Product portfolio management software has been a mainstay in product-centric organizations for some time now, empowering leaders to make strategic business decisions in a transparent, collaborative way. For years, Gartner has recognized product portfolio management as a key capability to “optimize product portfolios and manage product activities throughout all life cycle stages.”
But product portfolio management software is not the only product management software in many tech stacks. Product lifecycle management software also provides intelligence and insights to ensure timely and on-budget delivery of high-quality and competitive products.
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While they appear similar, they are markedly different but equally necessary. And when combined to share information, they provide a full-circle ecosystem to help the business and cross-functional teams collaborate more effectively. Hence, both succeed from strategy to delivery for the one thing that connects them – the product.
Silos Are Rarely a Good Thing
From filling the pipeline with good ideas and prioritizing the right products and projects to ensuring enough capacity to deliver on time and on budget, product portfolio management connects product strategy, planning, ideation, prioritization, and development to delivery. It helps leaders define why certain products are worth investment, what types of resources are required to build them, and when the ideal time would be to launch. It’s a hypothetical but valuable planning approach.
Until recently, the business was happy to keep its product portfolio management software and data to itself, passing the baton to the designers and engineers tasked with building said products and executing projects. Other teams had their own tools, namely product lifecycle management software. It, too, takes an end-to-end approach to product development, but it is different from product portfolio management software. Product lifecycle management software identifies what will be produced and controls how products are built in detail. It is not hypothetical but actual.
R&D provides the vision; then, it is up to another team to move forward with the execution. This handoff is where the rubber meets the road, where the visionary plans are put to the execution test. But without collaboration, the organization works with one hand behind its back, unable to validate ideas until much has already been invested. Those products that fail the test don’t always lead to killed projects, but they frequently introduce project delays, overspending, and loss of market share.
McKinsey warns of such silos, saying, “When different stakeholders engage in a myopic, sequential way, using their own lenses…the numerous handoffs create gaps in knowledge. This process leads to development blind spots, which introduce unnecessary risk and inefficiencies.” And inefficiency spells disaster in this dynamic economy.
Thankfully, things are changing. Digital transformation and innovation speed are among the many driving factors leading organizations toward achieving greater resiliency and growth in light of so much disruption. They now recognize that cross-functional teams must work together to accelerate the translation of strategy into execution.
“When different stakeholders engage in a myopic, sequential way, using their own lenses…the numerous handoffs create gaps in knowledge. This process leads to development blind spots, which introduce unnecessary risk and inefficiencies.” – McKinsey
Today, forward-thinking companies are embracing the convergence of product portfolio management software and product lifecycle management software. While each has distinct purposes and users, when integrated to share information, they can be part of a comprehensive product development strategy to bring the right products to market with speed, efficiency, and less risk.
The Core Purpose of Product Portfolio Management
Product portfolio management software provides a centralized, structured way for decision-makers to ensure brand legacy and longevity by defining strategies for ideation assessment, KPIs, and modeling in a safe environment. Leaders can more easily determine whether a good idea is worthy of development as part of the broader portfolio and make adaptable prioritization decisions when changes come.
Because the software can integrate with product lifecycle management software, it can provide a critical feedback loop that identifies potential problem areas faster and earlier to reduce delays and roadblocks during the design and engineering stages.
Product portfolio management focuses on choosing the products that best align with a company’s primary objectives and will have the best ROI. That means:
- Pairing demand with right-fitted resources
- Tracking total costs of development
- Evaluating products for their market readiness, demand, and revenue potential
- Forecasting potential risks and rewards
- Enabling effective communication and collaboration across internal teams and external stakeholders
It is essential to improving product innovation because it helps leaders choose the projects and products most likely to achieve corporate goals and improve time to market through automation. It can also shed light on where best to spend precious resources.
For example, a McKinsey survey revealed that 44% of senior executives planned to reallocate their R&D budgets to new products. Product portfolio management software is an excellent tool for fleshing out which products deserve those dollars, whether the goal is to grow the portfolio via incremental features or disruptive new product types.
The core capabilities of product portfolio management software
Organizations rely on product portfolio management software to clarify the business, financial, and resource management data connected to developing a product – from innovation to go-to-market. They can increase speed to market and revenue by having a trusted source to select winning products.
