Documente Academic
Documente Profesional
Documente Cultură
2008 / 10
www.detecon.com
Next-Generation PLM
Table of Contents
1 Executive Summary............................................................................................. 4
2 The Shift towards a New PLM Paradigm............................................................. 5
2.1 The Increasing Relevance of PLM .............................................................. 5
2.2 Requirements on an Integrated PLM Approach .......................................... 9
2.3 Spotlight on Multi-Lifecycle Management .................................................. 10
3 Integrated PLM Framework for the Telco Business .......................................... 12
3.1 PLM Process and Organization ................................................................. 13
3.2 Product Meta-Model .................................................................................. 18
3.3 PLM IT-Architecture................................................................................... 21
3.4 Lifecycle Value Management .................................................................... 23
4 The Proof of Next-Generation PLM ................................................................... 25
4.1 The Challenge ........................................................................................... 25
4.2 The Task.................................................................................................... 25
4.3 The Solution .............................................................................................. 25
4.4 The Approach ............................................................................................ 25
4.5 Benefits for the Client ................................................................................ 27
5 Conclusions & Recommendations..................................................................... 28
6 Outlook: Study ‘Next-Generation Telco PLM 2009’........................................... 30
7 Reading on ........................................................................................................ 31
8 The Authors ....................................................................................................... 33
9 The Company .................................................................................................... 34
1 Executive Summary
The telecommunications market has faced a great variety of challenges over the past five
years. Tough competition, price war and regulatory risk exposure have been leading to
decreasing price, declining revenues and EBITDA margins.
Product Lifecycle Management (short: PLM) is more and more regarded as a key to
business excellence. Due to market dynamics and the rapid global availability of new
technologies, telco providers have finally started to realize the necessity for holistic PLM as a
highly critical business success factor for managing the increasing product complexity.
Complexity, and the inability of an organization to manage it adequately, is a major obstacle
for telco providers to proceed on their path towards operational excellence. The emergence
of multi-layered product structures, as well as industrialization trends, call for new
management approaches. Arising challenges have to be alleviated by an integrated PLM
approach that encompasses a company’s product diversity, innovation efforts, globalization
issues and continuously changing legal framework.
Over the past few years, consultants of the Telco Effectiveness & Product Lifecycle
Management Group at Detecon have worked on the development of an integrated PLM
concept that was successfully implemented in various projects within the
telecommunications industry worldwide.
The objective of this paper is to provide an overview on the 4-Pillars approach of integrated
PLM which, through its integrated and holistic nature, is capable of alleviating the multiple
dimension of PLM complexity. The foundation of the approach is a process view put across
four pillars of PLM that are to be integrated in a holistic sense. These include 1) PLM
Process and Organization, 2) PLM Meta-Model, 3) PLM IT-Architecture and 4) Lifecycle
Value Management. The model is based on best-practice experience from the telco industry
and the adoption from existing frameworks from industries with a higher PLM-maturity level
such as the automotive or manufacturing industry.
In order to make the effects of our approach quantifiable, Detecon has defined a set of PLM-
relevant success factors and KPIs which enables our clients to evaluate the value of the
implementation of the 4-Pillars approach. Currently, the Telco Effectiveness and Product
Lifecycle Management Group of Detecon, in cooperation with the Research Institute for
Operations Management at the RWTH Aachen, are conducting an international expert study
on the status quo and perspectives of PLM in the telecommunications industry. The general
objective is to validate and evaluate interdependencies between PLM parameters, success
factors, and strategic company goals.
Due to the dynamic nature and momentum of the telecommunications industry, there are a
variety of different market trends and developments that leverage the relevance of PLM.
Reality has hit providers harshly, as they have to deal with the evidential intensification of
competition, decreasing market prices, increased customer expectations regarding
functionality and individuality of products, shortened product lifecycles and order lead time,
simply in order to achieve and sustain competitiveness. The following graphic illustrates the
aforementioned market trends and developments.
Quality Revenue
+50% +150%
Pressure Pressure
1990 2000 2010 Source: Mercer Management Group 1990 2000 2010 Source: RegTP, 2004
Innovation Cost
-50% -50%
Pressure Pressure
These challenges share a common evolutionary path due to recent technological and
market-driven advancements, and immensely increased complexity. As a result, they have to
be included in Next-Generation PLM considerations.
In the following sections, the main business drivers with the greatest impact on the telco
business model are introduced. An effective PLM implementation helps to manage the
challenges that these drivers impose on the industry.
The dichotomy between tangible goods and immaterial services is subject to change. This
development towards an extended product can be observed in both, telecommunications
industries, as well as in the traditional industries (i.e. manufacturing or automotive).
An exemplarily critical success factor in the manufacturing industry is the ability to provide
more suitable services along with the tangible good. The combination of tangible and
intangible attributes in terms of the extended product increases the complexity in managing
the product lifecycle.
The extended product (compare Thoben et al. 2001) can be characterized by the fact that it
consists of a bundle of components/modules that in sum create the customer benefit - as this
holds particularly true for products offered in the telecommunications sector. Each module
embodies its own lifecycle, a high variance in functionality, and implies an additional product
complexity in terms of module design, module management and module elimination from the
product.
