The Missing Element in PLM: Where's the Value?

By Don Creswell, SmartOrg Inc.

PLM – Product Life Cycle Management – addresses, or attempts to address, virtually everything that needs to be managed to conceive of, develop, and bring a product to market. The scope of PLM is immense: from innovation to computer aided design (CAD), to computer aided engineering (CAE), to project/portfolio management (PPM) and on and on. But looking at the PLM “map” (graphic below) one has to wonder how does management address the fundamental question: what is the bottom line value as a result of doing all this?

Because the value question often remains unanswered or superficially answered, an extraordinarily high number of products fail to produce expected results or fail altogether. Industry studies report that, depending on the industry, product type, and related factors, failure rates can be as high as 60 to 70 per cent. A major reason for such dismal results was recently cited in a benchmarking study by Tech-Clarity analyst Jim Brown, “Many companies fail at the very core of the portfolio management problem — identifying and achieving value from their projects.”

Value-Based Management (VBM) applies the tools of economic and risk/uncertainty analysis to help managers confidently select the most promising products among competing innovative products and, throughout the development cycle, to focus efforts on the relatively few—but hugely important—factors that will produce the highest profitable revenue.

This paper describes a VBM approach to strategic project and portfolio management that has produced exceptional results for such companies as HP, Sprint, and Inspire Pharmaceuticals.

[To read the complete paper, click here]