Collaborative product development tools and techniques in small and medium enterprises

Collaborative New Product Development in Small & Medium Businesses

Collaborative New Product Development Tools and Techniques in Small and Medium Businesses

For small and medium businesses (SMB) product introductions are one of the most significant sources of new customer, revenue and profit growth. As a result, the new product development strategies, tools, techniques and processes they rely on of a strategic importance. The objective of this analysis is to analyze and evaluate how small and medium businesses manage the new product development process using the collection of strategies, techniques, systems and processes.

Factors Accelerating Collaborative New Product Development Tools and Techniques Adoption

Balancing the five factors of development costs, product costs, product quality, revenue potential, and the pressure to attain a launch date to stay competitive to their industry, SMBs routinely prioritize their new product development initiatives across these five dimensions. The top four external factors that drive SMBs to adopt collaborative new product development tools and techniques include increasing pressure over shorter product lifecycles, globalization of markets and supply chains, an increasing distributed design environment, and the need for managing complex product development and production (Shamsuzzoha,

Kyllonen, Helo, 2009) . These four factors combined account for over 75% of the investments SMBs make in collaborative new product development tools and techniques. Collaborating with their supply chain partners and service partners SMBs are seek to gain time and cost efficiencies from improved information and knowledge management throughout their supply chains (Tan, Tracey, 2007, 13-15). The payoff of having greater collaboration throughout their supplier networks over several product generations often leads to knowledge of processes and trust between suppliers becoming one of the core strengths of the company (Jenssen, Aasheim, 2010, 19). SMBs are finding that through the use of collaborative new product development platforms and design environments that are hosted and delivered on the Software-as-a-Service (SaaS) platform they can also scale geographically much more efficiently (Ottenbacher, Shaw, Ermen, 2006, 84-85). The growth of SaaS as a viable platform for the deployment of collaborative new product development tools and techniques has grown exponentially in recent years due to several factors. A major contributing factor is the ability of SMBs to scale their collaborative new product development strategies more efficiently and a lower cost than previous methods including the intensive effort required to be part of a broader development network. The SaaS platform has also made it possible for SMBs to manage more complex design environments and production workflows including build-to-order, configure-to-order and engineer-to-order workflows. These are critical for those SMBs whose product design and collaborative product development strategies are focused on markets dominated by mass customization. The adoption of collaborative new product development tools and techniques is being driven by the need many SMBs have to differentiate themselves through a mass customization strategy that gives them the flexibility of aligning their production expertise to the given needs of a specific audience and market segment (Burkett, 2006).

The growing adoption of Product Lifecycle Management (PLM) and Product Data Management (PDM) as techniques or strategies for better managing the collaborative new product development process is experiencing rapid growth due to the increasing complexity of product strategies as well (Weiping, Zhengqi, Biao, 2008, 57). For companies who produce make-to-stock or off the shelf products, PLM and PDM techniques and strategies are being relied on to ensure time-to-market and a competitive market position relative to industry lifecycles (Burkett, 2005, 12 -- 13). The greater the complexity of product or services being delivered, the more critical the need for centralized data and knowledge management, in addition to integrated data, process and product development collaboration throughout an SMB. It has also been found that the SMBs that are growing the most rapidly create national, regional and global networks based on collaboration with suppliers, partners and distributors much more effectively than their slower-growing SMB counterparts. They are able to successfully centralize innovation data and knowledge, integrate that data, process intelligence and expertise, including collaboration knowledge, into a global context much more effectively than their counterparts. Those SMBs getting the greatest results from their use of centralized innovation, data and knowledge are nearly four times as likely to engage in these strategies as competing firms in their same industry. The same also holds true for the adoption of highly integrated data, process automation and expertise, and skills learned for mastering collaboration (Ward, Runcie, Morris, 2009, 83, 84). For higher growth SMBs their organizations strive for this level of adoption as they have seen that the greater the level of pervasive adoption of PLM and PDM strategies the greater the propensity to attain and achieve time-to-market on complex products that require intensive levels of coordination and support. These higher-growth SMBs have learned how to create extended knowledge networks using PLM and PDM strategies as a foundation for greater supplier, partner and development coordination (Hackett, 2007, 45 -- 50). Over time, trust becomes an accelerator of these processes and the ability to attain shorter, more complex product lifecycles becomes attainable. These extended networks based on PLM and PDM platforms and strategies literally "learn" how to work with one another and as a result when trust increases so does the acceleration of key processes (Allocca, Kessler, 2006, 279 . This in many SMBs becomes a defensive competitive advantage, linking their supply chains, manufacturing and serving as a catalyst for future product development (Banker, Bardhan, Asdemir, 2006, 352, 440). The adoption of PLM and PDM techniques or strategies varies significantly across the entire base of SMBs with estimates at 13% or less having centralized product data and the use of process automation and collaboration. There have also been studies that indicate the value of PDM as a means of creating a single system of record in SMBs often gets implemented to solve a specific pain point in the new product development process and then is abandoned. This frequently occurs when coordination between suppliers of specialized components needs to be included in each phase of a collaborative new product development process. The development by an SMB of an entirely new electronics product or system for example forces the development of a PDM system so that the project can be completed. The majority of the time however the SMB will stop short of creating an enterprise-wide PDM once the initial need it was purchased or created for has been met. The same holds true with PLM systems, platforms and strategies. Once the initial process workflows have been defined and are working well enough to meet product launch timelines, many SMBs quit improving on this strategy or technique.