Global and deregulated markets result in global competition that every company is
confronted with. This result in a shift from a suppliers’ market to a buyers’ market in which
the customer has to be regarded as the focal point. This business driver forces companies to
follow either a cost- and efficiency-leadership strategy or a differentiation strategy on a global
scale.
Q In order to perform in the cost-leadership role, companies not only have to
implement efficient processes for the development of complex products, but
also need the ability to efficiently handle the order management process.
Simultaneously, companies have to cooperate with numerous business
partners resulting in significantly higher coordination efforts.
Q A product differentiation strategy implies processes that ensure short time-to-
market on the one hand, and a high degree of freedom in process definition for
increasing the effectiveness of innovation activities on the other hand.
Due to the rapid developments in the telecommunications industry and shorter product and
service lifecycles, providers are forced to increase their level of flexibility and agility. From a
PLM perspective, emerging technologies have to be assessed thoroughly as they present
the fundamental basis for the introduction and launch of new services, applications and
product opportunities. However, it is vital to maintain a healthy balance between complex
lifecycle management and innovation initiatives to maintain competitive advantages, protect
market position and remain profitable.
Increased regulations such as safety, environmental and product reliability will further
influence a company’s PLM process. Especially the resulting effort for ensuring traceability
will have an impact. Traceability has two dimensions in the PLM context.
First of all, it is related to the PLM process itself. Effective measures have to be put in place
in order to ensure the seamless flow of transactions to identify where material misstatements
due to error or fraud could occur (Sarbanes-Oxley Act).
Further, traceability in the order-delivery process is about the tracking of individual product
units or components. Legal frameworks like the TREAD Act (for the automotive industry in
the U.S.) or REACH (for the chemical industry in EU) can be subsumed under this
dimension. Affected companies have to arrange the implementation and integration of these
regulations in the existing processes at the lowest possible lifecycle costs.
Another aspect of this business driver describes the fact that service providers have just
started to realize that the vertical alignment of organizational business units on the basis of
network technologies for fixed, mobile voice, data and content services, presents a mere
relict only suitable for the historical context in which those services had been in fact
separated from one another. From a Next-Generation perspective, the necessity for each
independent unit to assume the role as a network, service and content provider proves to be
highly inefficient.
Cost reduction initiatives and revenue generating strategies are vital for the achievement of
common business goals in a time marked by tough competition and price reduction.
Management aspects such as the proper positioning in the market, innovation initiatives,
introduction of new products, and customer satisfaction combined with the cost efficiency
measures, are becoming more important than ever.
PLM can be defined as the activity of managing a company’s products across the entire
lifecycle, from the early stages of conception to the final withdrawal or recycling of a product.
By this definition, a strong interrelation between the value creation process and PLM can be
deduced.
In order to support such value creation process, an integrated PLM approach has to be
followed, which holds the mandate to encompass and optimize all aspects required to
leverage the efficiency and effectiveness of the company’s PLM.
Taking the current globally changing business environment into account, PLM can be
considered as a strategic weapon for enabling companies to provide an additional value to
customers, and thereby gaining a competitive advantage over their competitors. Especially in
the telecommunications industry which experienced a significant change in its environment
over last five years, PLM is considered to be essential for coping with shortening innovation
cycles.
The key to achieving innovation and customer satisfaction at reasonable costs is a holistic
view out across the company and its processes, enabling an enterprise organization to meet
the new challenge of managing multiple lifecycles for providing one product to the customer.
Until now, no such holistic PLM-approach addressing the real challenges of the modern
business environment in the realm of telecommunications has been developed.
Multi-Lifecycle Management (MLM) can be considered as a key challenge within the PLM
context that holds especially true for the telecommunications industry due to the multi-
layered nature of its products. For the purpose of this paper, we define MLM as follows:
Product Layer
Infrastructure
Lifecycle
Variance
Service
Lifecycle
Device
Lifecycle
Application
Lifecycle
Perceived
Product
In the following chapter, the 4-Pillars approach will be introduced along with relevant
implementation principles for each layer.
The integrated PLM-Approach consists of four components as depicted in the figure below.
4-Pillars Approach
PLM Process and Product PLM IT Lifecycle Value
Organization Meta-Model Architecture Management
Increases efficiency of Ensures product and
Builds the basis for the
Defines the overall product PLM-process by the service quality aligned with
PLM success by
structure and enables provision of best-of-breed requirements of the
facilitating an operational
effective management of software components to relevant market along with
excellence to the highest
product components support product consistent reporting
degree
development infrastructure
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Product Configuration from the manufacturing perspective
Class.
Gates
Internal Production
Decision Support
Approval by the product board General Scalable System
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Solution Area
Optional
Gates
Fuzzy
space
View
Process
Box
PLM-
space Services
Bounding Box Approval by the Product Board Obligatory Product-Development Marketing Management Product Exit Management Portfolio
Alternatives
Management
Operational Support System
Alignment
1 Innovation 2 3 4 5 6 7 Multi-Project- Product-Data-Management
Marketing Collaboration Tools
Evaluation Planning Implementation Launch Exit Management System System
Management Management
Product Configuration from the customer perspective
Market & Market roll- Implement Monitor &
Market
persp.
