Management of Product Complexity through ...

Management of Product Complexity through Integrated PLM in a Multi-Lifecycle Environment Julius Golovatchev1, Oliver Budde2, Chin-Gi Hong1 1

Detecon International GmbH, Bonn, Germany,

2

Research Institute for Operations Management, Aachen University, Germany

Abstract The products in the telecommunications industry typically consist of several modules that in sum create the customer benefit (e.g. Multi-Play products). Each module embodies its own lifecycle, which implies an additional product complexity in terms of module design, module management and module removal from the product. Release Engineering is an approach to counter this challenge. The authors provide reasons why the holistic view on the Product Lifecycle Management is critical for an efficient PLM, and present a new approach for PLM-Process Management in a multi-lifecycle environment. Taking into consideration the typical characteristics of product components, three variants of a PLM-Process are introduced in the paper: PLM-Flex, PLM-Max and PLM-Fast. The paper closes with the presentation of a short case study validating the proposed process design for a company in the telecommunications industry. Keywords Product Lifecycle Management, Multi-Lifecycle Management, Extended Product, Release Engineering

1 Increasing Product Complexity in the Telecommunications Industry The development and introduction of new innovative products is vital for the survival of carriers in mature as well as in emerging markets. Due to the dynamic nature and momentum

Figure 1: Current Challenges

of the telecommunications industry, there are a variety of different market trends and developments that leverage the relevance of Product Lifecycle Management (PLM).

Less than half of all new product launches made by telecommunications companies actually provide a sustained improvement to their revenues and market share, or their business results. Most new products do not fulfil the expectations of the company’s management. Weak product ideas do not carry all the responsibility for this failure. In many cases it is the extreme complexity of the new products targeted at consumer or business markets, the lack of innovation due to their pure ‘me-too’ character, an unsatisfactory cost-benefit relationship, error rates that are simply unacceptable, or too many complaints following launch that lead to disaster. But it is not only a question of the quality of specific product features or their sum that may cause a failure on the market. Especially in the service industry the customer-to-customer processes also play a critical role for the realization of the market potential. For the telecommunication sector the most important can be categorized in: 

Service-Fulfilment



Service-Assurance

 Service-Billing The increasing product complexity has resulted into an increased process complexity and the implementation of many different process variants in the aforementioned process categories. The management of theses processes reflecting the complexity of the product is a major challenge for business champions.

2 Product Realization in the Multi-Lifecycle Management Environment In the telecommunications industry it is not unusual that the IT infrastructure set-up of the Business Support System (BSS) and Operations Support System (OSS) takes up to 18 months until a new product can be launched on the market. What are the reasons for this phenomenon of long development and processing times? In the complex of marketing, sales, order management, technology and IT, there are often deficits in the information flows concerning the requirements and restrictions related to the service characteristics and processes of a new product. Even though techniques such as conjoint measurement and focus group interviews have long been known, the consumer is still often only involved in the identification of requirements during the implementation phase to a limited extent. The uncontrolled expansion of requirements in product management and other related business areas often leads to an increase in complexity which is often not compensated by a corresponding increase in the product value from a customer perspective. The effects of such an increased internal complexity in turn leads to a cost explosion and slower development times. It is often observed, particularly in the case of new products, that telecommunications companies forget to strike a balance between customer and cost orientation. Product Layer Infrastructure Lifecycle Variance Service Lifecycle

Device Lifecycle Application Lifecycle Perceived Product Product (v1.0)

Product (v1.5) Time

Figure 2: MLM in the Telecommunications Industry (adapted from [Schuh 2005])

Multi-Lifecycle Management (MLM) can be considered as a key challenge within the PLM context that holds especially true for the telecommunications industry due to the multilayered nature of its products. For the purpose of this paper, we define MLM as follows: MLM is the activity to manage a company’s extended product that is characterized by consisting of product modules with individual lifecycles, across the complete product lifecycle in order to provide the customer with a unified product experience. Providing a unified experience to the customer, requires the synchronisation and coordination of multiple lifecycles that in sum are perceived as one product from the customer perspective. According to the TMForum 2007, this synchronization has to occur on several layers (cf. Figure 2).