One of the most significant predictors of an SMB's potential for success with collaborative new product development tools is their commitment to using them across entire process workflows, not just selectively choosing specific areas. This is evident in the wide variation in performance SMBs attain on the New Product Development and Introduction (NPDI) process (Peterson, 2006, 38-40). The top-performing SMBs who have adopted PLM and PDM strategies across their entire business attain their product launch dates and timelines 81% to 100% of the time (Lofstrand, 2007). They attain this impressive result due to process integration internally and with suppliers and partners, analytics and data reporting, and the development of a strategic product portfolio management strategy. All of these factors combined increase the likelihood of an SMB being able to have enough process coordination and communication to ensure product launch dates are met (Shiu, Walker, 2007, 91, 92). Conversely SMBs that have only a partial level of integration across the core components of their PLM strategies and only sporadically manage processes attain their product launch dates between 21% to 80% of the time. It is anticipated that approximately 50% of the SMBs using collaborative new product development tools are capable of attaining their launch dates in this range. For the SMBs who have not adopted PLM and PDM-based tools and techniques, their changes is just one in five, or just 20% of making their product launch deadlines. Often these organizations rely on project-management-based tools and techniques in efforts to attain the product launch dates yet find these personal productivity applications cannot scale well enough to allow for collaboration. Microsoft Project is the most commonly used personal productivity application by these SMBs. Even through the use of shared folders and posting Microsoft Project files on Intranet sites within companies, this approach fails to integrate the broader PLM and PDM processes necessary to attain product launch timeframes and launch dates successfully (Johnson, Filippini, 2009, 15 -- 17) .

Conversely the use of PLM-based strategies that are strengthened with PDM systems are a critical success factor in SMBs being able to more effectively collaborate during new product development planning and execution. PDM systems deliver the necessary analytics, data, process intelligence and legacy data that further strengthen PLM strategy execution (Chen, Chen, Chu, 2008, 395). SMBs successful with integrating their PLM and PDM systems together concentrate on the collaborative new product development processes critical to their companies first, and then build out the technology-based systems to support them. In the most successful SMB implementations of collaborative new product development tools including PLM and PDM, priority is put first on process definition and process improvement. Once processes have been defined, continually managed to greater efficiency and as optimized as possible, then the use of information systems technologies and platforms to automate them are added (Christensen, Magnusson, Zetherstrom, 2006, 583-585). PLM as a technique or strategy is not automated until the core processes that comprise a given SMBs use of it are made as efficient as possible and optimized through business process re-engineering over time. It is critical then for SMBs looking to build a collaborative new product development strategy to first look to streamline the most critical core processes their collaborative new product development strategies will address.

