Detecon Study Next-Generation Telco Product Lifecycle Management: How to Overcome Complexity in Product Management by Implementing Best-Practice PLM

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Next Generation Telco Product Lifecycle ManagementHow to Overcome Complexity in Product Management by Implementing Best-Practice PLM

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Next Generation Telco Product Lifecycle Management

How to Overcome Complexity in Product Management by Implementing Best-Practice PLM

September 2010

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© Detecon International GmbH2

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Table of Contents

1. Management Summary 5

2. A Wind of Change in the Telecommunications Industry 10

2.1 Status Quo and Changing Fields 10

2.2 A New Challenge on the Horizon: Product Complexity 10

3. PLM Framework for Communication Service Providers 13

4. Study Goals and Design 16

4.1 Study Goal 16

4.2 Research Design 17

4.3 Respondents Structure 18

4.4 Complexity Metric for Clustering 19

5. PLM Design Elements for Coping with Complexity 21

5.1 Design Domain ‘PLM Strategy’ 21

5.2 Design Domain ‘PLM Process’ 25

5.3 Design Domain ‘Product Architecture’ 29

5.4 Design Domain ‘PLM IT Architecture’ 32

6. PLM Impact on Complexity Management Targets 36

6.1 Target Domain ‘Time’ 37

6.2 Target Domain ‘Costs’ 40

6.3 Target Domain ‘Process Quality’ 42

6.4 Target Domain ‘Product Quality’ 48

7. Key Recommendations 52

7.1 Key Recommendations Applicable to All Groups 53

7.2 Key Recommendations Applicable to ‘Global Elephants’ 56

7.3 Key Recommendations Applicable to ‘Emerging Zebras’ 58

8. Achieving PLM Excellence 60

9. Acronyms 62

10. The Authors 63

11. The Company 64



Table of Figures

Figure 1: Impact of a Holistic PLM on Complexity 5

Figure 2: Three complexity groups of participating carriers 6

Figure 3: Overview of 23 PLM Design Elements and 16 Target Elements 7

Figure 4: Overview of Key Recommendations for ‘Global Elephants’ and ‘Emerging Zebras’ 9

Figure 5: Effects of Unmanaged Complexity on Time, Cost, Process and Product Quality 12

Figure 6: Holistic PLM Framework 14

Figure 7: Study Goal 16

Figure 8: Worldwide Coverage 18

Figure 9: Demography of Participants 19

Figure 10: Definition of Three Complexity Groups 20

Figure 11: Overview of 23 PLM Design Elements 21

Figure 12: Implementation Degree of PLM Strategy Design Elements 22

Figure 13: Implementation Degree of PLM Process Design Elements 25

Figure 14: Implementation Degree of Product Architecture Design Elements 29

Figure 15: Implementation Degree of PLM IT Architecture Design Elements 32

Figure 16: Overview of 23 PLM Design Elements and 16 Target Elements 36

Figure 17: Impact of Target Domains on PLM Curve 52

Figure 18: RAPIT Approach for PLM Optimization 61



1. Management SummaryThe increasing convergence of markets and products, shifting business models as well as increased customer expectations have created an unseen level of complexity for telecommunications providers. In the telecommunications industry, complexity has literally exploded in the three dimensions of product, processes and IT – simply based on the fact that carrier product portfolios have become much more diverse, and therefore have to be supported by a historically grown complex process and systems landscape. In order to be in a position to cope with this new complexity dilemma and to safeguard sustainable competitiveness, it is vital for carriers to implement an integrated, holistic approach for managing the different dimensions of complexity.

Based on many years of consulting experience in telecommunications, Detecon International’s PLM experts have developed a PLM framework in which the four functional design domains of strategy, process, product architecture and IT architecture are treated as parts of an integrated PLM approach.

The study at hand “Next Generation Telco Product Lifecycle Management”, conducted by Detecon International and by the Research Institute for Operations Management at RWTH Aachen University, represents the first international empirical survey studying the current status of PLM implementations in the telecommunications industry in a holistic and comprehensive manner. It was set up essentially with the objective to assess whether such an integrated PLM approach can be effective in managing and controlling the rising complexity. In order to do so, we defined target domains for complexity management with regard to time, costs, and process and product quality. The following figure depicts the underlying principle of how these target domains impact the PLM curve:

Figure 1: Impact of a Holistic PLM on Complexity

Leveling the PLM Curve by Meeting Complexity Targets

Cash-Flow Performance without PLM Cash-Flow Performance with PLMLegend:

Increase of re-usability

InnovationPlanning Realization Launch Growth Maturity Saturation Exit

Product QualityEffects

Cost Effects

Time Effects

0

€

+

-

Benefit of product

Chronological Sequence

Rev

enue

/Pro

fit

Process Quality Effects




Cost Effects

Time Effects

0

€

+

-

Benefit of product

Chronological SequenceChronological Sequence

Rev

enue

/Pro

fit


Revenue Performance without PLM Revenue Performance with PLM



For each of the four design and target domains, detailed design and target elements were defined. The validation of the integrated PLM approach was based on assessing whether plausible correlations exist between the design and target elements. Essentially it was examined which design elements have the greatest impact on what specific target elements. With this information at hand, carriers are able to evaluate which design elements are the most critical for their specific context in order to leverage the potential of PLM in the target domains of time, cost, process quality and product quality.

Naturally the complexity level of carriers varies, and it is obvious that a design element may have a completely different impact at different levels of complexity. A sophisticated workflow management system (WFMS) for example could work well for a global full service provider, whereas the same PLM design element might have a rather contrary effect on an organzation that is only active on a regional basis.

So the participating carriers were divided into three groups according to their complexity, and statements were derived for each complexity level. The complexity of each participating company was assessed in the dimensions of multiplicity, variety, interaction and dynamics. Based on this evaluation, three groups were defined (figure 2):

Figure 2: Three Complexity Groups of Participating Carriers

�Moderately diverse product

and services portfolio

�Less than 14 million customers

�Semi-regulated environment or a market with limited penetration

(typically multi-national or national player)

�Moderately diverse product

and services portfolio


�Semi-regulated environment or a market with limited penetration

(typically multi-national or national player)

�Highly diverse product and services portfolio

�More than 30 million customers

�Highly turbulent market environment

(typically global player)

�Highly diverse product and services portfolio

�More than 30 million customers

�Highly turbulent market environment

(typically global player)

Global ElephantsGlobal Elephants �Product and service portfolio with low diversity


�Less dynamic market and regulated environment

(typically regional player)

�Product and service portfolio with low diversity


�Less dynamic market and regulated environment

(typically regional player)

Emerging ZebrasEmerging Zebras Protected PenguinsProtected Penguins



In order to find answers to these questions, we developed a detailed questionnaire, covering all design and target elements in the respective domains. Altogether, 23 design elements and 16 target elements were identified (see Figure 3).

For the definition of the design elements, a factor analysis method was used in order to statistically verify the underlying compositions. Based on these validated design and target elements, a correlation analysis was applied to measure the interdependency between the implementation degrees of each design element with the complexity management targets. The impact was measured by correlation indices between the PLM design elements and the complexity targets. Lastly, the findings were organized in accordance to the three different complexity groups in order to reach specific conclusions for each level of complexity. Interviews were conducted with PLM professionals at the executive and senior management levels from more than 50 telecommunications carriers worldwide.

Support

PLM

Tar

gets

Process QualityTime Product QualityCost

Flexibility of PLM-Process

Efficiency in CNM

Delay in Delivery

Time-to-Market Waiting Time Product Market

Launch QualityProvisioning

Performance in the Value Net

Reduction of Technical Deficits

Churn RateProcess & System

Implementation Costs

Human Resource

Performance

Effectiveness of PLM

Processes

Value Net Performance

Information Availability

Reliability of PLM

Processes

FAB Quality

PLM

Des

ign

Elem

ents

PLM IT ArchitecturePLM Strategy PLM Process Product Architecture

Extended Collaboration

Tools

Application Integration

Product Portfolio Analysis Tools

PLM-Governance

Transparency of Product &

Portfolio

Customer NeedManagement

Empowerment of Employees

Process Standardization

PLM ProcessVariants

Alignment of Product Model with Product Data

Strict Stage-Gate

RetirementManagement

Modular Technical Production Perspective

Engineering Change

Management

Modular FAB Processes

Modular Market Perspective

Functional Integration of Departments

Integration of Value-Adding

Partners

Workflow Management

System

Data Management

PLM Reporting & Controlling

PLM Process Competence

Manageability of Value-Adding

Partners

Support

PLM

Tar

gets



Efficiency in CNM

Delay in Delivery







Human Resource

Performance


Processes



Reliability of PLM

Processes

FAB Quality

PLM

Des

ign

Elem

ents

PLM

Des

ign

Elem

ents



Tools



PLM-Governance


Portfolio




PLM ProcessVariants


Strict Stage-Gate



Engineering Change

Management





Partners



Partners

Workflow Management

System

Data Management




Partners

Figure 3: Overview of 23 PLM Design Elements and 16 Target Elements



Through the study, it could be validated that there is indeed an impact of PLM design elements on the target domains. PLM should no longer be understood solely as a matter of IT or product development, but recognized as a comprehensive and highly critical management approach which can potentially lead to effective gains across an entire enterprise. As such, PLM has to be addressed in an integrated and holistic fashion in order to achieve sustainable competitiveness and market success in a highly dynamic industry such as telecommunications.

The following design domains should be targeted for an integrated PLM implementation:

PLM Strategy – ensures alignment of products and portfolio with actual and potential market demands,

and provides the guiding framework for PLM process execution.

PLM Process – facilitates execution of the collaborative process (efficiency goal) and the alignment of activities with the strategic PLM goals of the company (effectiveness goal).

Product Architecture – enables product component reusability by defining constraints and rules for decomposing product functionality into modules with product data models.

PLM IT Architecture – increases PLM process execution efficiency by providing a best-of-breed framework of IT components that ensures an optimal IT-to-process fit.

Overall the study has revealed severe shortcomings with regards to PLM implementation in most carriers surveyed. To begin with almost 80% of the participating carriers do not have a systematic approach to retirement management in place – this is a huge problem, because it creates more complexity and it is counterproductive to the general objective of achieving lean product development. Moreover, 40% of carriers do not have a modular product concept implemented, and over 60% of carriers only evaluate their product portfolio once a year – or even less often.

Among all correlations between design and target elements that were identified, the most interesting and revealing highlights are listed below. These recommendations are applicable to all groups – independently of the complexity level of a carrier:

Time Improvement Action Points:

Costs Improvement Action Points:

Process Quality Improvement Action Points:

Product Quality Improvement Action Points:



Besides these general findings and recommendations applicable to all groups, it was also found that the impact of design elements does vary according to the specific complexity level of a carrier. For the ‘global elephants’ group the overarching principle is to “harmonize, enable diversity and conquer.” Since complexity is steadily rising due to increasing product diversity accompanied by complicated IT and process structures; it should be considered mission-critical to implement means that demystify complexity and drive harmonization in the first place. With increased transparency, ‘global elephants’ should then focus on creating diversity in order to fend off the threat of losing revenue through commoditization of traditional services. In order to do so, it is vital to enforce the concept of modularization in the relevant dimensions of product structure, processes and IT.

For the ‘emerging zebras’ group the overarching objective is to “standardize, enable integration and conquer”. Coming mostly from a background with voice-centric product portfolios, standardization and integration within all design domains will become increasingly important in order to increase effectiveness and efficiency, and it will empower the carrier to address customer needs correctly by adequately managing its PLM implementation. The ‘protected penguins’ were not assessed any further in terms of correlative measures, as increasing complexity is less of an issue for this group of participants.

The main findings for the two dominant complexity groups within the pool of participants are summarized in the following table.