3 Management of Complexity in the Product Realization The best innovation telecommunications companies produce a constant flow of product and service innovations. At the same time they keep the accompanying complexity under control with a universal management system. Recent studies have revealed that by using a unified complexity management system along the entire value chain the EBIT margin can be boosted by three to five percent. The telecommunications industry, with its trend towards combined products, is a perfect example of complex product portfolios. The importance of complexity management during product launches will thus continue to increase and become more critical to company success. The aim must however not only be to minimize complexity, but to find a companyspecific optimized complexity level which ensures competitiveness in the market place. One approach to realize this with regards to the multi-lifecycle challenge of PLM is Release Engineering. Unit-To-Outside Link (Interdependency) Component Without Release Engineering

With Release Engineering

Figure 3: Release Engineering (adapted from [Schuh, et al. 2004])

Release Engineering is an approach to achieve optimum innovation frequency by bundling multiple component changes into releases (cf. Figure 3). These releases have to be planned and rolled out in consideration of interdependencies between components [Schuh, et al. 2004]. Release Engineering is understood as a proactive change management approach that enables an efficient product development by clearly defined development stages. Combining multiple component changes into periodic releases lowers the process complexity and ensures innovativeness while keeping the competitiveness in the market place. Thereby Release Engineering serves as a solution for the increasing complexity through multilifecycles and provides a basis for the successful development and management of products.

4 Integrated PLM Framework for the Successful Development and Management of Products PLM can be defined as the activity of managing a company’s products across the entire lifecycle, from the early stages of conception to the final withdrawal or recycling of a product. By this definition, a strong interrelation between the value creation process and PLM can be deduced. In order to support such value creation process, an integrated PLM approach has to be followed, which holds the mandate to encompass and optimize all aspects required to leverage the efficiency and effectiveness of the company’s PLM. An integrated PLM approach is necessary to counter the multitude of challenges placed on telecommunications companies. Such an approach is characterized by the consideration of process models and consistent IT-support, as well as by the ability to structure products or their components in a form that provides commonality on product level in particular (such as by means of same parts management as an analogy from the automotive or manufacturing industries), but also on process and technology level to support the provisioning of such products across their lifecycle. With singular optimization of PLM processes without any consideration of the IT-architecture for instance, such implementation efforts would have to be regarded as incomplete, eventually leading to suboptimal results. PLM Framework PLM Process and Organization

Product MetaModel

Builds the basis for the PLM success by facilitating an operational excellence to the highest degree

Gate 2

Gate 3

Gate 4

Gate 5

Gate 6

Gate 5

Gate 6

Gate 3

Gate 4

Bounding Box

Gate 4

Gate 5

Gate 6

Approval by the Product Board

Bounding Box

Ensures product and service quality aligned with requirements of the relevant Market along with consistent reporting infrastructure

Product Configuration from the manufacturing perspective

Approval by the product board Approval by the product board via Fuzzy gates

Decision Support System

Scalable Area

General Solution space

Optional

CAS

Strategic Resource Management

Value Management

Value Oriented Portfolio Management

Fix

Defined Solution space

PLMProcess

Fuzzy Gates

Gate 2

Lifecycle Value Management

Increases efficiency of PLM-process by the provision of best-of-breed software components to support product development

Defines the overall product structure and enables effective management of product components

Internal Production View

Class. Gates

Gate 1

Gate 1

PLM ITArchitecture

Services

Obligatory Alternatives

Product-Development

Marketing Management

Product Exit Management

Operational Support System

Alignment

Adjust business case

Monitor business case

Control business case

Finalize business case

…

Data Voice

Cu DA

SPAMfilter

Mobile

…

IDMana gem ent

Service

Services

Firewall

Modules Basic Module Ad ditional Module

Co nference

Technical exit

Mailbox

Product Configuration from the customer perspective Market exit

Qo S

Monitor & ens. product success

Tarif A

Monitor & manage KPIs

Tarif B

Technical Go-Live

Exit

Fla trat e

Product launch

Multi-ProjectManagement System

7

200 kBit/s

Technical implementa tion

Marketing Management

Sales & market view

Implement market plan

Launch report

Develop technical concept

6 Launch

Management report

Market rollout planning

Business case introduction

Product description

Fin. persp.

Financial rating

Business plan

Technic. persp.