Product Product
Product description
Management report
Firewall
gement
Lifecycle Value
SPAM-
Mana-
Modules
ence
Sales & market
filter
ID-
Launch report
Management
Technic.
Flatrate
Develop Technical
Tarif A
Tarif B
persp.
QoS
kBit/s
kBit/s
200
400
Financial
Fin.
Scope
The foundation of the 4-Pillars approach is a process view put across four dimensions of
PLM that are to be integrated in a holistic sense. Extensive consulting experience with PLM
implementation and optimization projects has shown that the actual pain points for
telecommunications companies circle around these four major areas:
Q PLM Process and Organization – facilitating the execution of the collaborative
process (efficiency goal) and aligning the activities with the strategic goals of
the company (effectiveness goal)
Q Product Meta-Model – enabling product component reusability by defining
constraints and rules for decomposing the product functionality into meaningful
modules with coherent data models
Q PLM IT-Architecture – increasing the PLM process execution efficiency by
providing a best-of-breed framework of IT-components and their interrelations
Q Lifecycle Value Management – ensuring alignment between product and
service portfolio and market by continuously identifying the requirements and
demands of actual and potential markets
Companies in the service industry should take a disciplined, analytical approach for the
development of new products relying on targeted customer input. The main design goals of
this approach is to facilitate the execution of this collaborative process (efficiency goal) and,
equally important, to align the activities with the strategic goals of the company
(effectiveness goal). In the following sections, PLM process variants and principles are
introduced which present the foundation of the process pillar of our integrated PLM
approach.
Long-living products with a limited variance in their product structure along their lifecycle are
becoming less and less relevant. Those products have been replaced by a new type of
product: the extended product. It is characterized by the fact that it consists of a bundle of
components/modules, each with a different lifecycle and a high variance in functionality. As
the product concept has changed, the PLM process has to be adapted accordingly. Based
on the typical characteristics of product components, several specifications of a PLM
process have to be defined.
Q PLM-Flex: This process variant ensures an efficient and effective PLM with the
highest possible degree of freedom for product design and pricing. Typically,
radical innovations with an associated high risk of failure can be managed with
this process variant (i.e. new network technology).
Q PLM-Max: Based on standardized activities, this process variant focuses on
efficiency improvements and the simplification of knowledge-intensive
development processes for products for which boundary conditions are known.
Q PLM-Fast: This process variant is characterized by the highest level of
standardization and simplification of the decision-making process. It focuses on
the highest possible reduction of processing time under known conditions.
Component characteristic
Lifecycle- Product- Innovation-
duration Complexity Level
PLM-Flex
Q Radical-Inno-
vation
Long High
Degree of process standardization
Low Q Architectural
Innovation
PLM-Max
? Modular
Gate 2
Gate 4
Gate 5
Gate 1
Gate 3
PLM-Fast
E-Mail VoD Content Tarif
Tarif
Incremental
High Tarif Short Low
Tarif
Innovation
… …
Our PLM process approach is based on following four principles which have to be
considered when implementing PLM processes:
Q Enhanced Stage-Gate approach
Q Multi-perspective view
Q Metrics-based management
Q Process modularity
The standard Stage-and-Gate PLM process with its frozen gates has several characteristics
that lead to significant problems in the development of low-complexity telecommunications
products, as well as highly innovative extended products and solutions (i.e. time-to-market
delay). Weaknesses of the Stage-and-Gate model - such as narrow criteria, long review
preparation time, slow and serial decision making process - provide reason for the necessity
of introducing hereby two additional approaches: the aforementioned PLM-Flex and PLM-
Fast process variants.
The process solution for standardized products could be a simplification and automation of
gate decisions, and elimination of some gates/stages.
The adoption of Stage-and-Gate and Bounding-Box models allows for the development of a
new approach for designing variants of a PLM-process in the telecommunications industry
Bounding Box
Principle Two: Multi-Perspective View
In the market perspective, all activities related to product marketing, such as the definition of
product specifications and the management of the product in the market-place, are included.
The technical perspective subsumes all technical or production-oriented activities. Finally, all
financial aspects and implications are categorized in the financial perspective.
At each stage and for every perspective, a distinct deliverable is specified. Before entering
the gate, the deliverables - at least one for each perspective - are conflated and presented
as a whole to the product board.
For the purpose of achieving a higher degree of process standardization, the deliverables
should be created on the basis of pre-defined and agreed templates.
In addition to process definition, the organizational and business components must not be
neglected. Since products, and consequently the PLM process, become more complex and
involve internal as well as external partners along the value chain, there is a greater need to
balance top-management control with the empowerment of self-managed, cross functional
teams. As a prerequisite for achieving this balance, the company has to implement a
metrics-based management approach by which teams are measured on strategic
performance indicators such as development cost, time-to-market and customer satisfaction.