Collaborative New Product Development Process Focus

Empirical studies indicate collaborative new product development strategies have a significantly higher level of success when they are first defined from a process standpoint first. With a process orientation, SMBs are finding it much easier to correlate investments in collaborative new product development techniques and tools to the longer-term results necessary to attain their strategic plans. Studies indicate that the ability of an SMB to define its entire collaborative new product development plans in the context of processes first makes a big difference in how long the company continues to rely on them (Peterson, 2006, 38-40). In other words, the more an SMB concentrates on the most critical product development processes it has, the more likely their collaborative product development initiatives, programs and strategies will become a core part of their organizations. Without this process-based focus, studies indicate SMBs fail to adopt collaborative new product development systems and strategies into their company's mainstream operations. Making collaborative new product development strategies directly tied to their company's most critical product development processes, SMBs are also finding that resistance to change also is decreased. Those employees most impacted by the new PLM, PDM and collaborative new product development systems and techniques are more likely to adopt and use them when they are aligned to key processes and strategies.

The eight most common strategic process areas SMBs concentrate on to ensure a higher adoption and success rate of collaborative new product development tools and techniques include the following. The New Product Introduction (NPI) success rate, time-to-market performance relative to industry standards and timelines, engineering productivity, design reuse and cost reduction, and engineering cycle time reductions are the primary process areas that SMBs who are successful over the long-term with their new product development strategies concentrate on. Each of these process areas directly impacts the ability of an SMB to generate greater revenues through new product development while also ensuring existing product upgrades and engineering stay on schedule. Each of these process areas also has a very high degree of inherent collaboration within each of them. For many SMBs who are experiencing exceptionally fast growth, these process areas force them to create scalable, secure and globally-based collaborative new product development platforms delivered over the Internet. (Prandelli, Verona, Raccagni, 2006, 134, 135). Basing collaborative new product development strategies on the NPI success rate forces a higher level of collaboration across suppliers, distributors and other critical partners outside of an SMB. The NPI success rate also galvanizes the focus in an SMB towards the attainment of a single, shared goal. This has been found to significantly reduce resistance to change and a lack of commitment to collaborative new product development techniques and strategies. The NPI success rate also has been shown to force a tighter integration of PLM and PDM systems both at a technology and process level as well. Finally the NPI success rate metrics, often measured in terms of sales, profits and overall performance, are much more relevant across the entire ecosystem of an SMB than any internally derived metric. Those SMBs who are the most successful with the development and use of their collaborative new product development techniques, tools and strategies focus on the NPI success rate and become very focused on the New Product Development and Introduction (NPDI) process as well (Ming, Yan, Wang, Li, Lu, Peng, Ma, 2008, 154). As the NPI success rate and NPDI process are the two most critical process areas to the long-term financial strength and viability of any company, these two areas get the majority of attention in SMBs as well (Ledwith, Richardson, Sheahan, 2006, 439, 440).

The processes that support time-to-market performance of an SMB relative to its competitors and the industry also act to provide greater direction and focus to collaborative new product development strategies as well. SMBs that compete in areas of high technology that are characterized by very rapid product lifecycles are passionate about this metric (Winnick, 2006, 93). The credibility of an SMB is directly tied to their ability to get their latest product generations out the door within the market windows their industry measures themselves on. An example would be an SMB that concentrates on value-added products for the Apple iPad for example. There are literally now over 100 companies who launched in some cases their companies and products on the same day Apple announced their latest generation tablet. Companies whose products were launched and available on the Apple launch day have much greater credibility and the potential to gain much greater market share as a result. The time-to-market performance metric and its associated processes also anchors collaborative new product development techniques, tools and the strategies they support to a very high level of accountability within SMBs as well.

The remaining process areas of engineering project development, product design and development, design reuse and cost reduction, and engineering cycle time reductions together solidify collaborative new product development systems in SMBs. In SMBs that are attaining the highest levels of performance they also form the center of their PLM platforms and strategies and also act as a coordination point for their direct materials sourcing and coordination of customer needs management. Figure 1, Product Lifecycle Management Overview defines how the five functional areas of companies are integrated together to support collaborative new product development strategies (Robin, Girard, 2010, 318)