Idea paper

Technical evaluation

5 Implementation

Detailed design

Market persp.

Market & capability analysis

4 Planning

Single Play

Double Play

Triple Play

Collaboration Tools

Product Modeling System

Workflow- Management System

Quadruple Play

Product-Data-Management System

Lifecycle Value Management

Cus_ Seg1

Integration-layer (SOA)

Cus_ Seg2

400 kBit/s

3 Evaluation

100 kBit/s

2

Business Applications

Cus_ Seg3

WLAN Hotspo t

1 Innovation Management

( Supplier)

Business Applications SCM

ERP

CRM

CAD

Customer Needs Management

Business Applications

PLM Reporting and Controlling

(Customer )

Scope



Definition of overall process model

 Classification of businessprinciple  Process follows Stage-Gate 

activities and their Three perspectivespurposes on the process organizational (market, engineering, finance)  Description of roles and responsibilities

 Reduction of product complexity Meta Models for describing the  Introduction of modular product concept completly product structure  Alignment of the customer view and  Facilitation of product the production view on the product components reuse 





 Enabling higher degree of process automation PLM IT-Architecture is partitioned  Seamless integration of in 3 groups: information DSS, OSS and Integration Layer  Provision of consistent ITIntegration layer ensures process based view of the product interoperability and data consistency

 Definition and management of product portfolio Standardized reporting for all KPIs  Enabling Lifecycle Costing throughout the entire PLM process Approach  Implementing and controlling of  Facilitation of consistent Product-Portfolio strategy – reducing reporting infrastructure product complexity 

Figure 4: 4-Pillars Approach of Integrated PLM

Taking the current globally changing business environment into account, PLM can be considered as a strategic weapon for enabling companies to provide an additional value to customers, and thereby gaining a competitive advantage over their competitors. The 4-Pillars approach is a process view put across four dimensions of PLM that are to be integrated in a holistic sense [Golovatchev, et al. 2007]:  PLM Process and Organisation – facilitating the execution of the collaborative process (efficiency goal) and aligning the activities with the strategic goals of the company (effectiveness goal)  Product Meta-Model – enabling product component reusability by defining constraints and rules for decomposing the product functionality into meaningful modules with coherent data models  PLM IT-Architecture – increasing the PLM process execution efficiency by providing a best-of-breed framework of IT-components and their interrelations

 Lifecycle Value Management – ensuring alignment between product and service portfolio and market by continuously identifying the requirements and demands of actual and potential markets Especially in the telecommunications industry which experienced a significant change in its environment over last five years, PLM is considered to be essential for coping with shortening innovation cycles. Fixed line and mobile networks are converging towards a broad variety of services and innovative end user devices which will be usable anywhere, anytime – independent of the underlying access technology. Tomorrow‘s world of communication will be increasingly complex. And it is task of the PLM to reduce complexity and create transparency. It will be Telco‘s main mission for the years ahead.

5 Next Generation PLM-Process and its impact on the complexity management The importance of well-designed processes has been stressed by many authors, e.g. [Hammer, et al. 2003]. Since PLM plays a crucial role for organisational success in such highly competitive markets as the telecommunications industry, the relevance of an adequate PLM-Process is self-evident. Complex product innovations, such in the telecommunication industry, increase the complexity of the processes. As already indicated, the requirements on such a PLM-Process have changed. Long-living products with a limited variance in their product structure along their lifecycle are becoming less and less relevant. Those products have been replaced by a new product type: the extended product [Thoben, et al. 2001] that is characterized by the fact that it consists of a bundle of components/modules, each with a different lifecycle and a high variance in functionality.

5.1

PLM Process Variants

Figure 5: PLM Process Variants

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 a PLM-Process have to be in place. Following three variants are necessary:

 PLM-Flex: This process variant ensures an efficient and effective Product Lifecycle Management with the highest possible degree of freedom for product design and pricing. Typically, radical innovations with an associated high risk of failure can be managed by this process variant - e.g. new network technology  PLM-Max: Based on standardised activities, this process variant focuses on efficiency improvements and the simplification of knowledge-intensive development processes for products for which boundary conditions are known.  PLM-Fast: This process variant is characterized by the highest level of standardisation and simplification of the decision making process. It focuses on the most possible reduction of processing time under known conditions. Each PLM-Process variant reflects the different characteristics of the components that are managed throughout the lifecycle (cf. Figure 5). The main design objectives of this approach are to facilitate the execution of this collaborative process (efficiency goal) and to align the activities with the strategic goals of the company (effectiveness goal).