The definition and selection of the indicators is critical for the successful implementation of
the PLM process. Our developed and tested metrics-based framework can be used to
systematically make business decisions about implementing PLM and maximizing the return
on investment (ROI).
The metrics-based framework to assess and monitor the efficiency and effectiveness of an
implemented PLM process includes four dimensions:
Q Business Metrics: All market-based and competitive metrics fall under this
category, including metrics of strategic relevance such as market share,
revenue growth, operating costs or margins.
Q Process Metrics: This category includes all metrics that are focused of the
performance and quality of the process itself, including time-based metrics (i.e.
time-to-market, time-to-prototype, time-to change, time-to-access-data, change
process cycle time), as well as quality-related metrics such as design error
rate, number of quality rejections or number of deviations or waivers.
Q Product Metrics: All metrics that related directly to the quality of the product are
subsumed under this category, including such metrics as unit costs, reliability
of the product, number of defects, number of requirements met or number of
product modules.
Q Soft Metrics: Due to the abstract nature, soft metrics are probably the hardest
dimension to measure. However, this category has to be considered as well
since all culture-related aspects are included that have an impact on the PLM
process. This fourth dimension includes metrics such as employee satisfaction,
supplier relations or customer satisfaction.
By setting the weights properly, the development teams are capable to self-steer for the
greatest short-term and long-term profit, resulting in less coordination efforts and efficiency
gains especially for cross-departmental teams in particular.
Box / PLM-
Bounding Gate 4 Gate 5 Gate 6
Fast
Class.
Gates
1 Innovation 2 3 4 5 6 Marketing 7
Evaluation Planning Implementation Launch Exit
Management Management
Market & Market roll- Implement Monitor &
Market
persp.
Product
Product description
Management report
capability out market manage Market exit
launch
Detailed design
Business plan
Launch report
analysis planning plan KPIs
Idea paper
Technic.
Develop Technical
persp.
Monitor &
Technical Technical Technical
technical implementa ens. product
evaluation Go-Live success exit
concept tion
Business Adjust Monitor Control Finalize
persp.
Financial
Fin.
The overall objective reflected in this principle is the achievement of the highest possible
degree of two aspects at once: market flexibility and internal efficiency. Modularization in
regards to process design allows the management and PLM force to decompose complex
PLM tasks into modules of process chains that can be flexibility re-adjusted and re-arranged
as needed, thus imposing a scaling effect on production efficiency. Through the streamlining
of processes, innovation cycles can be shortened – ideally in continuous sync with changing
market, technological or financial drivers.
Process modularization can be regarded as an enabler for increasing the efficiency and
effectiveness - however, following aspects have to be considered and followed in order to be
able to fully capitalize on the potentials benefits:
Q Architecture defining production and process modules and their functions.
Q Interfaces describing the relationships and input/output parameters between
modules.
Q Set evaluation criteria or standards for the modules assessment in regards to
conformity within the entire system and relative to one another.
The requirement for standardized interfaces especially presents a critical point. In order to
allow for the flexible rearrangement of interchangeable process modules, the input and
output parameters have to be defined and described precisely in a detailed fashion across all
process modules. A valid approach to such demand is presented by data modelling which
will be further explained in a subsequent section.
The product meta-model (PMM) is essentially based on the consistent product definition
from a product engineering perspective, as well as from a customer (market-oriented)
perspective - which is crucial in nowadays hyper-competitive environments. The PMM
serves as a regulatory framework for managing the vast amount of information that relates to
the product during its lifecycle. Its purpose is the organization of all relevant information
pieces in order to ensure efficiency of the production process through re-usability of
components, in hand with an effective customer response that can be established by
enabling product individualization concepts.
Many present quality deficiencies originate from a diffuse definition as well as from an
inconsistent view on the ‘product’. The extended product should be clearly and precisely
defined, efficiently developed, valuably commercialized and reasonably understood by the
customer. There should be a constant product definition across the entire lifecycle and its
coherent business and operational processes.
The product as the main subject of the process needs to be defined, and this definition of
product should take the perspective of the customer into account. A product is defined as
anything that can be offered on a market for attention, acquisition, use or consumption that
might satisfy a wish, demand or need. It can be of physical or intangible nature, such as
services for information, communication or entertainment. A product is an entity the
customer perceives in its entirety.
The precise definition of the complete product range and their categorization remains a
considerable problem especially in the telecommunications industry. For as
telecommunications, there are four essential product categories that can be differentiated:
market product (service), standard solution, customized solution (or individual solution) and
bundle. All offered products and services can be assigned to one of these four categories.
Product definition is not simply a reflection of the engineering design. It also includes the
entire set of information that defines how the product is designed, manufactured, operated
and managed in the market, and finally withdrawn from the market when it becomes
obsolete. This product definition is continually updated throughout the entire lifecycle and its
coherent business processes. For PLM in general, the product has to be regarded as the
core information object (CIO).
Data modelling represents one of the key fundamentals for a successful implementation of
product and process modularization. It can be defined as the analysis, definition and
description of data objects and their interrelations to allow for the interoperability and
consistency of data objects. The main objective is to ease and simplify communication
between different business entities.