Complexity Groups

Time

Costs

Process Quality

Product Quality

Com

plex

ity M

anag

emen

t Tar

gets

Harmonize and integrate your application landscape to reduce

waiting time between departments

Utilize KPIs to increaseportfolio transparency and

reduce launch costs

Create process variants to improve information logistics inproduct development

Manage your value-adding partners actively to improve

overall product quality

Increase integration of your application landscape

to reduce time-to-market

Standardize your processes to increase customer satisfaction

and reduce churn

Ensure empowerment of employees to improve information availability

Improve your strict stage-gate implementation to increase

product market launch quality

Harmonize, enable diversity and conquer

Standardize, enable integration and conquer

Global Elephants Emerging Zebras

Overarching Principles

Figure 4: Overview of Key Recommendations for ‘Global Elephants’ and ‘Emerging Zebras’



2. A Wind of Change in the Telecommunications Industry2.1 Status Quo and Changing Fields

The telecommunications market has changed significantly over the past decade. Traditional products and services offered by carriers – such as voice communication and data messaging – have become more and more commoditized, resulting in declining prices and new communication models shifting customers away from the traditional telco core business. Voice over IP (VoIP), unified communications, social media – all of these represent a new communication paradigm that is characterized by a shift towards allowing users to interact in a many-to-many, collaborative and multi-modal fashion in real-time from any place at any time by the use of multiple means of personalized IP-based digital information and communications services.

Based on the evidential convergence bringing together once-separated markets, lots of new players have entered the original playing field of carriers and have thus moved into the telco value chain. The market is slowly transitioning from a telco-controlled environment to an open ecosystem that is essentially controlled by consumers having a variety of access channels available to them – with non-telco players being well-positioned to become integrated platforms with a direct and steady customer relationship providing new kinds of integrated services.

Telco carriers nowadays are faced with competition not only on a network and access level (e.g. mobile network vs. fixed network vs. cable network), but also from the content delivery side (e.g. Google), social networking services companies (e.g. Facebook, LinkedIn) and from original equipment manufacturers (OEM; e.g. Apple, Nokia, Samsung). This development mainly results from two driving forces: the standardization of technologies (network and device convergence) and the increasing customer need for personalization.

In order to alleviate the threat of quickly getting outpaced by these changing market dynamics, carriers are forced to generate additional revenue and to grow and diversify into new lines of business. Carriers must adopt the new communications paradigm fast in order to defend their present position in the future market of IP communications. The ability to master these dynamics on a management level is a critical success factor for carriers, and it is strongly linked with the implementation of the appropriate management methods and tools for coping with increasing product and service complexity.

2.2 A New Challenge at the Horizon: Product Complexity

The concept of complexity management has arrived in the telecommunications industry. Interwoven product bundles pressure carriers to achieve operational excellence while providing mass-customized services to evermore demanding customers at the same time.

Until recently the matter of complexity was not much of an interest for product management professionals in the telco industry, because the symptoms of badly managed complexity were mostly addressed through short-term revenue assurance or cost-cutting programs on support activities. However, fighting the symptoms with these measures cannot be sustained over the long run in a hypercompetitive environment – hence the increasing importance of complexity management. Complexity that is not being managed from the very beginning of a product lifecycle leads to higher costs in the later lifecycle stages (e.g. not having anticipated the overall complexity of offering a triple play product, and therefore neglecting the crucial role of customer care management in the launch phase). In consequence, customer satisfaction decreases as the telco provider fails to live up to customer expectations.

Due to the specific telco industry characteristics, complexity is inherent and therefore cannot be eliminated in its entirety – only a state of unmanaged complexity has to be avoided by all means. Therefore the main objective of complexity management is to take control over the growing complexity and to make it manageable. This study introduces and validates a holistic and integrated PLM approach as a means to counteract the prevailing complexity dilemma.



The main sources for product lifecycle complexity can be categorized in three dimensions: product, process and IT complexity. These complexity dimensions are briefly described in the following sections.

Product ComplexityProviding a unified product experience to the customer requires the synchronization and coordination of multiple lifecycles that in sum are perceived as one product from a customer perspective. Therefore carriers have to ensure that all product components delivered by 3rd party suppliers are fully integrated in a seamless fashion and provisioned at the same global quality standards as the rest of the product. At the same time further constraints on the integration of products have to be overcome.

The growing need to deliver mass-customized products and services in order to satisfy more and more niche markets with diversified customer segments makes product and service modularization a necessity in order to be able to achieve high reusability rates of product components. With increasing relevance of managing the interfaces between product components, the management of partner collaboration becomes a critical requirement of PLM. However, coping with these challenges is a Herculean task, and not meeting these requirements can lead to serious consequences.

Process ComplexityThe complexity of PLM and operational service processes such as fulfillment, assurance and billing processes increases with the number of interactions with subscribers or partners and the variety of the product bundles. A more complex product has other requirements on PLM and service processes than a traditional voice product.

An increasing product variety usually brings with it an increased variety in the types of complexity aspects involved. The development, launch and retirement processes become more complex due to increased coordination requirements and due to the multiplicity of product components that have to be assembled. Moreover different products typically require several service processes that are handled via multiple ordering channels such as on-site, call center or online catalog. In terms of billing, the management of highly dynamic tariff structures as well as of inter-company invoicing and mediation increases the complexity of billing processes.

IT ComplexityThe business application landscape of a telco carrier is typically characterized by the use of multiple different IT systems, since standard enterprise solution systems that would meet all business requirements are generally not available. Apart from heterogeneous bundles of IT-Systems, another IT complexity aspect can be found in the fact that multiple silo-like data sources are typically in place – managed separately from one another without being aligned or integrated. This diversity on the IT-system level as well as on the data level is the main driver of IT complexity – leading to high maintenance costs.

Due to the fact that processes and product service bundles in telco are getting more and more complex, the need for IT support increases exponentially. One example is the increase in the automation level of complex processes, as well as seamless and real-time application integration within a fragmented systems landscape. Therefore a critical task of integrated PLM is to maintain consistent information logistics of products and customer data throughout the product lifecycle and throughout all relevant processes.



Figure 5: Effects of Unmanaged Complexity on Time, Cost, Process and Product Quality

As the starting point to alleviate and resolve this complexity dilemma, it is important to identify the complexity drivers at first, and to continuously monitor and control them. Complexity that is well managed will improve time, costs, and quality both on the process and product levels. The ability to correctly manage complexity will increasingly determine business performance and lead to a competitive advantage in the long run. Hence, gaining control over the effects of unmanaged complexity turns these four dimensions into targets.

In the following chapter, a holistic PLM framework is introduced that can be considered as an effective weapon for coping with complexity.

The effects of unmanaged complexity in these three perspectives are diverse and can roughly be categorized in time, cost, and process and product quality. The most critical effects are listed in the following table:

� Risk of delayed product launch

� Risk of interruptions to clarify unknown errors

� Unknown processing duration

� Unknown reliability and performance

Time Cost Process Quality

Unmanaged Product Complexity

UnmanagedIT Complexity

Product QualityLead to issueswith regards to

� Time-consuming interim & delivery processes

� Risk of increased manual override

� Hidden Costs� Cross

subsidization� Limited

reusability

� Unmanaged customer needs

� Reduced employee & customer satisfaction

� Product deficits leading to customer complaints

� Churn ratio

� Unpredictable revenue assurance results

� Risk of non-reproducible quality

� Inconsistent level of knowledge

� Missing processtransparency

� Risk of interruptions

� Overhead in process execution

� Cost intensive delivery & interim processes

� Missing trans-parency and hidden cost driver related to IT- utili-zation, interfaces and maintenance

� Complexrealization of implementations

� Interoperability testing becomes more challenging

� Service Interruptions

� Critical performance for end-user

Unmanaged Process Complexity



3. PLM Framework for Communication Service ProvidersAs discussed in the previous chapter, the telco business is getting increasingly complex due to a number of reasons. Complexity is evident in the different perspectives of product, process and IT – so an integrated approach to counteract complexity is needed. Product Lifecycle Management (PLM) is a key to operational excellence for carriers as it offers companies a systematic approach to coping with the complexity challenge.

Definition of PLM

PLM is a strategic business approach for managing a company’s products and services throughout their lifecycle in the most effective and efficient way: starting with the original idea, through the design, marketing and withdrawal phases. Holistic PLM is characterized by an integrated view on PLM strategy, PLM process, product architecture and PLM IT architecture, as well as their alignment to one another in order to monitor and control complexity along the product lifecycle.

Based on many years of consulting experience in telecommunications, Detecon International’s PLM experts have developed a PLM framework in which the four functional design domains of strategy, process, product architecture and IT architecture are treated as parts of an integrated PLM approach:

This PLM approach provides telco management with best-practice management tools that are collectively exhaustive and mutually exclusive in the four design domains – enabling management to evaluate and to integrate the right components within their organization according to the specific complexity level of the company. The strengths and opportunities inherent in such a PLM approach can be summarized as follows:

a company’s individual complexity level.

coordination of departments within a company, as well as the management of external parties.

launch and market management all the way to the retirement phase.

In figure 6, the PLM framework is depicted illustrating the interdependencies of each domain and showing the interrelations within the organizational environment.



Figure 6: Holistic PLM Framework

PLM StrategyThe purpose of the design domain ‘PLM strategy’ is the alignment of the innovation and marketing strategy with the overall PLM strategy to allow for a synchronization of the product development, market management and retirement processes. In order to do so, a strong link to customer needs management has to be ensured, as well as the safeguarding of lifecycle-oriented product and project portfolio management – controlling and monitoring the innovation and product pipelines. A strategic PLM process management defines the cornerstones of the PLM process by introducing PLM process variants according to innovation level and by implementing consistent PLM process reporting.

PLM ProcessThe purpose of the design domain ‘PLM process’ is to facilitate the execution of collaborative processes (efficiency goal) and the alignment of activities with the strategic PLM goals of the company (effectiveness goal). The PLM process specification includes the definition of the relevant activities and their sequence and configuration. In addition, the functional integration of relevant departments needs to be defined in order to ensure proper process execution – this is especially important since numerous departments are involved and have to work collaboratively as determined by the interdisciplinary nature of PLM. The operational PLM process can be split into 7 phases starting with the product idea phase and ending with the retirement management phase. In all of this the focus is on the definition of organizational interfaces within the company, as well as with external parties, such as content or component suppliers.

PLM Domains

Innovation Strategy Marketing StrategyProduct Portfolio ManagementInnovation Output Innovation Potential

Corporate Strategy

Enterprise Data Model

Res

sour

ce D

evel

opm

ent

Supp

ly C

hain

Dev

elop

men

t

IT-S

ervi

ce D

evel

opm

ent

....

EnterpriseProcesses

EnterpriseIT Architecture

StrategicBusiness IT Landscape

Operational Business IT Landscape

Middleware/DBS/OS

StrategicBusiness IT Landscape

Operational Business IT Landscape

Middleware/DBS/OS

Controlling Information flow

Interdependency Alignment

Legend

Shapes

Determines

Prod

uct

Arc

hite

ctur

e

Def

ines

Product Meta Model (Market Perspective)

Process Meta Model

Resource Meta Model (Production Perspective)

Product Data Information Framework (PDIF)

PLM

Stra

tegy

Strategic PLM Process ManagementProcess Controlling Process Organization Process OptimizationProcess Controlling Process Organization Process Optimization

Inst

antia

tion

Customer Needs Management Lifecycle-oriented Portfolio Management

PLM

Proc

ess

Empowerment of People

Integration with Partners on Vertical, Horizontal and Lateral Level

Market

Technology

BusinessInte

grat

ion

patte

rns

SupportsPLM IT

Architecture

ERP

CR

M

Integra-tion-Layer(SOA)

DSS

Multi-Project Management

System

Product Data Management

System

Workflow Management

System

Collaboration Tools

Document Management

SystemIdea

Generation Evaluation Planning Implemen-tation Launch Retire-

ment

Fulfillment

Assurance

Billing

ProductCatalogs

ResourceModel

Employee Domain

Products

…..

A

Customer Domain

Contract Invoice EmployeeCustomer Customer

MarketingManagement

Mgmt.



Product ArchitectureThe purpose of the design domain ‘product architecture’ is to enable product component reusability by defining constraints and rules for decomposing the product functionality into meaningful modules with coherent product data models – critical for ensuring mass customization of telco products. For communication service providers, the product structure includes modelling the product service modules from a market perspective, as well as FAB processes and technical resources modules. A product data information framework ensures efficient information logistics in order to translate the conceptual models into operations.

