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

Excerpt

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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)

For more insight on how to prepare for your PPM journey,

download the full Tech-Clarity eBook:

An Action Plan to Improve Your Product Portfolio

at Planview.info/Tech-Clarity