As data objects are transformed by processes modules, a clear and consistent picture on the
varying states of these data objects is required across all relevant processes on a high-
granular business, as well as detailed operational level, for achieving internal efficiency and
market flexibility. The Unified Modelling Language (short: UML) is commonly used as the
notation standard for data modelling.
Product and process modularization goes hand in hand with data modelling, and therefore a
systematic approach for such should be followed for the efficient implementation of the
Product Meta Model pillar. An illustrious example for such model is given with the Shared
Information and Data Model (short: SID) which is based on UML, and widely applied as the
de-facto standard for data modelling in the telecommunications industry.
SID can be regarded as an information model, providing a high level business oriented view,
as it defines entities (representing objects) that are of interest for the service provider, as
well as the associations between entities.
In regards to PLM, several benefits can be realized if such data modelling standards like SID
are applied. All involved entities, be it internal division or external partners, are in position to
share a common understanding in terms of functions, relationships and the associated
information requirements of each business entity. The overall objective is to increase
effectiveness and efficiency of system interaction.
A product model can serve several purposes. In regards to the telco industry, a product
model is necessary for the definition of products from two distinct perspectives: the
production point of view (telco factory) and from a customer perspective.
A product model from the latter perspective is necessary for providing the customer with the
possibility to configure the product in exact accordance to one needs (compare to the car
configurator in the automotive industry). In an ideal case, the product configurator from the
customer perspective is directly integrated with its counterpart on the production side, and
vice versa. The bi-directional integration ensures consistency and thereby efficiency
improvement in the maintenance of product data.
The purpose of PMM lies in the definition of the underlying linking rules, as well as the type
of modules in both perspectives. In Figure 6, module types have been defined from the
production point of view. These module types can be instantiated for the definition of a
product. The same principle is applied for the definition of the product from the customer
perspective. The alignment, or as mentioned before, the bi-directional integration, is
achieved by the consistent use of the PMM.
General Scalable
Solution Area
Optional
space
View
Defined Fix
Solution
space Services
Obligatory
Alternatives
Alignment
Firewall
Confer-
gement
SPAM-
Mana-
Modules
ence
Sales & market
filter
Service Single Double Triple Quadruple
ID-
Basic Module Play Play Play Play
Flatrate
Tarif A
Tarif B
QoS
Mobile
Seg1
Services
Cus_
kBit/s
kBit/s
kBit/s
100
400
200
… Data Seg2
… Cus_
Hotspot
WLAN
CuDA Seg3
Voice
Scope
The definition of the product as a CIO based on a PMM is the fundament for the
standardization and modularization of products in the telecommunications industry. Product
standardization changes the process landscape and reduces costs. Modular product data
structure ensures linking the sales perspective to the internal (production) perspective in
relation to the offered products and services. The main objective of introducing a modular
product structure is the optimization of the product development and the sub sequential
production.
Consequently, applying the concept of modularization with all its advantages regarding
reusability refers not only to the market but also to the technological side. Therefore a
modular product structure is to be followed by a modular production structure. This poses a
critical aspect since in order to achieve efficiency, competitive pricing and rapidness in terms
of production, the product processes have to be industrialized through modularization. This
enables providers to flexibly serve a heterogeneous customer base with a relatively stable
product portfolio re-arranged in a customer-specific fashion.
The basis for the evolution of a product through its complete lifecycle is a solid PLM IT-
architecture that is customized for the company-specific PLM requirements. Since systems
and applications primarily serve to support the business and operational processes, such
has to be implemented as a holistic enterprise architecture to support the PLM process in all
relevant dimensions: (1) decision support, (2) process support and (3) enterprise architecture
integration. A standardized off-the-shelf PLM system is therefore not the tool of choice as
Ausura and Deck (2007) point out.
As previously mentioned, it deems important - following the concept of product and process
modularization - that also IT components should be implemented in a modular structure
within an integrated enterprise architecture to allow for efficiency and flexibility.
Instead of a one-size-fits-all approach (meaning one software system for the support of the
entire PLM process), it appears advantageous to rely on an IT-architecture that reuses and
respectively customizes existing components as far as possible. In following sections, an
overview on the essential IT components that a PLM IT-architecture should consist of is
provided.
Architecture View
Decision Support
System
Strategic Resource
CAS Management Value Management
Process
PLM -
Operational
Process Support
Support
System
System
Product Product
Workflow Management
Workflow - Management
System System Document Management System
Modeling System
Modeling System
Integration Layer
-layer(SOA)
(SOA)
The main purpose of a DSS is to gather and consolidate data from operative systems in
order to provide aggregated information on the product lifecycle to the senior management. It
is mainly based on three components: The Computer Aided Selling (CAS) provides
functionality for product configuration and product pricing. Aspects regarding the planning of
long-term resource capacities are handled by the Strategic Resource Management
component. The Value Management component covers product portfolio management
aspects.