PLM IT ArchitectureThe purpose of the design domain ‘PLM IT architecture’ is to increase the efficiency of PLM process execution by providing a best-of-breed framework of IT components that ensures an optimal IT-to-process fit. Instead of a one-size-fits-all approach (meaning one software system for the support of the entire PLM process), it is more effective to rely on an IT architecture that reuses and respectively customizes existing components as far as possible. These IT building blocks can be categorized in three layers: decision support system, process support system and integration layer.

Together these four design domains represent a framework that covers all management-relevant aspects that need to be considered in a holistic manner in order to ensure an optimal complexity management.

Before detailing each of the four design domains to assess the underlying design elements, the study goal and research design and methodology are described first in the following section. Please note that in the Detecon Opinion Paper “Next Generation PLM – Strengthen Competitiveness in the Telco Business” (2008/10), the framework is described in more detail.



4. Study Goals and DesignHaving identified the need for a systematic management approach for coping with increasing complexity, this study was set up with the objective to identify proper PLM design elements and to evaluate their impact on PLM targets – ultimately leading to operational excellence and helping carriers to achieve a state of managed complexity.

Within the next section, the study goals are outlined in more detail. Based on these goals, the derived research design methods are presented that ensure the reliability and consistency of the statements given. Following that, details about the respondents’ structure are provided as evidence for the representativeness of this study.

4.1 Study Goal

The goal of the study is to provide carriers with a comprehensive list of the right PLM design elements that help to achieve operational excellence and to take control over an increasing complexity. We also defined the following two subordinate objectives:

implementation

Path to PLM Operational Excellence

Impact on PLM Targets

PLM Design Elements

PLM Design Elements Candidates

1

2

Evaluate potentials of PLM design elements

Specific PLM design elements achieve PLM targets for a given complexity level

Appropriate alignment of complexity level and PLM design element implementation and configuration

enablesenables

Leverage

Element aElement a

Ladd

er o

f suc

cess

Low

Mid

High

% PLM Design element

% P

LM ta

rget

% PLM Design element

% P

LM ta

rget

Element bElement b

Have beenimplemented

Have beenimplemented

PLMOperationalExcellence

3

Figure 7: Study Goal

Our underlying hypothesis is that companies with a higher complexity level are more prone towards a more sophisticated and varied set of design elements than companies that provide products and services in less complex environments. Based on this, it is assumed that the appropriate set of PLM design elements for a specific company depends on their complexity level. So the participating carriers were divided into groups according to their complexity, and statements were derived for each complexity level. Based on the findings of this study, carriers will be able to select the appropriate design elements according to their specific complexity level.



4.2 Research Design

The challenging goals of this study imply a scientifically rigorous and at the same time pragmatic approach. The fact that a multi-faceted topic such as PLM is investigated in a holistic manner, a cross-departmental view is required which meant a high coordinating effort for the participating companies. Therefore the study was carefully designed so that pre-defined goals could be achieved with accurate statements provided by a relatively small sample size – minimizing effort on one hand, while maximizing explanatory power and validity on the other.

4.2.1 Approach

The approach can be separated into the following three phases:

AnalysisPreparation Interview Management

Derivation and

validation of questionnaire

with pre-tests

Elaboration of PLM design

elements and targets by industry

experts

Conduction of 2h

interview session

on-site or via web

conferences

Identification of study

participants and interview coordination

Conduction of factor analysis for PLM design

element and targets

Grouping of participating companies

into clusters according to

identified complexity

level

Evaluation of correlations

between design

elements and targets

Conduction of non-

parametrictests

comparing the means of design elements

Interpretation of statistical analysis and derivation of key findings

Step 1: PreparationThe holistic PLM framework for carriers was developed based on previous consulting experience. This framework was used as an analysis raster for identifying the relevant PLM design elements within each of the four building blocks, as well as the most important PLM targets which impact complexity.

With the definition of PLM design elements and targets as a starting point, a questionnaire was developed and validated via pre-tests with industry experts. Based on this feedback, the final questionnaire was developed. The questionnaire consisted of 90 questions and was structured according to the four design domains of the framework.

Step 2: Interview ManagementMore than 1,000 senior managers from leading telecommunications providers worldwide were contacted for participation. A typical interview session was conducted either on-site or via web-conference with an approximate duration of 2 hours. On average, two managers from the participating company attended these meetings. After the interview, all answers on the questionnaire were reviewed by the participating company and final feedback was incorporated accordingly.

Step 3: AnalysisBased on the complexity metric, a cluster analysis was carried out segmenting the companies into three complexity groups (see section 4.4). Afterwards, a factor analysis was conducted for the PLM design elements and targets defined in phase 1 in order to confirm their composition. In order to evaluate whether the implementation degree for a given PLM design element depends on the complexity level of the company, a non-parametric test comparing the means was conducted. These statistical findings along with the correlations between PLM design elements and targets were interpreted as a final step to derive key recommendations for coping with complexity by means of a holistic PLM.



4.2.2 PLM Design Elements and Complexity Management Targets

During the initial conception phase, all relevant PLM design elements and targets were identified and carefully selected along with interrelated metrics based on prior consulting and research projects. The PLM framework outlined before with its four design domains served as an analysis raster in order to ensure completeness, consistency and mutual exclusiveness of each PLM design element.

4.3 Respondents Structure

Most of the interviews were conducted from May to October 2009. The pool of participants consisted of a large number of carries including fixed line, wireless and broadband providers with varying degrees of telco value chain coverage. The participating companies were selected from more than 30 countries. As shown in figure 8, the study is to be regarded as a global endeavor as companies from all around the world have participated. However, companies from Central and Eastern European countries were overrepresented with a quota of 50% of the total.

Figure 8: Worldwide Coverage

Besides the importance of achieving participation on a global scale, it was critical to interview the right people in the respective companies. Since PLM is an interdisciplinary topic, interviews were conducted on average with two senior managers. In most cases, one representative from the marketing department and one representative from a technical department were interviewed, mostly members of top or senior management (figure 9).

Another important aspect for evaluating the outcome of the study is the degree of experience of the interviewed representatives. More than 61% have more than 10 years of experience in the telecommunications sector. Through the participation of senior managers with a long track record in the international telco business it was possible to record a multifaceted understanding of PLM implementation within the study.



4.4 Complexity Metric for Clustering

In order to be precise in the statements and to derive specific recommendations, the interviewed companies had to be clustered into different complexity groups. Accordingly a complexity metric was applied in order to compile homogenous groups. The metric used for measuring complexity originates from the manufacturing industry, and it was adapted here with specific telco characteristics in mind. The dimensions used to describe complexity can be summarized as follows:

the entire product lifecycle

Figure 9: Demography of Participants

5%

30%

18%

43%

3%3%

Organizational Unit Position of the Interviewee Years of Experience

Other Staff member

Strategy

Marketing

Production

Service

R&D

46%

12%5%7%

10%

20%61%

37%

2%

More than 10 years

Between 3 and 10 years

Executive board

Board of directors

Head of department

Team leader

Other Less than 3 years

Company Statistics

Segment Amount PercentageKey Company Statistics

Min. Avg. Max.

MNO 18 33% Number of Customers 400 k 14 Mio 140 Mio

FNO 33 67% Revenue $56 Mio $3.789 Mio $26,8 Mrd



Variety Very limited product spectrum

Limited product spectrum

StandardMultifaceted

product spectrumVery multifaceted product spectrum

Multiplicity 2.1 Mio customers

5.8 Mio customers

14.1 Mio customers

35 Mio customers

85.5 Mio customers

Interaction To a strong lesser extent

To a far lesser extent

To a lesser extent

Level of a large European carrier

Above the level of a large

European carrier

Dynamics Turbulence Index 0.0 – 0.2

Turbulence Index 0.2 – 0.4




Regional Carrier

Protected Penguins(Multi-)National Carrier

Emerging ZebrasGlobal Carrier

Global Elephants

Based on this complexity metric, the participating companies have been evaluated in the respective dimensions. In order to identify representative groups of companies with a homogenous complexity level, a statistical method was applied to cluster the companies based on their characteristics in the four complexity dimensions. As a result, three different complexity groups were defined as shown in figure 10.

Figure 10: Definition of Three Complexity Groups

Protected Penguins“Protected penguins” represent the group with the lowest level of complexity. This group typically has a limited number of products or value-added services and an inflexible tariff structure. The degree of interaction across the product lifecycle is limited and hence a limited vertical integration is typical for this group. The low level of dyna-mics, as indicated by the relatively low turbulence index value, results mainly from a regulated environment, as well as from a limited penetration of ICT within the overall economy.

Emerging Zebras“Emerging zebras” represent the group with an average complexity level. Companies within this group offer a greater variety of products and services, focus more strongly on the customer, and create additional revenue from niche markets. Such telecommunications companies typically have a medium number of customers and are associ-ated with a higher level of interaction than the penguins’ – implying higher coordination efforts. The dynamics of the markets in which emerging zebras’ participate are medium – with a medium degree of ICT penetration as well.

Global Elephants“Global elephants” are characterized by a huge variety of their product and service portfolio. A big spectrum of product components is offered to markets where they are adapted at the fastest rate due to the high market dynamics. The tariff structure provides for greater choices and flexibility. Other characteristics of “global elephants”are very high numbers of subscribers, as well as strong and multiple interactions with partners within their value network and throughout the lifecycle of their products. The high turbulence index indicates a strong penetration of ICT in the respective markets.



5. PLM Design Elements for Coping with ComplexityIn chapter 3 we introduced the integrated PLM framework. It is the goal of this chapter to present the PLM design elements that exist within each of the four respective design domains of strategy, process, product and IT architecture. This will serve as the basis for chapter 6, in which the complexity management targets are introduced – along with design elements that have shown the highest correlation in terms of target impact. The following figure presents an overview of all 23 design elements that have been defined and assessed in the course of this study:

PLM

Des

ign

Elem

ents

PLM

Des

ign

Elem

ents



Tools



PLM-Governance


Portfolio




PLM ProcessVariants


Strict Stage-Gate



Engineering Change

Management





Partners



Partners

Workflow Management

System

Data Management




Partners

Figure 11: Overview of 23 Design Elements

In the following sections, a description of each design element will be provided along with empirical findings with regards to its relevance and current degree of implementation. The empirical findings are represented in a radar chart which is provided for each design domain in the respective introductory section. Each spoke within the chart represents a design element that has been validated with a statistic. The data length of a spoke ranges from 0 to 100%. A data point refers to the average degree of implementation in one group for a given design element. The details about the chosen indicators for each factor and its representation in each complexity group will be available in a separate publication.

5.1 Design Domain ‘PLM Strategy’

In the context of PLM, an overall strategy is needed that sets the conditions for the operational execution of PLM processes and for the design of the IT and product architectures. Therefore, a well-defined PLM strategy is characterized by an optimal alignment of the different design domains without overemphasizing specific elements. Since the product has to satisfy customer needs, the strategy has to ensure the translation of these needs into products. Against this background, customer needs management and lifecycle-oriented product portfolio management are to be considered as essential parts of a PLM strategy. For the purpose of the study, five design elements were investigated. The aggregated results regarding the degree of implementation for all design elements within each group are depicted in figure 12 – with one exception: The design element ‘PLM governance’ was evaluated as a categorical variable, therefore it cannot be represented in the radar chart.



In the next sections, each design element is described in more detail.

5.1.1 Design Element ‘PLM Process Variants’

The importance of well-designed PLM processes was pointed out in the introductory chapter. As indicated there, the requirements imposed on such a PLM process have changed. Long-lived products with a limited variance in their product structure along their lifecycle are becoming less and less relevant. These products have been replaced by a new type of product: a network-based product service system that consists of a bundle of components/modules, each with a different lifecycle and a high variance in functionality. In order to provide for a unified customer experience, these lifecycles have to be synchronized and the interdependencies between the components and different network infrastructures need to be considered. PLM processes have to be designed in such a way that they reflect the management of innovations on the module level (incremental innovations or modular innovations) as well as on the architectural level (architectural or radical innovations), meaning that the product service system is affected as a whole. In order to cope with varying degrees of innovation complexity, the PLM process has to be adapted accordingly. Based on the typical characteristics of product components, variants of PLM processes have to be in place.

