Despite having processes for gathering data, managing customer requirements and tracking product development cycles, the San Jose, Calif.-based provider of call center hardware and software solutions was trapped in a manual, time-consuming effort to coordinate, organize and sync up data.

"We had fairly well-designed processes for information gathering, tracking product life cycle processes, and managing customer and market requirements. But they were manual," said Paul Lang, Aspect's vice president of product management. "We were looking for a tool that could manage those processes, help with scenario planning and monitor changes in customer requirements."

Aspect's past practice, albeit a common one, is tinged with irony: high-tech companies creating innovative products while relying on archaic tools to manage the growing number of products and projects in their portfolios.

But the tides are rapidly changing, industry observers noted. Although portfolio management concepts have been around for some time, the convergence of a more- sophisticated user base, advanced software capabilities and an aggressively competitive business climate is ushering in new tools and creating an emerging subset of solutions in product life cycle management (PLM).

Generally, PLM is being seen as a sweet spot in the IT software space, analysts said. CIMdata Inc., a consulting firm in Ann Arbor, Mich., projects that the global PLM market will grow from $16.9 billion in 2004 to nearly $25 billion by 2009, with a compound annual growth rate of about 8 percent. AMR Research Inc., in Boston, pegs the growth a bit higher, at about 11 percent CAGR.

"The tools are better than they used to be, and people have a better understanding of what they can accomplish with the technology," said Ed Miller, president of CIMdata. "One of the reasons PLM is taking off is that people can look across the broad spectrum of product life cycle management issues, see how an organization can tie different things together and manage all of those pieces."

Hot spots
Within the PLM sector, two segments are winning attention, according to industry observers: product portfolio management and project portfolio management (sometimes also referred to as program portfolio management).

On a broad scale, managing products or projects under one umbrella gives companies greater clarity in the way they prioritize, invest and support various in-house activities, said Pete Woodhouse, a principal at management consultancy Pittiglio Rabin Todd and McGrath, in Mountain View, Calif.

"Portfolio management is a decision support system that companies can use to measure product development performance or how projects are progressing," said Woodhouse. "It puts information in front of the people who need to make decisions about whether or not to continue with certain products or projects."

Portfolio management programs have a huge appeal in industries, such as high-tech and consumer goods, that have a high number of product stock-keeping units (SKUs) and juggle multiple worldwide projects. In these industries, portfolio management strategies are being seen as a way to tackle key issues such as resource allocation, budget planning, and project and product development tracking.

"The high-tech industry has been through tough times the last few years. Companies have cut down R&D budgets and expenses but are still looking to keep pace with innovation and introduce products that continue to make them competitive," said Michael Burkett, an AMR research director. "That's why these types of tools are doing well."

While similar in some respects, the two software segments have their own nuances. As the names imply, product portfolio management allows cross-functional teams-usually comprised of department-level marketing and new-product development managers-to oversee a range of individual products. The team is able to examine material requirements across product lines, determine whether products will hit time-to-market schedules and get a sense of where bottlenecks lie.

On the other hand, project portfolio management is usually targeted to vice president and chief-level executives in marketing, finance, operations and perhaps even IT departments. These executives not only need to see what products are being developed on a departmental scale; they also need to see what's going on companywide.

In both scenarios, these analytical activities traditionally have been handled in a manual phase-gate manner, notes Burkett. The phase-gate approach, which has been around for more than 20 years, plots out decision-making milestones within a product's or a project's development cycle. For example, when a product is at the concept stage, executives will evaluate feasibility, marketability and profitability targets; further down the road, at another defined mile marker, the product or project will come under scrutiny again, and executives will give it the green light or kill it.

Historically, executives have managed these steps in a fairly manual way, relying on monthly meetings, PowerPoint presentations, scattered data reports from multiple systems and, of course, spreadsheets, Burkett added. Now, with the Web and advances in IT infrastructure, executives get a clearer idea of what is happening, faster than before and with precise detail. That translates to quicker product turnarounds, reduced inaccuracies and improved resource allocation, Woodhouse said.

Positive results
Aspect Communications is counting on achieving all the above goals and more. So far, the results appear to be heading in that direction.

The company bought a product-planning platform from Fremont, Calif.-based Accept Software Corp. during the first quarter with the aim of replacing its spreadsheet system, Lang said. "We wanted to take out the subjective parts of what makes this an art and make it a science," said Lang. The new tools will enable the company to plot varied scenarios and more closely monitor customer ordering and purchasing patterns, he said.