On the operational level, the PLM process execution is supported by the Process Support
System, consisting essentially of 5 components. The Workflow Management Systems
(WFMS) enables a higher degree of process automation. Especially in the context of
distributing and releasing unstructured content like product specifications in cross-functional
teams, the WFMS plays an essential role through a strong link to the Product Data
Management System (PDM). The Product Modelling System and the PDM are closely
coupled. The former defines the product structure, providing an overview on the types of
modules a product is composed of. In a database context, this functionality is similar to a
scheme definition. The PDM system stores all product relevant data according to this
definition, and provides different views for each stakeholder, be it from a marketing and
engineering department. The Multi-Project Management System and collaboration tools are
instruments for the management of the product in different phases in a collaborative
environment.
A PLM IT-architecture is supposed to hold the promise to seamlessly integrate and present
all information produced throughout all phases of a product’s lifecycle to everyone in an
organization including external business partners. For ensuring this functionality, an EAI-
approach has to be implemented. According to recent research activities, a Service Oriented
Architecture (SOA) is most suitable to integrate business applications across company
boundaries, allowing for an increase of efficiency.
The value-oriented portfolio management process consists of strategic alignment and value-
based product portfolio management. Focusing on clearly defined and specified products
makes a significant contribution to effective portfolio management. Products can be
positioned without overlaps or threatening cannibalization effects, and in accordance with
pre-identified market demands. Sales and marketing departments benefit from the increased
transparency of the product range and enhanced comprehensibility for the customers.
In order to allow for a quantitative and qualitative assessment, portfolio management uses
the tools provided by the IT-supported portfolio database. Within the increasing complexity of
product marketing, it is highly important to rely on an appropriate and efficient data basis that
compensates for the lack of business transparency and low synergies in the value network.
The modular structure of the portfolio promotes the use of common parts in the production
processes, increasing the ratio of mass production to overall production.
In addition, not only the current portfolio should be evaluated and in terms of qualitative and
quantitative aspects, but also potential future portfolio scenarios. In praxis, several product
innovations originate from technological advancements. The implementation of an innovation
radar to realize the function of recognizing and assessing upcoming market and technology
trends at an early point of time can be a helpful tool to include an outlook perspective in
value-oriented portfolio considerations.
Customer Needs Management is a discipline within PLM that ensures that customer needs
or requirements are communicated to all product development stakeholders across the
lifecycle. Customer Needs Management effectively decreases the potential of design flaws
and delays associated with misinterpretation and discontinuous communication, while
improving productivity, efficiency and quality at the same time.
A standardized product data structure forms the prerequisite for the continuity of the
processes, spanning from production to sales and marketing. The development process for
market products becomes faster and cheaper. A higher level of process automation
improves production quality and process cost efficiency (i.e. by savings in IT operating costs
and headcount). Besides process continuity, the data quality along with certain level of
automation has to be ensured.
The development of an integrated database between the Product Lifecycle Management and
Product Portfolio Management has to be regarded as a critical factor to achieve consistency
in regards to information flow. A possible concept for this is the implementation of a Data
Warehouse which enables consistent realization of data exchange between production and
sales system, and provides for the opportunity to up-value the existing Product Data
Management and to assure early identification of value creation opportunities.
In the initial situation, the implemented PLM solution with its platform was not ‘state-of-the-
art’ – due to a lack of both, product withdrawal concept and decision gates, as well as an
unacceptable time-to-market ratio. Until then, no portfolio management process was
designed and implemented.
The existing portfolio was oriented on the organizational or technical structure, and not
organized from the customer’s point of view. The product portfolio was characterized by a
large number of product variants and features. All of these products needed to be handled
individually from the IT management perspective. This broad variety of products needed to
be realized and implemented within all operative processes, IT-applications and -systems, as
well as sales information tools. Hence, the provider had to struggle with enormous
complexity impeding the maintenance of IT-landscape and the management and
optimization of the processes. Neither for the company itself, nor for its affiliates or partners,
was an integrated IT-solution architecture available or implemented.
The product portfolio was subject to thorough analysis throughout the whole company. The
aim was to balance product categorization, to understand the customers’ requirements and
to broadly define the product itself that the company was expected to offer on the market.
The precise definition of the product was expected to support and enable accurate reporting.
The integration of several standalone IT-solutions into one integrated IT-architecture was
vital to enable effective decision-making procedures and to reduce the complexity and
inefficiencies.
During the project the integrated PLM approach valid for the company and its affiliates was
developed. The implementation of the 4-Pillars approach at this particular company resulted
in valuable benefits for solid product development, marketing and strategy.
The approach was based on the four pillars of our approach of integrated PLM. Following a
thorough analysis to assess the status quo of the implemented PLM solution and identify
potentials for optimization, a wide range of activities was defined for each specific dimension
as a work package.
‘PLM Process Introduction was carried by designing specific PLM processes for the financial,
technical and market perspectives with set key deliverables for each. The steps taken
included:
Q Design and implementation of three variants of Stage-Gate PLM-processes
(PLM-Fast, PLM-Max, PLM-Flex) for different types of products
Q Introduction of fuzzy gates concept for a lean decision-making process.