Through the study it was found that the telecommunications industry strongly relies on PLM process variants. In general groups with higher complexity have a higher degree of implementation, which makes absolute sense considering the fact that the limited product portfolio of ‘protected penguins’ typically would not require a sophisticated setting of process variants. It has to be carefully evaluated how many PLM process variants are adequate for a given organization in a given market environment. More PLM processes come with more complexity for coordination, and are only justifiable with an adequate product portfolio.

5.1.2 Design Element ‘Transparency of Product and Portfolio’

Metrics-based management helps project teams to meet commitments, but in order to do so, teams require the right tools, processes and methods, as well as the capability to uncover and mitigate potential threats. Metrics-based management uses similar systems, knowledge and rules-based functions, quantitative software management, integrated software management and core measures to provide predictive capabilities.

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Emerging ZebrasGlobal ElephantsLegend: Protected Penguins

PLM Process Variants

Transparency ofProduct and

Portfolio

Customer NeedsManagement

PLM Reporting &Controlling 0,00%

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Transparency ofProduct and

Portfolio

Customer NeedsManagement

PLM Reporting &Controlling

Radar Chart für PLM Strategy

Figure 12: Implementation Degree of PLM Strategy Design Elements



The transparency of a product and the product portfolio as a whole can be measured by the number of key performance indicators (KPI) that are used for assessments. KPIs reduce time in the decision-making process and help to assess products correctly by providing standard criteria for approving or disapproving a product for the product portfolio. Generally speaking, the more complex a company is, the more products will need to be managed; therefore, an appropriate number of KPIs will be necessary.

How often do you evaluate your products and your portfolio?

33%

100%

Portfolio 100

Product 100

63% 20% 15% 2%

9% 28% 30%

Fact Box

Yearly or less oftenTwice per yearQuarterlyMonthly

Such a KPI set should ideally be based on both quantitative and qualitative parameters. The quantitative dimension is focused on value contribution in monetary terms, as well as on expected resource requirements, complexity costs and quantitative implementation risks. The qualitative perspective is based on a product performance assessment including such aspects as customer benefit, reusability of modules, cross-selling potential, degree of imitation and strategic relevance. As the empirical findings prove, the application of an extensive set of KPIs for ensuring the transparency of the product portfolio varies between the complexity groups.

5.1.3 Design Element ‘Customer Needs Management’

In order to succeed in a highly competitive market like the telecommunications industry, it is necessary to identify customer needs and expectations, and to evaluate the prices customers are willing to pay. To attract new customers and to prevent turnover, a company must be able to recognize market trends and to that end systematic market research methods are essential. To develop innovative products, customer expectations should be integrated in the development process and solutions should be validated and adjusted in close contact with the customers. Furthermore, to achieve continuous customer satisfaction, a company needs to monitor the lifecycle value of products. An effective approach to customer needs management ensures that the product specification matches customer requirements and allows for the delivery of more personalized products by facilitating mass customization. The instruments for ensuring a well-balanced customer needs management vary with the complexity level. Nevertheless it was observed that highly complex companies have customer needs management implemented only at a relatively low level – leaving room for improvement.

5.1.4 Design Element ‘PLM Reporting and Controlling’

In a hyper-competitive environment transparency of current R&D activities affecting the innovation pipeline as well as the profitability of the current product portfolio is crucial. Using the right management tactics in this highly dynamic environment requires an all-encompassing reporting and controlling approach. Such an approach can be characterized in the following four dimensions: (1) report generation (manual or automated), (2) sources (multiple or single), (3) frequency of analysis and (4) analysis methods.



Based on these four dimensions a maturity model was developed that distinguishes between five levels of PLM reporting and controlling. For the purpose of the study, every company was evaluated with regards to these levels.

According to the findings of the study, a systematic reporting and controlling approach is generally missing. Although ‘global elephants’ for instance are characterized by a complex product and service portfolio, an end-to-end reporting system reflecting the listed dimensions has usually not been implemented.

5.1.5 Design Element ‘PLM Governance’

Creating the organizational structure for PLM is a challenging task for carriers. If a company has a dedicated organizational unit for PLM, the location within the company hierarchy is significant. The coherent responsibilities and the level of authority can influence the effectiveness and implementation of PLM methods significantly.

How is the PLM function implemented with the organization?

Fact Box

80%

60%

40%

20%

100%

0No dedicated unit, responsibility

split between differentFunctional department with authority to issue directives

Staff division

Protected PenguinsEmerging ZebrasGlobal Elephants

PLM Governance along the complexity groups

The responsibility for PLM is in most companies located in a functional department, and it has the authority to issue directives. Only for a small percentage of companies the PLM unit is defined as a staff division. No carrier within the ‘protected penguins’ group cluster has implemented a dedicated unit for PLM –the relevant responsibilities are split between different functional departments instead.



5.2 Design Domain ‘PLM Process’

In order to act according to the given PLM strategy, a PLM process has to be defined that leverages the strategic success potentials on an operational level. Therefore the PLM process organization and – from an organizational structure perspective – the functional integration of the involved departments internally as well as with external partners across the lifecycle have to be considered within the functional design domain.

For the purpose of the study, eight different PLM process design elements were defined and evaluated. The aggre-gated results regarding the implementation degree in each group are depicted in figure 13.

Figure 13: Implementation Degree of PLM Process Design Elements

In the following sections, each design element is described in more detail.

5.2.1 Design Element ‘Strict Stage Gate’

A PLM process typically consists of several stages (or phases) in which certain activities are to be carried out. At the end of each process stage a decision panel – typically comprised of high-level management representatives of all involved departments – assesses whether the previously defined activities have been carried out to a satisfactory level. If requirements are met, the project passes the gate and proceeds to the next stage. In the context of PLM in the telecommunications industry, stage-gate structuring includes the design of the gate type, the evaluation criteria and the decision date for each phase.

In this study the implementation degree of the strict stage gate approach was examined – meaning that there is no more than one stage-gate concept implemented which applies the same criteria regardless of varying innovation levels. As can be seen in figure 13, the strict stage gate approach has a rather high implementation degree – with the exception of the ‘protected penguins’ complexity group.

Besides the strict stage gate approach, we also have to mention the concept of fuzzy stage gates. It was not possible to confirm its existence; however, the authors believe that fuzzy stage gates will grow in their importance due to the increased need of flexibility in the PLM process.

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0,20%

0,40%

0,60%

0,80%

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Strict Stage-Gate

Retirement Management

Integration of Value-AddingPartners

PLM ProcessCompetence


Functional Integrationof Departments

Manageability of Value- Adding Partners

Empowerment ofEmployees

0,00%

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Strict Stage-Gate

Retirement Management

Integration of Value-AddingPartners

PLM ProcessCompetence


Functional Integrationof Departments

Manageability of Value- Adding Partners

Empowerment ofEmployees

Radar Chart for PLM Process



5.2.2 Design Element ‘Process Standardization’

The standardization of the PLM process is one of the most critical PLM process design elements as it comes with a number of potential benefits. In the first place, it greatly reduces process complexity while increasing process quality. It allows for the mass production of innovations, it leads to better performance with respect to collaborative efforts and it serves as the basis of performance measurements by creating the opportunity for process monitoring and for continuous improvements. Taking all of these aspects into consideration, process standardization – if well-managed and implemented – can greatly increase the overall effectiveness of the PLM process and improve the probability of product success by decreasing the risk of wrong decision-making.

The degree to which the PLM process is standardized differs between the complexity groups and increases with the complexity level. As to be expected, the most complex ‘global elephant’ group has the highest degree of implementation when it comes to process standardization – however, only to a maximum of 73% which is relatively low considering the importance of this design element.

17% of participants do not have a standardized PLM process implemented

Fact Box

15%

17%2%

17%

49% Level 5:Process and concepts have been refined to the level of best-practice based on continuous improvement

Level 4:Monitoring and controlling of PLM process is established

Level 3:Processes and basis concepts are standardized and documented

Level 2:Collection of best-practices approaches exists for specific PLM tasks but have not been integrated and harmonized

Level 1:No standardized PLM process is implemented

5.2.3 Design Element ‘Retirement Management‘

Removing unprofitable products from the portfolio can strengthen the success of a company significantly. A lean product portfolio lowers product complexity; therefore, it is necessary to take the retirement phase into account and to make it an integral part of the PLM process model with clearly-defined activities and responsibilities. One important key activity is that customers must be first migrated to potential substitute products before the production technology for the “to-be-retired” product can be removed. Therefore customer migration concepts are needed that identify alternative products and actively encourage the customer to switch.

In general, the implementation level for this is quite low across all complexity groups indicating that retirement management has not been considered as an important aspect for most carriers so far. It is again the high complex-ity ‘global elephant’ group which leads the way in terms of implementation degree – which makes sense from the standpoint that due to their complex portfolio structures, the necessity is much higher than in the other groups.



5.2.4 Design Element ‘Functional Integration of Departments’

PLM-related projects are often accompanied by a conflict of objectives between product marketing and the technical units within a company. Several case studies have documented that this conflict leads to a higher probability of product failure within the market. This can have several reasons. Either the product specification is far from actual market demands and too much technology-driven, or product marketing has specified a theoretical product without considering the technical feasibility of the idea. A possible approach to solving this dilemma is to take on a multi-perspective view – meaning that three process perspectives have to be taken into account in order to ensure efficient coordination and collaboration between the relevant departments or business partners. These three perspectives are marketing, technological and financial feasibility. The marketing perspective includes all activities related to product marketing, such as the definition of product specifications and the management of the product in the marketplace. The technical perspective subsumes all technical or production-oriented activities. Finally, all financial aspects and implications are categorized in the financial perspective.

80% of participants do not have an active retirement management implemented

20%20%

Fact Box

80%

Active retirement management is not implemented

Active retirement management is implemented

Our study has shown that functional integration is quite common in the telecommunications industry, but again the most complex companies have the highest degree of implementation. This clearly indicates that the industry has addressed the collaborative aspect of the PLM process.

5.2.5 Design Element ‘Integration of Value-Adding Partners’

Due to the fact that value configuration in the communication service industry depends heavily on a value network, the integration between the value-adding partners is highly critical. For the sake of this study, the integration of the communication service provider with its hardware/equipment suppliers, as well as with content and application providers was assessed. Since the existence of an efficient information flow between the partners is essential for a collaborative development of complex products, it is assumed that a standardized process is also required in the context of PLM.

The empirical analysis has shown that the integration of value-adding partners is far more advanced with complex companies than with less complex companies – probably due to the higher interdependency of product com-ponents in complex companies, leading to a higher integration with value-adding partners.



5.2.6 Design Element ‘Manageability of Value-Adding Partners’

The greater the differences in size and scale between companies in a partnership, the more difficult it becomes to control the partnership actively. The way the collaboration with value-adding partners is managed varies by carrier type and by portfolio – with much potential for conflict about aspects such as market success, pricing and customer satisfaction.

In particular, very large component suppliers (i.e. infrastructure, device, application and content) with unique features and major international market penetration (e.g. Cisco, Microsoft, Google etc.) are naturally difficult to control for small businesses. In contrast, very large companies have advantages and often other means for negotiating product customization or pricing aspects.

As to be expected, the amount of control carriers can exercise over their value-adding partners differs in relation to the complexity of the company. Companies with higher complexity exercise more control on their components suppliers, particularly when it comes to indicators such as end-user experience and pricing.

5.2.7 Design Element ‘PLM Process Competence’

Since the collaboration aspect is highly critical for PLM process execution, an adequate competence level has to be ensured for all participating departments. In order to allow for seamless deputizing in the case of resource deficits, a competence management for PLM needs to be in place. For the purpose of this study, the existence of PLM trainings and process documentation was determined as an indicator for this design element.

The findings provide a clear indication that the degree of implementation varies greatly between the different complexity groups. If complexity is high, companies use PLM trainings and process handbooks and they keep the quality of process documentation high in order to actively manage the competencies of their employees.