5.2

PLM Process Principles

Most telecommunications companies utilize the Stage-and-Gate approach as a conceptual and an operational model for the development, marketing and removal of a product during its lifecycle. The Stage-and-Gate approach is very meaningful to the management because it restricts investment and expenditures in the next stage until the management is comfortable with the outcome of the current stage. The gate can be effective in monitoring and controlling product quality as well as development progress and costs. The “typical” PLM-Max-Process in the telecommunications industry consists of several stages - from idea generation to withdrawal from the market. This structure is oriented at the lifecycle of the “standard” telecommunications product, and has been validated through several consulting projects conducted by Detecon International GmbH - primarily in the telecommunications industry. Bounding Box / PLMFast

Gate 4

Fuzzy Gates / PLM-Max

Gate 2

Class. Gates PLM-Flex

Gate 1

Gate 2

Gate 6

Approval by the Product Board

Bounding Box Gate 1

Gate 5

Gate 3

Gate 4

Gate 5

Gate 6

Approval by the product board via Fuzzy gates Gate 3

Gate 4

Gate 5

Gate 6

Approval by the product board

1 Innovation Management

2

3 Evaluation

Adjust business case

Product launch Technical Go-Live Monitor business case

Marketing Management

Monitor & manage KPIs Monitor & ens. product success

Control business case

Management report

Business case introduction

Technical implementa tion

6 Launch

Launch report

Develop technical concept

Implement market plan

Product description

Fin. persp.

Financial rating

Market rollout planning

5 Implementation

Detailed design

Idea paper

Technic. persp.

Technical evaluation

Business plan

Market persp.

Market & capability analysis

4 Planning

7 Exit Market exit

Technical exit Finalize business case

Figure 6: PLM Process and Principles

Every stage consists of a distinct number of activities (organized in perspectives, refer to the next section) which have to be accomplished by specific process stakeholders at the given phase. The entrance to each stage is a gate; these gates control the process much like quality control checkpoints. Each gate is characterized by a set of deliverables as input, a set of exit criteria and an output. Gates are manned by senior managers that form the so-called Product

Board. The Product Board acts as a gate-keeper that evaluates the results from one stage by a given set of criteria. Based on this evaluation, the product board can either decide whether the product idea proceeds to the next stage, re-starts at the previous stage or is archived. “Standard” Stage-and-Gate PLM-Process with its “frozen” gates has several characteristics that lead to significant problems (e.g. time-to-market delay) in the development of low complexity telecommunications products, as well as high innovative hybrid products and solutions. Weaknesses of the Stage-and-Gate model, such as narrow criteria, long review preparation time and slow and a serial decision making process, provide reason for the necessity of the new PLM-Flex and PLM-Fast approaches. The process solution for standardized products could be a simplification and automatisation of gate decisions and elimination of some gates/stages. For high innovative hybrid products, the Stage-and-Gate approach exhibits additional weak points. Stage-and-Gate processes force fundamental project decisions to be made earlier than necessary, thereby restricting flexibility to respond to change and increasing the cost of change. Moreover, flexible development techniques are more suitable for development projects rather than phased approaches. The introduction of “fuzzy gates” which allow for “go forward” decisions to be made in the absence of complete information - with the expectation of achieving specified outcomes at a later date - does not solve the problem in this case. A more recent alternative to Stage-and-Gate processes is the Bounding-Box approach which is essentially a Management-by-Exceptions technique in which certain critical parameters of the project, such as profit margin, project budget, product performance level, and launch date, are negotiated as the bounding box. Then, the team is free to move ahead unimpeded as long as it stays within the box [Doyle 2003].