‘Implementation of the Product Meta Model presented a highly critical aspect since the
company specifically demanded the shift towards more customer orientation. Following this
mandate for the redefinition of the product portfolio from the customer’s point of view, the
integration and harmonization of the decision-making process in which various stakeholders
from different departments are involved, presented another key aspect. The steps taken in
this regard constitute:
Q Adoption of easier know-how exchange and the guaranteed usage of the
“common language” throughout the product development, as well as fast and
efficient communication between international partners.
Q Definition of harmonized and modularized product portfolio for all national and
international affiliate companies.
Q Introduction of innovative and effective materials reuse.
Q Adoption of the product data platform in all international subsidiaries.
‘PLM IT-Architecture Development was regarded as the technical fundament which provides
a range of useful utilities to ensure a successful and reasonably-priced integration of the
PLM-process within the company. The steps taken included:
Q Concept development and implementation of DMS Management and Workflow
Project Management system.
Q Implementation of the product concept within the ERP-system.
Q Implementation of the shared platform for documentation and entire project
management.
Q Roll-out of the one-physical-server concept to support separate PLM processes
in all divisions and subsidiaries.
Assurance of Effective Lifecycle Value Management was focused to accompany the product
lifecycle from the market launch through to the market withdrawal of a product. Issues
considered in this regard were:
Q Introduction of the value-based portfolio management process
Q Development of sound marketing strategy by means of early market needs
recognition, standardized information and environmental issues.
Q Assurance of detailed input for controlling for the sake of exact allocation of
revenues and costs to the products.
Q Introduction of simple allocation at cost centres and cost units.
Although particular benefits for the customers were to be expected for each of the four
dimensions, due to the holistic and integrated nature of the implementation and the tight
interdependencies between all dimensions, synergetic effects could be realized, thus
increasing overall efficiency and effectiveness of PLM and innovation management.
The PLM Process and Organization solution was based on the introduction of all three
variants of the Stage-Gate approach (PLM-Flex, PLM-Max and PLM-Fast) combined with the
fuzzy-gates concept. Due to these processes, the time-to-market ratio was reduced by 25%,
the product-success ratio was increased by 75%, and a customer-centralized product
development was achieved.
The PLM Meta-Model solution helped to achieve precise and customer-oriented product
definition that reduced the product portfolio complexity by 50%, and introduced the
modularization of the product. The modularized product portfolio increased cost reduction
chances by means of similar-components reuse.
Time-to-Market improvement
Product-success-ratio improvement
1. PLM requires top management attention and has to be regarded as a strategic key
to ensure sustainable competitiveness and growth in the telecommunications
industry
2. The horizontal value chain integration with external partners becomes increasingly
important as industrialization trends are coming into effect
One of the most important trends is that the telecommunications industry is becoming
increasingly industrialized. Not only does the integration and synchronization of internal PLM
processes and systems pose a critical issue, but more important, the value chain will further
has to be horizontally integrated across company borders within the supplier and partner
network. The concepts of process and systems integration, process modularization and
value chain decomposition will play a key role in accompanying carriers in their journey
towards the industrialized telco age and enable them to realize large-scale benefits.
The products in the telecommunications industry typically consist of several modules that in
sum create customer benefit. Each module embodies its own lifecycle, which implies an
additional product complexity in terms of module design, module management and module
removal from the product. Due to this increased complexity resulting from the multi-layered
nature of telco products, approaches are necessary for the management of these multiple
lifecycles and the coherent requirements. The integrated 4-Pillars PLM approach can provide
a solid basis for the implementation of such approaches. The ultimate objective of MLM is to
increase the degree of synchronization of the product layers in order to provide a unified
experience to the customer through one perceived product.
Clear and precise product definition based on customer centricity and customer value has to
be regarded as key for sustaining competitiveness in the telco business. Due to the
complexity of product design and the multi-perspective lifecycles of its modules, it is highly
important to understand the scope of the product and, subsequently, to adjust it according to
the customer needs. As the competitive focus shifts towards customer retention, satisfaction,
market share growth, effective innovation management within a company will further become
a critical success factor for service differentiation. The challenge will lie in the ability to
translate upcoming technological advancements into differentiated products in accordance to
customer expectations and actual market demands.
A fundamental concept for the achievement of internal efficiency and external flexibility is the
incorporation of two perspectives: the market-oriented as well as the production-oriented
view. Whereas the first view is focused on entities that are products or services actually
offered to the customer, the latter is more focused on modules on which basis the marketed
products are assembled and consist of. Both perspectives have to be brought operationally
in sync through complementary product and module portfolio management, and in an ideal
world, the product configurator from the customer perspective is directly integrated with its
counterpart on the production side, and vice versa. The bi-directional integration ensures
consistency and thereby efficiency improvement.
The basis for the introduction of a continuous PLM improvement process is the
implementation of a performance- and value-based PLM reporting and controlling system.
By this, the performance and success can be monitored on an individual product level,
facilitating the operative product management process across all relevant phases. But more
important, management attention can be created and enhanced by this since all relevant
information can be reported in a consolidated fashion to the top management, stimulating
faster decision-making and more agility in response to market demands.
For the sake of unfolding the potential of PLM, it is vital to understand the success factors of
PLM, their interrelation to one another, as well as the linkage to these factors in regards to
the strategic goals of an organization.
