Product Life-cycle Portfolio Management as part of Oracle’s Innovation Management Cloud
I’ve been working with customers on the product value chain for quite a while. I keep hearing the same comments wherever I go which are independent of the market and industry.
“We’ve already begun the development. We can’t stop now.”
“This is an Engineering pet project.”
“How do we make sure we’re working on the right things at the right time with the right resource?”
“This is a Marketing pet project.”
“What’s this project going to cost?”
“Why would we start another project?”
“IT has over 1,000 projects on their list. How do we prioritize them?”
“Our PMs are arguing about which of their projects should use the available resources. We need a tie breaker.”
“I can’t justify increasing head count.”
“I wish we could stop building this product. No one seems to be buying it. Yet, Management wants to keep it going.”
Many companies don’t have realistic ways of addressing these questions. However, all of these can be spoken to by using relatively simple and straightforward methods and tools. If we break the problems down into pieces we can layout the process into something like this:
All of the typical comments from above fall into this picture at some point. What is really needed is overall portfolio management as a repeatable way to make business decisions and direct the company. Oracle’s Innovation Management Cloud (IM) offering contains all the parts needed to manage the various pieces.
Proposals / Concepts
A Proposal is the business view. A Concept is the technical view. Both are required to eventually provide a solution. Proposals provide a way to develop an Idea into a viable product or solution. Proposals store the business aspect of a new or current product like Business Case, Cash Flow (expected cost vs. revenue) and resources.
A portfolio consists of a set of proposals listed as scenario elements. For instance, 1 portfolio may be “High Tech Portfolio (3 Yr Horizon)”. There may be many proposals depending on business structure and needs. Each Portfolio may contain multiple scenarios used in the business analysis. For instance, 1 scenario may be “All High Tech Proposals” and another may be “Those proposals with the highest NPV to obtain the cost target”.
The Oracle solution allows the users to easily capture the proposals and include them in an existing or new portfolio. Adding them to an existing portfolio is advantageous as it allows for the comparison of existing products and projects to new proposals. One of the hardest decisions most companies face is when to say “NO.”
For example: “We’re developing this product, but if we delayed the development for 6 months we could get this other product to the market faster and with a greater NPV.” OR “We’ve had this product in the market for the last x years. Sales are dropping and we have several new proposals that could easily replace the product and increase revenue. Let’s phase out the current product in favor of the new proposals.”
IM allows you to capture things like:
Net Present Value (NPV)
Payback Period (Years)
3 Year Revenue
The analytic capabilities allow the data to be ‘sliced and diced’ many ways. In particular, analysis can be performed by Department or Function, Division, Business Unit or Corporate level. It doesn’t have to be all or none. A great use is to help a particular department or function determine priorities. Remember the comment above “IT has over 1,000 projects on their list. How do we prioritize them?” The overall portfolio process can be applied to this particular problem. It offers a straightforward and repeatable process for lining up all the proposals or requests, categorizing them in multiple ways and then performing an analysis based on data rather than “gut feel”. The analysis may be performed at this level and the results rolled up into higher level portfolio analyses.
Out of the box, IM comes with a large set of analytics. All you have to do is capture the underlying data and IM provides the place and process to make the data capture process more efficient. Here’s an example of the out of the box analytics:
Technical Risk, Reward and Resources
Market Risk, Return and Cost
Product Development Schedule
In summary, setting priorities and making business related decisions is part of what management tries to do on a regular basis. This isn’t usually a simple undertaking. By providing tools and repeatable processes, Oracle has made the overall problem simpler to resolve.
For more information on Oracle’s Innovation Management solution:
Tom Nelson is an SME in design and manufacturing business process systems – guiding companies on how to streamline and consolidate their business processes from inception through obsolescence. Tom’s involvement with Agile PLM dates to an early release of the product, and in fact he was among the first 10 customers of Agile. He has over 40 years of experience in all aspects of manufacturing and service companies: semiconductor, high-tech, health sciences, aerospace and more. A deep knowledge of operational processes allows him to implement best practices for the control and processing of corporate information. These practices include development, quality, regulatory, product costing and program management.