5.2.8 Design Element ‘Empowerment of Employees’

The empowerment of employees describes the aspect of providing the PLM staff with the necessary freedom and resources needed to carry out their duties and tasks. With respect to this interpretation, there is a close linkage to the aspect of motivation and the matter of how PLM staff members can get motivated. The overall objective should be to empower human capabilities in order to boost innovativeness. In general, motivation can be subdivided into intrinsic and extrinsic motivation. Intrinsic motivation can be fostered through the transfer of responsibility, e.g. by giving employees the opportunity to self-organize their work, to design product specifications for certain components or to allocate project budgets within their own authority. Extrinsic motivation can be managed by incentives that are offered for creating new product ideas. Additionally, senior management has to make sure that individual goals of employees are linked to the PLM goals of the company.

Based on the empirical analysis, the motivation is independent from the complexity level and all complexity group clusters have implemented this design element to a similar degree. According to the results of the study, the management instruments and methods have not been fully implemented to ensure an intrinsic motivation.



5.3 Design Domain ‘Product Architecture’

Five distinct design elements for the design domain of product architecture were identified and evaluated in the course of the study. Three of them address different perspectives of a telco product: the market, the technical and the operations perspective – the latter mainly in terms of fulfillment, assurance and billing. In order to be in a position to adequately manage the product lifecycle, all three perspectives have to be aligned across all phases. In addition to these three perspectives, engineering change management and product data aspects present relevant design elements as well.

Figure 14: Implementation Degree of Product Architecture Design Elements

5.3.1 Design Element ‘Modular Market Perspective’

The modular market perspective encompasses several highly critical aspects for a carrier to achieve PLM excellence. In the market perspective design element, all activities related to product marketing are considered, including the definition of product specifications and after-launch management. Seen from a modularized market perspective market segment differentiation can be taken into account, as well as the differentiation between a market-focussed and a production-focussed point of view. A higher implementation degree of the modular market perspective enhances the time-to-market ratio and allows for better price discrimination (rule-based pricing for defined customer groups). Furthermore it addresses the issue of customer needs management.

Through a well-implemented approach to product modularization there is a chance to offer cross-bundles and to combine product modules for the customer in a flexible manner. Additionally, the computerization of the product model gives the opportunity to automatically generate sales catalogues based on the product model.

Based on our empirical analysis, it can be concluded that the complex ‘global elephants’ have implemented the modular market perspective to 70% on average, which seems not very high considering the great benefits of this design element. We found that the degree of implementation declines with the degree of complexity.

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Modular MarketPerspective

Alignment of Product Model with

Product Data

Modular FABProcesses

Modular TechnicalPerspective

Engineering ChangeManagement

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Radar Chart Product Architecture



5.3.2 Design Element ‘Modular FAB Processes’

The modularization of FAB processes – dealing with fulfillment (provisioning), assurance and billing – is another important element of product architecture. For the purpose of this study, a categorization model for the modularity of FAB-processes has been developed and applied:

Fact Box

Degree of Modularization

No modularity Product individual processes

Limited modularity Product type dependent processes

Rudimental modularity Defined process modules on a high level

Modularity Re-usability of all process modules per product type

Managed modularity Re-usability of all process modules independent of product type

Inter process modularity Process modules are used throughout the whole value chain

The empirical analysis provides a similar picture here as that of the modular market perspective. The degree of implementation increases with complexity, but it remains rather low despite its importance for improving efficiency in process execution.

5.3.3 Design Element ‘Modular Technical Production Perspective’

The modular technical production perspective is the logical counterpart to the modular market perspective. This design element focuses on the production view – especially on the similarity of production modules in terms of product design. If modular technical production is in place, it is considerably easier to develop new products or to adapt existing ones.

40% of participants do not have a modular product concept implemented ─neither on market nor on production side

Fact Box

40%

60%

Modular product concept implemented to some degree No modular product concept implemented



The focus lies on a reduction of production costs and on an increase of flexibility with regards to production elements – thus potentially improving time-to-market. The implementation degree of the modular technical production perspective is determined by the existence of a production view as well as by the conformity of physical products with their design and specifications.

A modular technical perspective on the product requires the implementation of specific engineering methods dealing with the modularization of tangible components (such as the network or end devices) and intangible components (such as software or content). Because these kinds of engineering methods, and especially their interrelation, are not so widely explored and used, a modular technical perspective has not been implemented on a high level.

5.3.4 Design Element ‘Engineering Change Management’

Engineering change management refers to the process of managing and implementing changes to existing pro-ducts. It describes functions and processes that are implemented in an organization to control and document product changes – including all activities dealing with the collection, evaluation, decision-making, planning and consolidation of product changes. Based on new requirements resulting from errors found or on newly acquired knowledge, it might be necessary to undertake adjustments accordingly.

In order to allow for a classification of the surveyed companies, a maturity model for engineering change management was developed. Within this maturity model, a distinction is made between five different levels of maturity in engineering change management – ranging from ad-hoc-based and informal change management at the low end, via a company-wide standardized approach and automation in the middle, all the way to a cross-company (inter-partner) implementation of engineering change management at the top end.

According to our study, the business function of engineering change management is not implemented on a broad scale – even within the highly complex ‘global elephant’ group. Nevertheless, based on experience from manufacturing, it is hypothesized that the more product complexity a telco carrier faces, the more stimuli there are to standardize engineering change management in order to achieve better stability and information exchange within the company and along the product development process.

5.3.5 Design Element ‘Alignment of Product Model with Product Data’

For the alignment of the product model with product data, a structured approach based on the usage of an information framework – such as the Shared Information & Data Model (SID) – plays an important role since it provides the reference data model that can be used across the entire enterprise for all application and process integration endeavors. Different dimensions of the product model concept have to be considered in order to achieve seamless enterprise data integration. A product data framework is indispensable for a flawless integration of the product model into an existing IT architecture.

For the purpose of this study, three aspects were identified that are important for a successful alignment of the product model with product data. First, product channel management (PCM) that the carrier incorporates the full supplier/consumer ecosystem into its product development and management process – such as by exposing the relevant product catalogue to the various ecosystem channels, customers, resellers and partner providers. Also, the alignment of the BSS and OSS data model with the product model gives the unique opportunity to automatically transmit all changes applied to the product model to the partly disintegrated BSS and OSS systems. Last but not least, implementing this design element enables the provision of one invoice to the customer, containing all services this customer has bought.

There is statistical evidence that the implementation degree of product and data model alignment does differ between the complexity groups. In general, we found that again the ‘global elephants’ are the most advanced compared to the other groups. But their average degree of implementation still remains below 60%.



5.4 Design Domain ‘PLM IT Architecture’

A product can only evolve through its complete lifecycle if a solid PLM IT architecture is in place that is customized for the company-specific PLM requirements. Systems and applications primarily serve the purpose to support the business and operational processes, therefore it is highly critical to assess process requirements first – and then to derive IT system requirements in order to guarantee a ‘system follows process’ approach.

The potential benefits of a sound IT architecture are tremendous – enabling the other PLM design areas of strategy, processes and product structuring. A complete PLM IT consists of a decision support system (i.e. portfolio analytics or product configurator), process support system (i.e. workflow management system, product data management system and project management software), as well as the integration infrastructure. The latter is of special im-portance as – contrary to the manufacturing industry – in telco a PLM solution is typically a best-of-breed archi-tecture in which different existing IT systems are integrated. Five design elements were examined for the design domain of PLM IT architecture within the study. The aggregated results regarding the degree of implementation in each group are depicted in figure 15.

Only 7% totally agree with the statement: Our IT provides a significant contribution to achieve operational excellence in PLM.

Fact Box

7%

93%

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Emerging ZebrasGlobal ElephantsLegend: Protected PenguinsEmerging ZebrasGlobal ElephantsLegend: Protected Penguins

Product PortfolioAnalysis Tools

Data Management

ApplicationIntegration

Workflow- ManagementSystem

Extended Collaboration Tools

Radar Chart for PLM IT Architecture

Figure 15: Implementation Degree of PLM IT Architecture Design Elements



5.4.1 Design Element ‘Product Portfolio Analysis Tools’

A systematic approach to portfolio management in general and the IT domain of decision support in particular is one of the most critical activities within the scope of PLM. As outlined in the previous chapter on PLM strategy, reporting and controlling serves the purpose to ensure availability of information – and product portfolio analysis tools provide the necessary tool and system support to analyze the portfolio. Because of the strategic, long-term relevance of all portfolio considerations, it is important to use IT systems that can facilitate the decision-making pro-cess. For the purpose of this study, three separate functional aspects were defined for the design element ‘product portfolio analysis tools’.

The IT support for customer needs management enables a strict orientation towards actual market demands – ensuring that the current and future portfolio are mirrored continuously against market requirements. Analytic tools for portfolio management are ideally integrated with a data warehouse in order to allow for multiple means of quantitative and qualitative analysis and thus to achieve a higher degree of maturity in PLM reporting and con-trolling. Finally, strategic resource planning ensures a demand and need-driven budget allocation, and it serves as a means to manage any future portfolio development endeavors.

In terms of controlling and reporting support, there are considerable differences between the complexity groups. Whereas the average degree of implementation in group 1, ‘global elephants’, is approximately 60%, there is almost no IT support for PLM in place in group 3 (approximately only 16%).

5.4.2 Design Element ‘Extended Collaboration Tools’

The support of PLM-related operations by a consistent and stringently-managed use of IT systems is critical for the overall efficiency and effectiveness of PLM. The design element ‘extended collaboration tools’ is focused on the use of extended tools that enable and facilitate cross-departmental collaboration within the organization, as well as outside within the partner network. This includes PLM process support systems which are important for managing collaboration aspects such as project management software or document management systems (DMS).

Our study has shown that the degree of implementation for this design element is relatively high with regards to project management software and lower in the area of DMS – across all three complexity groups. However, the ‘global elephants’ group again has the highest degree of implementation, and it decreases in accordance with complexity levels, i.e. the degree of implementation for DMS is especially low with ‘protected penguins’ where it is only implemented to a degree of approximately 35%.



5.4.3 Design Element ‘Workflow Management System’

In order to allow for an IT-based support of processes, it is highly critical to implement solutions that can be configured and adapted to resemble the carrier-specific processes. Workflow management systems (WFMS) guide users through the process in accordance to their role and function, and they ensure that formal procedures and processes are strictly followed by the PLM staff. This means that a WFMS serves as the basis for increased process automation as it ideally provides some intelligence through functions such as automated triggers and reminders when actions are to be carried out. Due to the cross-departmental and inter-company nature of telco industry-specific product development endeavors, it is highly important that a WFMS contains a capability to integrate and manage the collaborative efforts of PLM professionals from different departments and even companies.

‘Global elephants’ have typically implemented a WFMS to a degree of 80%, while the ‘protected penguins’ have an implementation degree of only 10% within their PLM organization. The very low implementation degree of WFMS in group 3 might be due to the fact that for low-complexity carriers, a WFMS might be counterproductive and not necessarily beneficial for business. For large carriers on the other hand, such as the participants in group 1, WFMS is highly critical in order to achieve process transparency and to facilitate collaboration.

5.4.4 Design Element ‘Application Integration’

In order to achieve synergies on a system level, it is important not only to implement a PLM IT architecture in an isolated silo-like fashion, but to ideally integrate it fully with finance, CRM, OSS and BSS systems.

The coupling with finance systems allows for the immediate analysis of product performance with respect to key financials throughout the entire lifecycle. Integration with the CRM system is necessary in order to allow for a com-bined perspective on product and customer-related data, as well as their existing interrelation and interdependen-cies. In addition, this type of integration also serves the purpose of enabling customer needs management – by channelling customer feedback back into the innovation pipeline. Finally, integration with OSS and BSS systems seems critical as it allows a smoother transition from the product development phases to market launch and to actual operations.

According to the findings of our study, the implementation degree of this design element is only low or moderate across all complexity groups – but then again, it is the ‘elephants’ group which is most advanced in this matter. It is interesting that the integration with OSS and BSS systems is by far higher than the integration with functional systems such as finance or CRM systems. This holds true for all complexity groups, and one reason might be the fact that OSS/BSS integration has been heavily marketed and pushed by the TeleManagement Forum.



5.4.5 Design Element ‘Data Management’

As pointed out before, the impact of data management on the complexity of a carrier is immense. Data can only increase transparency and serve the purpose of creating business intelligence for proper decision-making if they are managed properly.