In order to answer the aforementioned questions, Detecon and the Research Institute for
Rationalization and Operations Management at Aachen University (FIR) are currently
conducting an international expert study ‘Next-Generation Telco PLM 2009’ to assess the
status quo and perspectives of PLM in the telecommunications industry. The objective of this
study is to identify the success factors of PLM, and to assess their impact on organizational
performance.
Participants of the study ‘Next-Generation Telco PLM 2009” receive a package of valuable
benefits:
Q PLM quick-check, carried out by the experts of Detecon and FIR to assess the
maturity of the PLM implementation. This analysis should lead to constructive
benchmarking for the particular PLM implementation.
Q Increased industry and in-house awareness of PLM.
Q Exclusive priority edition of the in-depth survey before publication date that
should strengthen the competitive position.
The results of the study will enable participating companies to protect and strengthen their
existing competitive advantages on grounds of validated PLM success factors and their
organizational impact.
7 Reading on
Q Abramovici, M.; Sieg, O. C. (2002): Status and Development Trends of Product
Lifecycle Management Systems. In: Proceeding of International Conference on
Integrated Product and Process Development, Wroclaw, Poland, p. 2122.
Q Ausura, B; Deck, M (2007): The new product lifecycle management systems:
what are these PLM systems? and how can they help your company do NPD
better? Visions Magazine. Online available at
http://www.pdma.org/visions/jan03/plm.html, last visit 26.01.2007.
Q Doyle, Laura (2003): Using the ‘Bounding Box’ to accelerate product
development: The Management Roundtable, Waltham, USA.
Q Golovatchev, J.; Budde,O. (2007): Next generation PLM - an integrated
approach to product development in the service industry. In: Product Lifecycle
Management: Assessing Industry Relevance, PLM-SP3: Interscience
Enterprice Ltd, London, p. 555 - 564.
Q Golovatchev, J.; Budde, O.; Hong, C. (2008): Next Generation PLM-Process
Management for the Development of Telecommunications Products in the
Multi-Lifecycle Environment, In: Proceedings of the 2008 IEEE International
Conference on Management of Innovation & Technology Singapore, p. 391-
396,
Q Kim, J. and Wilemon, D. (2002): Sources and assessment of complexity in
NPD projects. R&D Management, 33 (1), pp. 16-30
Q Koen P. et al. (2001), Providing clarity and a common language to the ‘fuzzy
front end’. Research Technology Management, 44 (2), pp.46-55.
Q Kraemer, C.; Golovatchev, J. (2008): A Perfect partnership: Successful
product innovations in the telecommunications market depend on the
management of complexity: in DMR: Detecon Management Report, No.3,
Bonn, p. 38-45
Q Mateika, M. (2005): Unterstützung der lebenszyklusorientierten Produktplanung
am Beispiel des Maschinen- und Anlagenbaus. Essen: Vulkan-Verl.
Q Moews, C. and Rieger, Dr. V. (2007). Production Strategies for Managed ICT
Service. Detecon Management Report. Online available at http://www.detecon-
dmr.com/ en/print.html?unique_id=193401
Q Porter, M. E. (1985): Competitive advantage: Free Press New York.
Q Saaksvuori, A.; Immonen, A. (2004): Product Lifecycle Management: Springer.
Q Schuh, G. (2005). Produktkomplexität managen. München [u.a.]: Hanser.
Q Schuh, G.; Eversheim, W. (2004): Release-Engineering - An Approach to
Control Rising System-Complexity. CIRP Annals-Manufacturing Technology,
53 (1), p. 167-170.
Q Stark, J. (2004): Product Lifecycle Management: 21st Century Paradigm for
Product Realisation: Springer.
Q Teresko, J. (2004): Auto Report: Information Technology The PLM Revolution.
In: Industry Week-CLEVELAND OHIO-, Vol. 253, Nr. 2, p. 32–38.
8 The Authors
Ralph Hiob is Managing Partner at Detecon International GmbH, Bonn, Germany. With over
18 years of experience in the telecommunications industry, he leads the group “Telco-
Effectiveness- and Product-Lifecycle-Management” within the Competence Practice
"Operations & Performance".
Oliver Budde is Senior Researcher at the Research Institute for Operations Management at
RWTH Aachen University, Germany. He holds a degree in Information Management. In his
research, he mainly focuses on PLM and Business-IT alignment topics. He has a wide range
of project experience in the telecommunications, automotive and manufacturing industries.
The authors would like to thank Dr. Roland Keil, Sergei Holmeckis and James T. O’Neal for
their great support in the preparation and development of this opinion paper.
9 The Company
Detecon International GmbH
Detecon offers both horizontal services that are oriented towards all industries and can entail
architecture, marketing or purchasing strategies, for example, as well as vertical consulting
services that presuppose extensive industry knowledge. Detecon's particular strength in the
ICT industry is documented by numerous domestic and international projects for
telecommunications providers, mobile operators and regulatory authorities that focused on
the development of networks and markets, evaluation of technologies and standards or
support during the merger and acquisition process.