6 Case Study A large integrated telecommunications operator carried out an extensive program for restructuring and re-positioning of the company in a highly competitive and dynamic market. While the company’s core business with traditional fixed-network lines had been declining rapidly, the pace of innovation was continuously increasing, product lifecycles were becoming shorter, and the importance of mobile communications was growing. In order to alleviate these problems, the company set up a plan to improve customer satisfaction, launch innovative products, achieve high market shares and a good financial performance ambitious goals given the challenging market environment. Initial Situation Process

• Technical driven product development process • Interfaces between product development team and marketing were not well established • No stage/gate process available

Consequences on the Value • Process complexity leads to high coordination effort and therefore suboptimal time-to-market • Low product realization rate and high product failure rate

Impact

Approach Process

 Design and implementation of three variants of Stage/Gate PLM processes, taking different product types into account  Introduction of fuzzy gates for a lean decision making process

Time to Market Organizational implementation Product success rate

Figure 7: Result of Implementation of the New Generation PLM Process

The PLM-related objective was to convert the previously technical driven approach for the product design (i.e., their orientation towards technical performance features) to an approach focusing on the customers’ needs and requirements. Equally important, the implementationof a new effective PLM-Process for the development of products and services was defined as another core objective. In the initial situation, the implemented PLM-Process was far from being “state-of-the-art“ (e.g. no withdrawal phase, missing of decision gates, long “time-to-market”, no standard templates available, no variants of PLM-Process were implemented, etc). Through the project, however, an integrated PLM approach suitable for the company and its affiliates was developed. The three Stage-Gate process variants (PLM-Fast, PLM-Max, PLM-Flex) were designed and implemented according to the company’s diversified product portfolio, types and modules. In addition, fuzzy gates were introduced in order to allow for a lean decision making process by achieving a reasonable balance between time- and risk-management goals, including quicker decision- making implying the possible suspension of decision- making body approval, introduction of decision-making tools and project supervision in regards to the final steps of every stage. Through the implementation of the Next Generation PLM-Process, valuable benefits could be achieved for the company:  Achievement of accelerated time-to-market up to 25% by several product groups  Efficient cost savings along the PLM-Process by using standard support system and reusing of modules and components (process costs saving up to 170 million USD/year in the product realization phase)  The product portfolios across all of the divisions were reduced by 50% and integrated into a modular structure. The simplification and redesign of the product portfolios during the process pursued  The operative goal of creating the pre-conditions for simple and consistent calculation, order processing, and billing, as well as the general goal of adapting the product portfolio to customer requirement and market conditions were successful implemented  Effective and similar procedure of innovation and market management projects execution  Simplified exchange of know-how and usage of the “same language” during product development, as well as fast and efficient communication between international partner  An implemented shared platform for document and project management.  Sound marketing strategy due to the early recognition of relevant market needs, standardized information and environmental issues Through a consistent reduction in complexity, efficiency potential may also be released which could lead to significant cost and process optimization and in turn strengthen the company’s competitive position [Krämer, Golovatchev, 2008]. References Doyle, L. (2003) Using the “Bounding Box” to Accelerate Product Development. WWW page. https://fasttrack.roundtable.com/upload/ffpd2-doyle-bbox_v1.pdf, accessed 29.02.2008 Golovatchev, J., Budde, O. (2007): Next generation PLM - an integrated approach to product development in the service industry. In: Product Lifecycle Management: Assessing Industry Relevance, PLM-SP3. Interscience Enterprice Ltd, pp. 555 – 564. Krämer C., Golovatchev J. (2008): A Perfect Partnership: Successful product innovations in the telecommunications market depend on the management of complexity. In: DMR, Issue 3, 2008, pp 38-45

Hammer, M., Champy, J. (2003) Business reengineering. Campus-Verl, Frankfurt/Main, 2003. Schuh, G. (2005) Produktkomplexität managen. Hanser, München, 2005. Schuh, G., Eversheim, W. (2004) Release-Engineering – An Approach to Control Rising System-Complexity. CIRP Annuals - Manufacturing Technology, Vol 53, Issue 1, 2004, pp. 167-170. Thoben, K. D., Jagdev, H., Eschenbaecher, J. (2001) Extended Products: Evolving Traditional Product Concepts. In: Proceedings of the 7th International Conference on Concurrent Enterprising: Engineering the Knowledge Economy through Cooperation, Bremen, Germany, pp. 27–29. TMForum (2007) TR137 Holistic Product Lifecycle Management Release 1.0. WWW page. http://www.tmforum.org/page33734.aspx, accessed 28.02.2008