May 4, 2011

The New Global Product Development Approach Spurs Collaboration, Speeds Innovation

Harvard Business Review Study of more than 1,200 Global Enterprises Underscores Value and Impact of PLM in Increasing R&D Efficiency, Design Processes.

PLANO, Texas – In the post-recession economy, successful product development efforts will increasingly be shaped—and driven—by advanced IT tools like product lifecycle management (PLM) and collaborative software that enables all stakeholders in a product’s design to share updates, reuse data and streamline processes. This was one of the key findings released today in a survey of more than 1,200 global enterprises, conducted by the Harvard Business Review Analytic Services, which sought to understand how companies are positioning themselves for revenue growth as the economy improves. The survey was sponsored by Siemens PLM Software, a business unit of the Siemens Industry Automation Division and a leading global provider of PLM software and services.

Against a backdrop of increasing global competition and tightly-controlled research and development (R&D) budgets, the firms were surveyed with regard to their plans for enhancing R&D efficiency, and the role that they expect IT to play in those plans. The 1,214 firms —representing numerous industry sectors, including manufacturing, professional services, and healthcare — were also surveyed about the role that partners and customers play in their product development processes, and the key challenges they face in implementing best-in-class IT support for their product design efforts.

Among the key survey findings:

Since 2008, 55 percent of companies endeavored to increase R&D efficiency through such tactics as using IT to enhance collaboration.
Half said increasing the rate of innovation is a top priority in 2011.
Customer suggestions are the most important source of new product ideas.
More than half of the companies said marketing, operations, sales and finance work with the R&D department.
55 percent said partners are an important source of ideas and innovation support.
43 percent said intellectual property protection is a challenge in working with external organizations.

The connection between effective IT use, innovation, and new-product outcomes was very clear across the survey sample. Only one out of five companies in the survey rated their executives’ evaluation of new product processes as “good.” However, among organizations whose IT departments encourage innovation and the deployment of new tools like PLM, almost half of the senior executives rate their product development processes in the “good” category. Conversely, businesses that do not use IT to monitor new product development — or are unhappy with the IT department’s support for it — were much more likely to report dissatisfaction with product innovation outcomes and a related impact on their overall revenues.

“The responses from this global panel reveals just how much IT is enabling a new, more efficient model for product design and development, “ said Alex Clemente, managing director of Harvard Business Review Analytic Services. “Successful product development will increasingly be defined by using these IT tools like PLM in a smarter, more collaborative way — across geographies, across multiple partners, and across different disciplines.”

“Having a respected media organization like the Harvard Business Review conduct this in-depth research validates what we hear from our customers about the business impact and return on investment continually delivered by PLM solutions,” said Chuck Grindstaff, president and chief technology officer, Siemens PLM Software. “Businesses are focused more than ever before on fully marshaling the expertise, knowledge, creativity and ideas of its people and collaboratively applying them at every stage of a product’s lifecycle. Our increasing market leadership demonstrates that Siemens PLM Software’s technology is where businesses are turning in order to achieve their goals across their respective enterprises.”

According to the survey, the top five technology tools most typically used in enterprises with strong IT department support and R&D success are:

Design and Analysis
Supplier Management
Product Requirements Management
Strategic R&D Portfolio Management
Change and Workflow Processes

In terms of future plans for integrating more sophisticated IT tools into the product planning process, strategic portfolio management was seen as an increasingly valuable component. More than two-thirds of the companies surveyed who use IT to monitor product development said that portfolio management will be important to them within two years. They cited not only the ability to build a smarter portfolio, but also the opportunity to create new processes that build cross-functional teams and link with external partners as key benefits of strategic portfolio management.

Finally, the survey also investigated the value placed on partners in the product development process. More than half of those companies surveyed indicated that partners are important in design considerations. By 2013, 86 percent of the firms also expect to have at least one product project underway based on a partners’ idea.

Harvard Business Review Analytic Services is an independent sponsored research unit within Harvard Business Review Group, which conducts research and comparative analysis into timely business and management ideas. HBR Analytic Services has been recognized for its 2009 “Face-to-Face” research report, sponsored by British Airways, as a finalist in the 2010 M&M Awards in the category of “Best Contribution to a Media Campaign by a Media Owner.” HBR Analytic Services research has been presented in articles appearing in The New York Times, Economist.com, USA Today, and the Times of London, among other major media.

Harvard Business Review is the leading destination for smart management thinking. Through its flagship magazine, 11 translated licensed editions, books from Harvard Business Review Press, and digital content and tools published on www.hbr.org, Harvard Business Review provides professionals the world over with rigorous insights and best practices to lead themselves and their organizations more effectively and to make a positive impact.