In one platform, leaders can:
- Simplify the capture of innovative product ideas
- Visualize global strategy, portfolio mix, and product pipeline
- Collect, analyze, and report on portfolio health and potential
- Integrate cost and risk analysis
- Engage in real-time resource capacity planning
- Collect and analyze data points across product execution
- Combine Agile and Stage-Gate methodologies
- Integrate product and technology roadmapping
- Catalog and manage changes in development
- View product development dashboards
To truly optimize the product portfolio, organizations must be able to accelerate innovation and overcome disruptions. Without dedicated software, it becomes impossible to efficiently manage increased portfolio complexity and adapt to change.
The Core Purpose of Product Lifecycle Management Software
CIO defines product lifecycle management as “an enterprise discipline for managing the data and processes involved in the lifecycle of a product, from inception to engineering, design, manufacture, sales and support, to disposal and retirement.”
Yet unlike product portfolio management software that also focuses on comprehensive product development, product lifecycle management is geared toward the design and engineering of the product itself. It automates and streamlines the ability to:
- Execute product development
- Manage the detailed development processes
- Manage various components required to bring a product to market
Product lifecycle management uses an ecosystem of applications that impact a product at every lifecycle stage, from concept through end-of-life. Going further, it is a management discipline, an ecosystem that connects to other applications, such as product portfolio management software.
Organizations that leverage product lifecycle management software are more efficient, effective, and productive because cross-functional teams have a single source of truth that enables them to collaborate efficiently through all execution stages for greater productivity.
Gartner reports that the product lifecycle management ecosystem has a return on investment of up to 25%.
The core capabilities of product lifecycle management software
Product lifecycle management software enables the organization to visualize the actual development of a product more easily. It serves as an information management system that integrates all the outputs (data, processes, business systems) into one source, offering:
- Design capabilities for workbench and collaboration, as well as software development, quality assurance, and requirements management
- Data management for everything from Bill of Materials (BOM), packaging, and configurations to specifications, formulas, and compliance
- Collaborative functions supporting the supply chain, sourcing and cost management, sales, and service
The key benefits of product lifecycle management software are simplifying each stage of a product’s lifecycle and making it more efficient to maximize profitability. With pressure to innovate and deliver products faster, organizations cannot afford to waste time. Lifecycle management speeds up the research and development of products, giving them a greater capacity to deliver products on time and on budget.
The Benefits of Integrating Product Portfolio Management and Product Lifecycle Management Software
As essential as product lifecycle management software is, it is not intended to operate in a vacuum. Its full benefits are experienced through integration with other business applications to foster collaboration and enable early detection and resolution of issues.
For the business, project portfolio management software is ideal for gathering critical project elements like ideas, analytics, and resource capacity data on products they want to pursue and prioritize. For IT designers and engineers, product lifecycle management software is built to help them either execute the business plan or work with the business front office to rethink product investments based on their risk assessment or experienced roadblocks. Only with shared data can these checks and balances serve as an intelligent safety measure to prevent delays that increase costs and give competitors the ability to beat them to market.
Integrating product portfolio management and product lifecycle software is now considered a best practice—a necessary merger for a product-centric company, particularly with IoT disruptions and complex products.
Instead of silos between R&D, IT, and leadership, the convergence of product portfolio management and product lifecycle software brings teams together to solve issues earlier in the development process and find the optimal path to strategic success faster.
The end results? Accelerated product development, execution, and time to market, as well as increased quality, compliance, and overall visibility into product data, status, cost, and issues.
Since 2017, Gartner has predicted that the vast majority of product lifecycle management applications “will have partnerships or intrinsic integration with product portfolio management applications by 2020.” While a follow-up report has yet to verify the prediction, all indications point to the fact that organizations have received the message and have already integrated the two applications or are moving in that direction.
The revelation is no surprise. Product portfolio management and product lifecycle management applications complement each other, creating the foundation of a product lifecycle management strategy. Used separately, teams only get half the story and must work twice as hard. But when connected, these two powerful applications answer and document the “what,” “why,” “how,” and “when” of product development.
To see evidence of how this type of integration can help fuel smart innovation and cross-team collaboration consider reading the following:
This whitepaper shows how global organizations used this same adaptive approach turn common product development disruptions into opportunities to innovate.