibility into your supplier base, make these
strategic partnerships instead of necessary speed bumps
– Continue to invest in the needed tools to consolidate data
and manage these NPDI risks.
– Realize there is always room for improvement.
THANK YOU
For more information on this and other topics, please visit aberdeen.com
@ReidpaquinABG
Reid Paquin
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