The design element ‘data management’ is comprised of three different aspects: Data visibility and roles-based access to information, harmonized data sources and data consistency, as well as versioning of product-related data. The underlying main objective of all these aspects is to achieve transparency by ensuring the availability, accuracy, timeliness and completeness of information for assessing and monitoring all relevant key metrics. The unambiguous correlation of basic data to business management indicators along the lines of a standard product structure provi-des staff and management with precise and timely information about all the critical success factors that help staff and management to make the right decisions at the right time.

The study has shown that data management is not widely implemented, and that there is much implementation potential in all complexity groups: The overall degree of implementation is only around 40% across all complexity groups.



6. PLM Impact on Complexity Management TargetsIn order to be in a position to analyze and understand the impact of PLM design elements, we developed a model for the purpose of this study. This model contains 16 specific PLM target elements for complexity management that are clustered into four different target domains – namely 1) time, 2) costs, 3) process quality and 4) product quality.

Structured along these four target domains, the specific target elements are introduced and described in the following sections. However, as it is mostly interesting from a management perspective to understand what PLM design elements have an impact on what complexity management targets, the top design elements in terms of their measured correlation are listed for three groups respectively – 1) generally applicable to all complexity groups 2) ‘global elephants’ with high complexity, as well as 3) ‘emerging zebras’ with medium complexity. The presen-ted correlations have been pre-selected by the authors on the basis of high correlation values and plausibility. For the low complexity ‘protected penguins’ group, the correlation was not further examined as it is mostly the other groups which struggle with increasing complexity. ‘Penguins’ are less affected by this due to their relatively focused and concise product portfolios. The following figure presents an overview of the 23 design elements listed above, as well as the 16 target elements that exist within each of the four target domains:

Support

PLM

Tar

gets



Efficiency in CNM

Delay in Delivery







Human Resource

Performance


Processes



Reliability of PLM

Processes

FAB Quality

PLM

Des

ign

Elem

ents



Tools



PLM-Governance


Portfolio




PLM ProcessVariants


Strict Stage-Gate



Engineering Change

Management





Partners

Workflow Management

System

Data Management




Partners

Support

PLM

Tar

gets



Efficiency in CNM

Delay in Delivery







Human Resource

Performance


Processes



Reliability of PLM

Processes

FAB Quality

PLM

Des

ign

Elem

ents

PLM

Des

ign

Elem

ents



Tools



PLM-Governance


Portfolio




PLM ProcessVariants


Strict Stage-Gate



Engineering Change

Management





Partners



Partners

Workflow Management

System

Data Management




Partners

Figure 16: Overview of 23 PLM Design Elements and 16 Target Elements

The study suggests that from an integrated perspective, best-practice based execution and handling of the design elements as described in chapter 5 will lead to a greater achievement level with regards to the correlating target elements. Using these levers will empower telco executives and managers to identify the most urgent actions to be taken in order to cope with the complexity dilemma.



Legend for P-Value: *** p < 0.01 ** p < 0.05 * p < 0.1

General Impact of PLM Design Elements across all Groups

Element Domain Correlation

Workflow Management System PLM IT Architecture 0.315 **

Functional Integration of Departments PLM Process 0.294 **

Special Impact for Emerging Zebras


Customer Needs Management PLM Strategy 0.499 **

Special Impact for Global Elephants


Application Integration PLM IT Architecture 0.611**

Time

Waiting Time

6.1 Target Domain ‘Time’

The PLM target domain ’time’ tackles the issue of time management and rapidness of execution regarding all pro-cesses that are related to product development and other PLM activities. Namely 1) waiting time occurrence, 2) delivery delay and 3) time-to-market are contained as elements within this target domain – with all of these time elements to be kept at a minimum for PLM excellence. Since the matter of product success or failure can heavily depend on time and timing, these target elements should always be monitored and assessed for the sake of setting the base for continuous improvement endeavors.

6.1.1 Target Element ‘Waiting Time’

The target element ‘waiting time’ contains three different factors: waiting time along the value and supply chain, technical development waiting time, and waiting time caused by a poor process structure. As the two most frequent sources for waiting time, coordination efforts with components suppliers, as well as technical issues were stated by participants of all three complexity groups – especially in terms of technical product development.

The following top correlations were determined for all complexity groups in conjunction, as well as specifically for the high-complexity ‘global elephants’ and the medium-complexity ‘emerging zebras’.



6.1.2 Target Element ‘Delay in Delivery’

The target element ‘delay in delivery’ is based on two factors: The first factor describes the matter of exceeding deadlines during the product development phases – particularly within the ideation, evaluation and planning phases. The second factor is focused on delays that occur after product development, including indicators of exceeding deadlines during implementation and launch, and later when the product is managed in the market. In general, it was found that PLM is a discipline in which deadlines are exceeded quite often – especially during the implementation and launch phases. Complexity levels did not make a difference here.

The following top correlations were determined for all complexity groups in conjunction, as well as specifically for the high complexity ‘global elephants’ and the medium complexity ‘emerging zebras’.



Integration of Value-Adding Partners PLM Process 0.517 **

Modular FAB Processes Product Architecture 0.439 ***

Product Portfolio Analysis Tools PLM IT Architecture 0.406 ***



Modular Technical Production Perspective Product Architecture 0.461***



Extended Collaboration Tools PLM IT Architecture 0.561**

Time

Delay in Delivery




6.1.3 Target Element ‘Time-to-Market’

The target element ‘time-to-market’ describes the time it takes to develop and launch a product – starting with the very first initial product idea all the way to the actual market launch of a product. Two factors were used in order to assess target achievement levels: the development of the duration of an average product development over the past three years, as well as the development of this average development duration in comparison to the closest competitors.

The following top correlations were determined for all complexity groups in conjunction, as well as specifically for the high-complexity ‘global elephants’ and the medium-complexity ‘emerging zebras’.



PLM Process Competence PLM Process 0.396 ***

Data Management PLM IT Architecture 0.249 *

Modular Technical Production Perspective Product Architecture 0.230 *



Application Integration PLM IT Architecture 0.466 **



Product Portfolio Analysis Tools PLM IT Architecture 0.621 **

Time

Time-to-Market




6.2 Target Domain ‘Costs’

The development, launch, management, relaunch and retirement of products and portfolios can be very cost-intensive and carriers that are able to be more efficient in terms of cost will always be in a position to generate and achieve greater margins. The target elements included within this target domain are 1) process and system implementation costs, 2) churn rate and 3) human resources performance. Out of these three aspects, only the first one has a true cost character – the latter two have been factored in based on the reasoning that high churn rates and ineffective human resources performance lead to an undesirable cost position.

6.2.1 Target Element ‘Process and System Implementation Costs’

The target element ‘process and system implementation costs’ includes a view on implementation costs for essential processes and systems when launching basic and value-added services in relation to the overall launch budget. An effective and efficient PLM implementation can help to minimize these implementation costs. Interestingly, it was found that high-complexity ‘global elephants’ are typically more efficient with regards to this target element. The following top correlations were determined for all complexity groups in conjunction, as well as specifically for the high-complexity ‘global elephants’ and for the medium-complexity ‘emerging zebras’:



Extended Collaboration Tools PLM IT Architecture 0.378 ***

PLM Governance PLM Strategy 0.251 *



Retirement Management PLM Process 0.456 **



Transparency of Product and Portfolio PLM Strategy 0.513 **

Costs

Process and System



6.2.2 Target Element ‘Churn Rate’

The churn rate is considered a target element within the target domain ‘costs’ based on the following reasoning: A telco product typically has a high portion of fixed costs. If the churn rate is high, carriers are still left with the same operational costs – such as for running their networks, systems and organization – therefore, the average cost per user increases, and PLM can help to reduce churn and minimize costs. For the purpose of this study, the target achievement degree was based on two factors: the churn rate development over the past three years, as well as the same metric in comparison to the closest competition. The following top correlations were determined for all com-plexity groups in conjunction and specifically for the medium complexity ‘emerging zebras’ (note: no correlations between design elements and this target element were identified for the ‘global elephants’ complexity group):





PLM Process Competence PLM Process 0.454 ***

Modular Market Perspective Product Architecture 0.446 ***

Customer Needs Management PLM Strategy 0.431 **



Process Standardization PLM Process 0.460 ***

Costs

Churn Rate


6.2.3 Target Element ‘Human Resources Performance’

An optimized utilization of resources presents another critical target element within the target domain ‘costs’. Human resources performance was selected and validated as a cost aspect because it is directly related to costs. If PLM staff performs effectively, personnel overhead costs will go down. Therefore it should always be a PLM cost target to optimize human resources performance. For the sake of the study, the measurement of resource perfor-mance was conducted on the basis of two factors: average revenue per employee and the same metric in compa-rison to the closest competition of the carrier. The following top correlations were determined for all complexity groups in conjunction and specifically for the high complexity ‘global elephants’ (note: no correlations between design elements and this target element were identified for the ‘emerging zebras’ complexity group):



Modular Technical Production Perspective Product Architecture 0.426 **

Engineering Change Management Product Architecture 0.329 *

Application Integration PLM Strategy 0.410 **



PLM Reporting & Controlling Product Architecture 0.735 **

Costs

Human Resources

Performance




6.3 Target Domain ‘Process Quality’

A high achievement level with regards to the elements contained in this target domain indicates a high level of process quality. The PLM process spans the entire lifecycle of products and portfolios and so determines the long-term sustainability of business success – hence, achieving operational excellence in terms of PLM processes is highly critical. High process quality leads not only to increased effectiveness and efficiency, but also to more flexibility, which is important when it is necessary to quickly adapt to changing market conditions. The target domain con-tains six elements: 1) flexibility of PLM processes, 2) efficiency of customer needs management, 3) effectiveness of PLM processes, 4) value net performance in terms of cost, time and quality, as well as 5) information availability and 6) reliability of PLM.

6.3.1 Target Element ‘Flexibility of PLM Processes’

The target element ‘flexibility of PLM processes’ is composed of two factors: First, a high level of process flexibility enables a carrier to quickly adapt to changing market requirements. A flexible PLM process is determined by the ability to react to market dynamics and to launch corresponding initiatives to follow-up on these opportunities. Second, high process flexibility also describes the ability to re-allocate resources if required due to shortages. Both these factors are relatively well-implemented across all complexity groups.

The following top correlations were determined for all complexity groups in conjunction, as well as specifically for the high-complexity ‘global elephants’ and for the medium-complexity ‘emerging zebras’:



Application Integration PLM IT Architecture 0.504 ***

Modular Market Perspective Product Architecture 0.489 ***

Alignment of Product Model with Product Data Product Architecture 0.441 ***






Retirement Management PLM Process 0.642 ***

Process Quality

Flexibility of PLM Processes




6.3.2 Target Element ‘Efficiency of Customer Needs Management’

Customer needs management describes a company’s ability to systematically assess present and future customer needs, and to have these reflected in the portfolio, or at least outlined in the development roadmap. Therefore, a high efficiency of customer needs management is characterized by better and more efficient monitoring of custo-mer lifecycles, as well as by the ability to maintain a consistent product portfolio through better synchronization of product portfolio and product changes. It was found in the study that it is mostly the low-complexity companies who have problems with executing customer needs management, but the problem was also observed in the high-er-complexity groups of ‘elephants’ and ‘zebras’, so the achievement level leaves a lot of room for improvement on all levels of complexity.




Customer Needs Management PLM Strategy 0.718 ***

Modular Technical Production Perspective Product Architecture 0.643 ***







Functional Integration of Departments PLM Process 0.603 **

Process Quality

Efficiency of Customer Needs

Management




6.3.3 Target Element ‘Effectiveness of PLM Processes’

The third target element contained in the target domain of process quality is the overall effectiveness of the PLM processes. It encompasses perspectives on three important phases within the PLM lifecycle process – namely the phases of R&D, launch and retirement. These three phases are represented by three factors that were used to measure the achievement degree of PLM process effectiveness. Out of the three factors, the achievement level with regards to the effectiveness of retirement management lags behind significantly – particularly in the ‘penguins’ and ‘zebras’ groups there is a lot of room for improvement in this regard.