Those are areas in which many of Aspect's customers would like to see improvements, added James Davies, president and chief executive officer. The trend is a natural outgrowth of what started to take shape about a decade ago.

"These practices and systems have their roots in the PDM [product data management] arena," Davies said. "In the late 1990s, companies and vendors were looking at tools from the perspective of understanding product configurations, managing engineering-change notifications and doing efficient product development. Now companies want to add the business layer to that. They want a holistic view of everything being planned and developed. You have to focus on the planning element, because it won't matter if you brought a product out on time if it was the wrong product."

In Aspect Communications' case, the software, which was installed in April, provides overviews of five major products, with three or four subproduct lines in each of those categories, Lang said. The focus is primarily on the company's self-service call center, voice response and text-to-speech products.

Within three months of deployment, Aspect Communications has hit significant strides. Lang said the company has seen a 20 to 30 percent improvement in its ability to plan for product releases, and its efficiency in tracking market and customer requirements has improved two- or threefold. The company has also shaved almost a month off its new-product development cycle, a reduction correlated to the amount of time saved by automating information distribution, eliminating lag time in team member responses and decreasing the number of product iterations that have to be designed.

Although it's too soon to convert those numbers into hard dollars, Lang expects to see balance sheet gains within the next few quarters, and he speculates that time-to-market windows will shrink as planning accuracy improves. "With the Accept tool, we were able to recognize what trade-offs we needed to make in terms of aligning resources, costs, planning schedules and product features," Lang said.

LG Chem Ltd., the Seoul, South Korea-based parent of LG Group, had a problem similar to that of Aspect Communications but decided to tackle it from a project level.

The manufacturer of chemicals, polymers, industrial materials and electronics materials has six research institutes and one main center with more than 1,000 specialists. Resource allocation was only one of the issues it confronted. Others included finding ways to improve the R&D team's overall efficiency, honing its project management abilities, increasing its project portfolio visibility and reducing uncertainty in project budgeting, according to documents from LG Chem and partner Artemis International Solutions Corp., of Newport Beach, Calif.

Integrating tools from Artemis with LG Chem's ERP system brings the teams access to detailed information about projects under way and lets them apply phase-gate processes more logically at critical steps in the development cycle.

Some of these activities were made simpler by the ease of use and immediate accessibility of the Internet, said Mike Metcalf, vice president of U.S. strategic marketing at Artemis.

"In the last several years, customers have asked us how they can take their project portfolios and apply an IT solutions approach to specific problems," Metcalf said. "Traditionally, customers had to manage new-product development and project portfolios in a fragmented way, with disparate office productivity, product data management, collaboration tools and spreadsheets. These solutions are only starting to emerge."

Wider appeal
Industry experts agree, and they expect to see more companies migrate in this direction.

"Companies have the religion. They know they have to manage multiple projects," said Doug Boike, treasurer of the Product Development and Management Association (PDMA) Foundation, in Mount Laurel, N.J., and president of Triad Consulting Inc., in Greensboro, N.C. "They want a clearer sense of how each project is doing and how each project compares to the others. They want to look at their portfolio, see how resources are distributed and determine which projects are likely to be winners."

Companies that are able to carefully monitor project portfolios and weed out winners and losers early on may not only secure a competitive advantage but could also earn best-in-class status, Boike added.

According to the PDMA Foundation's Comparative Performance Assessment Study, released last year, best performers needed only four ideas to generate one successful product, compared with 9.2 ideas for the average performer. The study, which was aimed at evaluating new-product development practices, was based on a survey of 416 North American respondents from a number of industries, including capital goods, consumer services, industrial services, health care, chemical and construction materials, technology hardware and equipment, and software.

While several factors are likely to contribute to the success rate, including better organizational tactics, better-defined processes and aggressive dedication to meeting corporate targets, the research also indicates that tools factor into best-in-class performance. Top performers surveyed said they used a greater number of tools in different operational areas, and with greater frequency.

Boike said that product and project portfolio management solutions will play a bigger role in the future as more companies adopt best-in-class practices, although how broad the adoption will be is still anyone's guess.

"We have reams and reams of PLM case studies where people can measure successes," said CIMdata's Miller. "But these solutions are still new, and those numbers are less worked out."

Jennifer Baljko can be reached at jbaljko@yahoo.com.