Why is it that some product development teams continually prosper and succeed while others are mired with frustrations that prevent innovation and delay time to market? A big part of the answer are the product development systems and processes employed that contribute to success.
In a recent study conducted in 2018 by engineering.com, 234 product development professionals were surveyed about the core issues that frustrate product development teams in getting products to market.
The survey’s results were definitive and resonated universally. There were strong relationships between the product development systems used, levels of satisfaction, and successful outcomes.
Success was defined as a team’s ability to meet three universal goals of product development:
· Achieving product launch dates
· Being innovative
· Products launched at target cost
The study found that, on these three measures of success, many teams are failing. This failure correlated well with all measures of satisfaction investigated, and when compared to successful teams, the rate of dissatisfaction experienced, expressed as frustration by failing teams, was many times higher.
The graphic below illustrates that survey respondents generally ranked their product development team’s performance as so-so across three vital aspects of product development, indicating a lot of room for improvement.
Notably, cloud-based system users overall were more successful at meeting their targets than users who used on-site, server-based systems or less formal systems such as email/spreadsheets. They also expressed the highest levels of satisfaction with their system as compared to users of the other two system types.
Product Development: A Complex Process
Without a doubt, product development, whether for a new product or for improving an existing product is serious business. The number of steps involved with product development is subject to many variables, but most new product development projects incorporate the following steps:
1. New Product Strategy– Clearly define goals and objectives for the new product.
2. Idea Generation– Collective brainstorming through internal and external sources.
3. Screening– Condense the number of brainstormed ideas.
4. Concept Testing– Structure an idea into a detailed concept.
5. Business Analysis– Understand the cost and profits of the new product and determining if they meet company objectives.
6. Product Development– Developing the product.
7. Market Testing– Marketing mix is tested through a trial run of the product.
8. Commercialization– Introducing the product to the public.
9. Sustainment – Supporting and improving the product in the market.
10. Retirement– All products have life spans, after which they are retired or superseded.
It’s obvious that this process involves a lot of people that have to perform as a collaborative team over the course of a product’s life.
Here, however, we’ll focus on the actual new product development step (the fun part) of the overall scheme and managing four core processes: engineering change orders (ECOs), document control, product collaboration, and bill of material (BoM) management.
Exactly what is it that differentiates successful product development teams with ones that aren’t as successful? It’s not a simple answer or just one variable, but rather, several factors that revolve around the system and approach for product development.
The Cloud Advantage
The study showed that how satisfied engineering professionals were with their product development process was largely dependent on the systems and platforms they were using: none/email/spreadsheets, on-site server-based, or cloud-based. Regardless of the system used, there are three critical activities that these systems facilitate:
• The efficient access of product information for quick decision making
• The gathering of feedback from all necessary product development participants
• Easy collaboration with other team members
So, what are some specific advantages of employing a cloud-based system for new product development?
According to John Laslavic, founder and CEO of Upchain said, “New product development doesn’t happen in a vacuum. It can’t. Through research that we have conducted, we found that 43 percent of product development teams have to work with more than five external suppliers, and that collaboration is a lot harder if you’re using on-premise solutions or (worse) no solution at all. Cloud-based systems are the only way to truly collaborate in the way that effective new product development demands.”
Although cloud-based systems do have qualitative and quantitative benefits, there are still push-back objections for not implementing a cloud-based system for new product development. As to why, Laslavic said, “Security is still a big one. Putting out product data, the lifeblood of their company still fills a lot of companies with fear. But those fears are completely overblown. We have found that over 90 percent of SMBs who moved to the cloud reported security benefits once they made the shift. Cloud providers have more resources to put toward security, better firewalls, better maintenance — basically, cloud computing providers like Amazon Web Services are specialists, so they’re a lot better at their specialty than anyone else, including security measures.”
Gearing Up for Success with Cloud-Based Systems
When asked what prospective users can expect in terms of cost, time, logistics when implementing a cloud-based system for the first time, Laslavic said, “It depends on the provider. In theory, they should be much lower costs, faster implementation times, and a better experience overall. But that really depends. A lot of system providers, even after they ostensibly shift to the cloud, continue to charge huge implementation fees for customization work that takes a long time and costs an arm and a leg. It also depends on what ‘cloud’ means. Systems using a multi-tenant architecture can spread their hosting costs among lots of different customers, so it gets a lot cheaper for everyone. Dedicated hosting will pass all that collective cost on to the customer.”
When asked if there is a universal implementation strategy for a cloud-based product development system, Laslavic advised, “Be as agile as possible. Try and implement strategically, doing a bit at a time and continuously evolving your systems. The alternative, where you rip everything out and replace it all at once, is much riskier. Projects tend to get away from companies, both because ripping everything out is incredibly complicated, and because there’s a real enthusiasm to ‘fix everything while we’ve got it open.’ A lot of time and money can get spent without anything ever going live.”
Given its many early successes, what does the future look like for cloud-based systems used for new product development? Laslavic said. “For new product development, I envision cloud platforms taking over. These platforms are basically like Amazon, where end-users don’t pay to join, but rather transact on the platform and the platform owner takes a cut. Product developers could find any resource they need, purchase components, hire engineers, etc., and only pay for exactly what they’re using. Communication could flow through this sort of platform, connecting manufacturing, engineering, buying teams, and more, all in one place. Obviously, that’s a few years out. But that platform-ization is definitely where I see the world going. In the meantime, I’d say cloud-based, SaaS products on a multi-tenant hosting environment that enormously lowers the cost of new product development software is the next step on the road.”
The study showed conclusively that teams that relied on cloud-based systems for managing three performance metrics—ECOs, BoMs, collaboration and document management—reported a higher level of satisfaction with their product development environments.
Teams who were using informal product development systems, such as email and spreadsheets, generally reported the poorest performance for on-time product delivery, cost management and innovation. In contrast, cloud-based product development teams reported the highest levels of success across the three performance metrics.
In general, the study provided proof that what product development systems are used have a major impact on both success and user satisfaction. Cloud users displayed higher overall levels of success and satisfaction compared to their counterparts working with older on-site server-based systems or those using informal systems. With the proven success of early adopters, cloud-based product development systems have a very promising future that will continue to reward those organizations that implement them.
To read the Research Report referenced in this article, click here.