Workflow Management System PLM IT Architecture 0.705 ***

Process Quality

Effectiveness of PLM Processes




6.3.4 Target Element ‘Value Net Performance’

Value creation in the telecommunications industry is based on a complex cooperation structure between telco carriers with suppliers of infrastructure and wholesale products, software and hardware, as well as content and process partners. This means that the performance of all parties within the value net is highly critical to the PLM process quality and to a company’s success in general. In order to assess value net performance, three factors were used which focus on the aspects of time, quality and costs. It was found that there are some significant differences between the complexity groups. Whereas for the ‘elephants’ value net performance seems to be satisfactory with regards to all three aspects, the lower-complexity ‘zebras’ and ‘penguins’ have the biggest issue when it comes to managing time.




Process Standardization PLM Process 0.632 ***

Strict Stage-Gate PLM Process 0.593 ***




Functional Integration of Departments PLM Process 0.545 ***



Transparency of Product and Portfolio PLM Strategy 0.786 ***

Process Quality





6.3.5 Target Element ‘Information Availability’

Access to accurate, relevant information in a timely fashion facilitates the decision-making process and carries an enormous impact on process quality in general. In order to measure information availability as one target element within this domain, the availability of six different key data sets was assessed: billing, activation, usage, material flow, inventory and customer feedback data. One finding that applies to all complexity groups is that the availability of material flow data has the lowest achievement level – probably due to the fact that this information did not used to be as business-critical as the other aspects in the past. The data set with the highest degree of availability across all compexity levels is billing-related information.









Empowerment of Employees PLM Process 0.573 ***



PLM Process Variants PLM Strategy 0.594 **

Process Quality





6.3.6 Target Element ‘Reliability of PLM Processes’

One important aspect of assessing overall process quality is the reliability of the PLM processes. For the purpose of this study, process reliability has been defined as a composition of three distinct factors – deadlines met or exceeded, budget met or exceeded, and technical modifications to products that already have been approved. It was found that the degree of achievement is generally low for all three complexity groups with not much variance. For instance, approximately 50% of the companies change a product design after it has been approved once, consequently leading to a situation where deadlines or pre-defined budgets are often exceeded.




Integration of Value-Adding Partners PLM Process 0.412 ***





Extended Collaboration Tools PLM IT Architecture 0.415 **



Functional Integration of Departments PLM Process 0.468 *

Process Quality

Reliability of PLM Processes




6.4 Target Domain ‘Product Quality’

In times of increasing customer expectations and of the inevitable trend towards commoditization, it becomes increasingly important for telco carriers to develop products and services with superior quality in order to create room for differentiation against competitors. An effective PLM with coherent metrics to increase product quality can help carriers to leverage products and components to address customer needs more effectively. In the target area of product quality, the following four aspects have been considered as target elements: 1) product market launch quality, 2) provisioning performance in the value network, 3) reduction of technical product deficits, and 4) quality assurance during the initial market launch in terms of fulfillment, assurance and billing.

6.4.1 Target Element ‘Product Market Launch Quality’

The differerent factors making up the target element ‘product market launch quality’ actually represent problems that are to be avoided. For the purpose of the study, four such factors were selected –service quality, end-user de-vice functionality, end-user device design and application functionality. It is important to have an understanding of these problems as their resolution can lead to high costs – in maintenance or in after-sales support – ultimately also increasing total cost of ownership. The study has found that all carriers have issues with these aspects, regardless of their complexity level. Remarkably, only the low-complexity ‘penguins’ have stated that product market launch quality in terms of end user devices is high.

The following top correlations were determined specifically for the high-complexity ‘global elephants’ and for the medium-complexity ‘emerging zebras’ (note: no correlations between design elements and this target element were identified for all complexity groups in conjunction):



Strict Stage-Gate PLM Process 0.522 ***



Integration of Value Adding Partners PLM Process 0.525 **Product Quality

Product Market Launch Quality




6.4.2 Target Element ‘Provisioning Performance in the Value Net’

The target element ‘provisioning performance in the value net’ is based on typical quality perspectives of a telco product – including the product quality in its entirety, the quality of the network infrastructure, the end-user devices, misc. hardware, SIM cards, content, as well as the quality of service and fulfillment. In combination, these seven aspects determine the overall quality and performance in the value net – which is also directly perceivable at the customer front, and is thus to be critically assessed at all times. In general, the ‚elephants’ have the best perfor-mance in their value net, followed by group 2, the ‘zebras’, and lastly the ‘penguins’ of group 3 were found to have the lowest degree of provisioning performance.






PLM Process Variants PLM Strategy 0.302 **



Modular Market Perspective Product Architecture 0.462 **



Modular Market Perspective Product Architecture 0.494 *

Product Quality

Provisioning Performance in the Value Net




6.4.3 Target Element ‘Reduction of Technical Deficits’

The later in the process technical design errors are discovered, the greater is the adverse impact in terms of time, money, disruption, reputation, and perhaps even safety. Therfore the reduction of technical product deficits should always be an important target for carriers. For the sake of the study, different aspects such as technical solution design, specification, and insufficient testing and preparation time – among others – were included for measuring the achievement degree of this target element. It was found that technical solution design and specification aspects are less of an issue for all complexity groups, while problems do exist with insufficient collaboration during the design phases, as well as with project management in general.




Functional Integration of Departments PLM Process 0.425 ***





Data Management PLM IT Architecture 0.415 ***



PLM Reporting and Controlling PLM Strategy 0.639 ***

Product Quality





6.4.4 Target Element ‘FAB Quality’

Ironically one of the most important aspects of quality in telco products is a process issue. If the performance of the FAB processes is not satisfactory, it will lead to a bad product experience; therefore this perspective also has to be considered in the target area of product quality. The target element of ‘FAB quality’ is comprised of three factors referring to billing quality, service quality and provisioning quality. It was found that there is not much variance and that carriers of all three complexity groups generally find FAB quality to be low or moderate.

The following top correlations were determined for all complexity groups in conjunction, as well as specifically for the high-complexity ‘global elephants’ (note: no correlations between design elements and this target element were identified for the ‘emerging zebras’ complexity group):

This section closes the chapter on the correlative impact of PLM design elements on the given complexity manage-ment targets. In the following chapter, we will highlight the most interesting findings as identified for the different complexity groups, and we will give recommendations based on their brief interpretation.





Product Portfolio Analysis Tools PLM IT Architecture 0.324 **



PLM Reporting and Controlling PLM Process 0.651 ***

Product Quality

FAB Quality

Legend for P-Value

*** p < 0.01 ** p < 0.05 * p < 0.1




7. Key Recommendations Throughout the study it could be validated that there is indeed an impact of PLM design elements on the target domains. PLM should no longer be understood solely as a matter of IT or product development, but recognized as a comprehensive and highly critical function with potential gains across an entire enterprise. PLM therefore has to be addressed in an integrated and holistic fashion in order to achieve sustainable competitiveness and market success in a highly dynamic industry such as telecommunications. In addition, it was found that the impact of design ele-ments does vary according to the specific complexity level of a carrier.

The success or failure of PLM implementation can be determined by evaluating the achievement of PLM targets in the domains time, cost, and product and process quality – ultimately reflecting the ability of a company to handle complexity. Figure 17 depicts the effects that the given PLM targets can have on the lifecycle of a product.

Figure 17: Impact of Target Domains on PLM Curve

Based on the findings as presented in the previous sections, recommendations were derived that apply either to all complexity groups in conjunction, or specifically to the ‘global elephants’ or to the ‘emerging zebras’ complexity groups. The following subsections are structured in accordance to the four target domains. Please note that the provided interpretations are only focused on correlations with the highest correlative values or on what was found to be particularly interesting.

Leveling the PLM Curve by Meeting Complexity Targets

Cash-Flow Performance without PLM Cash-Flow Performance with PLMLegend:




Cost Effects

Time Effects

0

€

+

-

Benefit of product

Chronological Sequence

Rev

enue

/Pro

fit





Cost Effects

Time Effects

0

€

+

-

Benefit of product

Chronological SequenceChronological Sequence

Rev

enue

/Pro

fit


Revenue Performance without PLM Revenue Performance with PLM



7.1 Key Recommendations Applicable to All Groups

With regards to all complexity groups in conjunction it was found that all design domains are important and have to be implemented in accordance to the level of complexity. The key to success lies in the systematic implemen-tation of PLM and in understanding the interdependencies between design elements and potential time, costs, process and product quality improvement. In the following, the most relevant and interesting correlations are presented and interpreted:

Time Improvement Action Points

� Implement WFMS to reduce waiting time between different departments:It has been validated that there is a positive correlation between the implementation of a workflow management system and waiting time. This makes absolute sense since a well-implemented WFMS supports all involved parties in carrying out their functions and responsibilities by mirroring steps and activities in sequence – typically in an automated fashion by providing reminders and triggers. Therefore waiting time can be reduced considerably throughout the process and along the value and supply chains.

Time

Waiting Time

––––––– Target Perspective –––––––

PLM IT Architecture

Workflow Management System

––––––– Design Perspective –––––––Correlation:

0.315

� Increase your PLM process competence to reduce time-to-market:By providing well-planned trainings and comprehensive process documentation, the staff competence level can be increased with regards to the PLM processes in place. According to the findings of the study, this proves to have a positive correlation on time-to-market. The reason for this is most probably the fact that PLM in particular is a management discipline in which the human factor plays a critical role. It has a lesser automation degree than other telco prime processes and the work imposes greater demands on creativity, knowledge and communication – therefore the better the competence level, the greater the potential reduction in time-to-market.

Time

Time-to-Market


PLM Process



0.396



Costs Improvement Action Points

��Implement a modular market perspective for product structuring to reduce churn:The concept of modular market perspective addresses the trend of increasing personalization. As it allows for a better alignment with actual market and customer needs, it can greatly reduce the churn rate, and so improve the average cost per user. In addition, it creates opportunities for a carrier to better adapt to changing market dynamics since market-defined modules can be rearranged quickly to accommodate any changes, rather than having to be newly-designed from scratch.

Costs

Churn Rate


Product Architecture



0.446

��Implement engineering change management to increase staff performance:There are two reasons why carriers currently modularize their products. First, in order to cope with the increasing demand for the configurability of their products, and second, to improve the efficiency in product development and management. To control the growing number of modules, a systematic engineering change management needs to be in place that tracks changes on product module level and ensures transparency. With this transparency, the efficiency of the product development and management staff can be improved since the reusability of modules can be matched to requirements faster.

Costs

Human Resource Performance


PLM Process

Engineering Change Management


0.329

Process Quality Improvement Action Points

��Utilize product portfolio analysis tools to increase PLM process effectiveness: Product portfolio analysis tools are highly critical since they allow for fact-based decision making. When all necessary information is accessible at decision-making points, there is a greater chance that activities are steered into the right direction – thus, positively impacting the effectives of PLM processes.

Process Quality

Effectiveness of PLM Processes


PLM IT Architecture


––––––– Design Perspective –––––––

Correlation:

0.665



��Integrate your value-adding partners to increase reliability of your PLM processes: PLM process reliability is highly-critical because any objective which is not met during process execution can have severe consequences. The more partner relations a carrier has, the more dependencies exist that can impact process reliability. By integrating value-adding partners, the risk of missing product changes, or of missing deadlines or budget is greatly reduced, thus, positively affecting the overall reliability of PLM processes.

Process Quality

Reliabilty of PLM Processes


PLM Process

Integration of Value-Adding Partners


0.412

Product Quality Improvement Action Points

��Reduce product deficits by optimizing integration of functional departments: The reason for technical product deficits is often a misunderstanding or even conflicts between different functional departments that are involved in PLM. By implementing the concept of multi-perspectiveness and functional integration, communication and transparency can be greatly improved – minimizing the risk of technical product portfolio and product failure in general.

Product Quality

Reduction of Technical Benefits


PLM Process



0.425

��Modular FAB processes improve the provisioning performance in the value net: The provisioning performance encompasses a variety of different quality aspects such as network aspects, end-user devices or service quality. The latter aspect in particular requires special attention because of the service character of telco products. Much of the quality perception at the customer front is service-focused. With a modular FAB process landscape, process modules can be rearranged flexibly in order to better accommodate different products and different customer needs.

