Executive Briefings

Product Lifecycle Management: The Systems Used in Product Development

Analyst Insight: Advisors are often asked what's the best system to develop a product. Time and again our data indicates that simple spreadsheets just don't cut it - commercial packages and internally developed systems provide the real-time visibility into the data that organizations need to succeed.

More than 40 percent of respondents in APQC's Open Standards Research report that they use a commercial PLM package, 35 percent use an internally developed system, and the remaining 23 percent use spreadsheets. Given the complex nature of the product development process (multiple stakeholders, cross-functional teams, often unknown technology, etc.), it is not surprising that so few rely on spreadsheets.

A key measure to gauge product development success is on-time launch. APQC research finds that organizations using a commercial package tend to launch more products on time (72 percent on time at the median), organizations using spreadsheets tend to lag behind (50 percent on time at the median), and those using internally developed systems are in the middle (57 percent on time at the median). These numbers suggest that using a commercial package provides real-time insights into project data as a new product is developed, which helps the project team stay on schedule.

When it comes to improvements and extensions of existing products, organizations using internally developed systems are much closer to those using commercial packages (both groups report 75 percent at the median). It may be that when more is known (i.e., extending and improving existing products), an organization can better build a system in-house to manage its process. In other words, we can build the perfect system when we know the product well. When it comes to sticking our toe in new waters, it is more challenging to get it right. It should be noted that spreadsheets may not be the cause of delayed product launches but are one indicator of a relatively unsophisticated or novice attempt at implementing a new-product development process.

The Outlook

Expect to see more organizations shift to using internally developed and commercial systems for the product development process. However, multiple organizational factors should be taken into account when deciding between an in-house or off-the-shelf package, including whether an organization invests more of its resources into new products (where commercial systems are correlated with higher on-time launch percentages) or improvements and extensions of existing products (where internally developed systems may perform almost as well or better).

More than 40 percent of respondents in APQC's Open Standards Research report that they use a commercial PLM package, 35 percent use an internally developed system, and the remaining 23 percent use spreadsheets. Given the complex nature of the product development process (multiple stakeholders, cross-functional teams, often unknown technology, etc.), it is not surprising that so few rely on spreadsheets.

A key measure to gauge product development success is on-time launch. APQC research finds that organizations using a commercial package tend to launch more products on time (72 percent on time at the median), organizations using spreadsheets tend to lag behind (50 percent on time at the median), and those using internally developed systems are in the middle (57 percent on time at the median). These numbers suggest that using a commercial package provides real-time insights into project data as a new product is developed, which helps the project team stay on schedule.

When it comes to improvements and extensions of existing products, organizations using internally developed systems are much closer to those using commercial packages (both groups report 75 percent at the median). It may be that when more is known (i.e., extending and improving existing products), an organization can better build a system in-house to manage its process. In other words, we can build the perfect system when we know the product well. When it comes to sticking our toe in new waters, it is more challenging to get it right. It should be noted that spreadsheets may not be the cause of delayed product launches but are one indicator of a relatively unsophisticated or novice attempt at implementing a new-product development process.

The Outlook

Expect to see more organizations shift to using internally developed and commercial systems for the product development process. However, multiple organizational factors should be taken into account when deciding between an in-house or off-the-shelf package, including whether an organization invests more of its resources into new products (where commercial systems are correlated with higher on-time launch percentages) or improvements and extensions of existing products (where internally developed systems may perform almost as well or better).