Product Quality

Provisioning Performance in the Value Net





Correlation:

0.610



7.2 Key Recommendations Applicable to ‘Global Elephants’

For the complexity group of ‘global elephants’ the overarching principle is to “harmonize, enable diversity and conquer”. Since complexity is steadily rising due to increasing product diversity accompanied by complicated IT and process structures, it should be considered a mission-critical aspect to implement means that demystify complexity and drive harmonization in the first place. With increased transparency, ‘global elephants’ should then focus on creating diversity in order to be prepared for the threat of losing revenue through the commoditization of traditional services. To this end, it is vital to enforce the concept of modularization in the relevant dimensions of product structure, processes and IT. In the following, key action points are presented that essentially increase trans-parency in terms of collaborative product development processes, as well as under aspects of product, portfolio and value-network quality.

Time Improvement Action Point

��Harmonize and integrate your application landscape to reduce waiting time between departments: One of the greatest time bottlenecks during the product development process of is the implementation of product data with regards to OSS and BSS systems. By setting the parameters through integration concepts such as SOA (Service-Oriented Architecture) that allow for real-time processing and a higher automation degree, much time can be saved, significantly reducing the waiting-time. For ‘global elephants’ it is particularly important to also extend the principle of application integration to the partner network.

Time

Waiting Time


PLM IT Architecture



Correlation:

0.611

Costs Improvement Action Point

��Modularize your products to increase performance of your PLM workforce: The objective of modularization is to increase reusability of product components and features in order to allow for product individualization and ultimately increase product diversity. The principle of modularization has to be thought through and implemented in a holistic manner, so that the configuration of the product service systems can be carried out with a maximum degree of efficiency. Implementing a technical modular production perspective can greatly increase human resources performance since products can be reassembled as required, rather than having to be designed from scratch.

Costs

Process and System Implementation Costs



Transparancy of Product and Portfolio


Correlation:

0.735



Process Quality Improvement Action Point

��Create process variants to improve information logistics in product development Depending on the innovation level of a product that is to be developed, a varying set of requirements is to be addressed by the implemented PLM process. By having PLM process variants implemented only the people involved receive the information that is needed – therefore the risk of information overflow is reduced and efficient information logistics are established, which is important for product development.

Process Quality



PLM Strategy



0.594

Product Quality Improvement Action Point

��Manage your value-adding partners actively to improve overall product quality:Due to the fact that the product-service system delivered by telco carriers consists of multiple components which are provisioned from a value net with individual partners and suppliers, it is vital that the carrier exercises control in an effective manner – after all it is the carrier’s face that is presented to the customer. In the study it could be validated that the active management of suppliers in terms of price, product design and logistics leads to a higher product quality from the customer point of view.

Product Quality




Manageability of Value-Adding Partners


0.651



7.3 Key Recommendations Applicable to ‘Emerging Zebras’

For the complexity group of ‘emerging zebras’ the overarching principle is to “standardize, enable integration and conquer”. Coming mostly from a background with voice-centric product portfolios, standardization in all design domains will become increasingly important in order to empower the carrier to correctly address customer needs by adequately managing its PLM implementation. The following key action points address the issues of standardization of IT interfaces, processes, data and information, as well as standardized development approval gates in order to achieve operational excellence in the four target domains and to ensure future growth.

Time Improvement Action Point

��Establish systematic customer needs management to reduce waiting time:A well-implemented approach to customer needs management (CNM) ensures that actual and potential market needs are thoroughly assessed and considered within all relevant decision-making procedures. Since it minimizes the risk of redundant iterations between different departments that are involved within the PLM process, CNM can help to reduce waiting time. This holds especially true for ‘emerging zebras’ as they find themselves in a transitional state from a sellers’ market to a buyers’ market in which CNM becomes increasingly relevant to handle market dynamics.

Time

Time-to-Market


PLM IT Architecture



0.499

Costs Improvement Action Point

��Standardize your processes to increase customer satisfaction and reduce churn:In order to hold customer satisfaction high and to ensure customer retention, carriers have to react to market changes quickly and at a high quality level. This can only be achieved by increasing PLM process automation and by reducing bottlenecks in the decision-making and process flow. The enabler for process automatation is the standardization of PLM processes because process execution can only be be modularized and be made predictable in its results by using standards. Ultimately, customer churn can be reduced by this.

Costs

Churn Rate


PLM Process



0.460



Process Quality Improvement Action Point

��Ensure empowerment of employees to improve information availability:The proper implementation of processes, systems and procedures for data management, reporting and con-trolling are important enablers for information availability. However, according to the findings of the study the greatest correlation is found with regards to the human factor. Staff members are responsible for recording, reporting and maintaining the data, so by providing the right resources, tools and incentives, information availability can be greatly enhanced. This applies to the ‘emerging zebras’ complexity group in particular, because there the degree of implementationwas found to be insufficient.

Process Quality



PLM Process



Correlation:

0.573

Product Quality Improvement Action Point

��Implement a strict stage-gate approach to increase product market launch quality: A high level of product market launch quality essentially means that no unexpected difficulties arise in terms of service quality or functionality when a product is launched in the market. . By implementing a strict stage-gate, it is ensured that the quality is systematically assessed in a standardized fashion with the help of regularly held quality checkpoints (or gates) and pre-defined quality and performance metrics. This design element proves to be particularly relevant for the ‘emerging zebras’ complexity group.

Product Quality



PLM Process

Strict Stage-Gate


Correlation:

0.522



8. Achieving PLM ExcellenceAs the study has given empirical evidence for pursuing a holistic PLM approach in accordance to an carrier’s com-plexity level, some further answers have to be provided to the questions of which PLM design elements have a high-er relevance with regards to a company-specific context, and how a potential set of relevant PLM design elements are to be prioritized under efficiency and effectiveness criteria.

Given the multifaceted nature of PLM, the pursuit of a holistic approach has to follow the general principle of “think big, start small”. Tackling every possible gap that has been identified will lead to an extraordinary effort and complexity – since PLM does not only affect individual domains such as IT architecture, but also the areas of strategy, process and structure. The interdependencies must be taken into account in order to prevent the project from failure and to mediate the high expectations from top management that cannot be fulfilled in the short run. Therefore the prioritization of potential fields for action becomes a crucial task for every PLM implementation or optimization project. In order to perform the prioritization, interdependencies between the design domains need to be transparent as well as their individual contribution to the achievement of targets. With this information at hand, an implementation roadmap has to be the final goal in order to initialize the PLM project.

Based on our findings and experience, we recommended carriers to follow a five-step approach for finding the answers to these questions. It can be referred to as RAPIT:

1. Reflect: Assess your complexity level as a starting point for identifying possible shortcomings of your current PLM-implementation. This will enable you to evaluate your current PLM landscape structured by PLM strategy, PLM process, product architecture and IT architecture.

2. Analyze: Follow a meet-in-the-middle approach. First, evaluate your complexity targets and conduct a gap analysis in order to identify room for improvement. Second, evaluate the implementation degree of the PLM design elements by applying a gap analysis in order to identify relevant fields for action.

3. Prioritize: Condense the results from step 2 and select specific design elements from the four design domains and mark possible interdependencies and synergies. In order to fulfill the prioritization task, the impact sphere of each design element has to be explored. Ideally the resulting knowledge then is coded into a correlation matrix for each complexity group and can therefore be used to select the design element with the highest impact on the selected targets.

4. Implement: Develop a PLM implementation roadmap and put it into action by using project struc ture planning methods.

5. Track: Continuously monitor the implementation progress, adjust and derive counter-measures if required in order to keep on track.

In order to benefit most from the results of this study, Detecon recommends purchasing the detailed version of this study in which information about the composition of the PLM design elements and targets will be given in great detail, and the evaluation for each indicator will be presented specifically for each complexity level. Apart from this, most of the identified correlations will be published providing carriers with essential information in order to fulfil the prioritization task on their own.



In addition, Detecon International and FIR at the RWTH University have prepared a standardized service offering for telecommunications carriers to perform a PLM audit based on the findings of this study. As a result of this PLM audit, a PLM implementation roadmap will be developed together with stakeholders from the finance, marketing and technical departments. The whole process covering information acquisition, data analysis and presentation of the results can be accomplished in a 3-day workshop session. For more details, please contact any one of the people listed below.

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Figure 18: RAPIT Approach for PLM Optimization



9. Acronyms

B2B Business to Business

B2C Business to Consumer

BSS Business Support System

C2C Consumer to Consumer

CSP Communication Service Provider

CRM Customer Relationship Management

DMS Document Management System

eTOM Enhanced Telecommunications Operations Map

FAB Fulfillment, Assurance and Billing

ICT Information and Communications Technology

KPI Key Performance Indicator

MMS Multimedia Subsystem

MVNO Mobile Virtual Network Operator

OEM Original Equipment Manufacturers

OSS Operations Support System

PLM Product Lifecycle Management

PSS 1) Product Service System 2) Process Support System

RACI Responsible, Accountable, Consulted, Informed

SID Shared Information and Data Model

SOA Service-Oriented Architecture

VAS Value-Added Services

VoIP Voice over IP

WFMS Workflow Management System



10. The Authors

Dr. Julius Dimitri Golovatchev Managing Consultant, Detecon International GmbH [email protected]

Oliver Budde Senior Researcher, Research Institute for Operations Management (FIR), RWTH Aachen [email protected]

Chin-Gi Hong Consultant, Detecon International GmbH [email protected]

Sergei Holmeckis Consultant, Detecon International GmbH [email protected]

Frank Brinkmann Senior Consultant, Detecon International GmbH [email protected]

For your inquiries, please contact either the authors or the following persons:

Ralph Hiob Head of Group ‘Process and Product Lifecycle Management’, Detecon International GmbH [email protected]

Dr. Roland Keil Head of Team ‘Product Lifecycle Management’, Detecon International GmbH [email protected]

Without the support and contributions of following people, it would not have been possible to publish this study. The authors would like to dearly thank:

Apostovola, Penka; Auroux, Sebastien; Auer, Gerhard; Blessing, Ingrid; Böttler, Marc; Derstroff, Mario; Distelrath, Claudia; Faber, Ralf; Fleck, Stephanie; Grimm, Louisa; Kamps, Christian; Kares, Tobias; Keferstein, Christian; Kolay, Tahir; Krieglstein, Günter; Lorbacher, Frank; Magsam, Nadine; Meißner, Golo; Müller, Hermann-Josef; O’Neal, James; Sarituc, Taner; Schirmer, Melanie; Schuhmann, Sascha; Wolter, Dr. Sven; Wurm, Christian



11. The CompanyDetecon International

Detecon is one of the world’s leading consulting companies and unites classic management consulting with a high level of technology expertise. Our services focus on consulting and implementation solutions which are derived from the use of information and communications technology (ICT).

Detecon’s expertise bundles the knowledge from the successful conclusion of management and ICT consulting projects in more than 160 countries. We are represented globally by subsidiaries, holding companies, and project offices, so we benefit as consultants from the infrastructure of a global player which spans the planet.

Our services for ICT management encompass classic strategy and organization consulting as well as the planning and implementation of highly complex, technological ICT architectures and applications. We are independent of manufacturers and obligated solely to our client’s success. Detecon is a subsidiary of T-Systems International, the key account brand of Deutsche Telekom.

Research Institute for Operations Management at RWTH Aachen University

FIR, the Research Institute for Operations Management at Aachen University of Technology (RWTH), is a non-profit membership research organization. The institute currently has 145 industrial members representing a wide array of industries (from raw materials over production to service industries).

The institute is a centre of excellence in the fields of rationalization and operations management and focuses on industry-oriented research. Currently employing 45 PhD students it operates in national and international networks and cooperates with different associations and institutes.

FIR develops models, methods and concepts which are implemented in cooperation with project partners in both industrial and service enterprises. The FIR is specialised in production management and logistics, service manage-ment and information management.

Detecon International GmbHOberkasseler Straße 253227 Bonn – Germany

[email protected]

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Detecon Study Next-Generation Telco Product Lifecycle Management: How to Overcome Complexity in Product Management by Implementing Best-Practice PLM

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plm design elements21figure

plm legend

plm curve52figure

plm excellence609

design domain plm process25

design domain plm strategy215

product management

integrated plm approach