Product Portfolio Management—Governance for Commercial and Technical Portfolios over Life Cycle

Abstract

Companies face an important question on whether they should allow product portfolio renewal to occur without interference by merely adding new products, or should the renewal be governed based on strategic and financial targets over life cycle? New product development phase is well covered in the product portfolio management (PPM) context, but later product life cycle phases are not covered well in this context. Neither are the different product structure levels adequately taken into account, instead the current PPM only discusses the "product" in general terms. Based on analysing the portfolio related practical challenges in ten case companies, and realising the deficiencies of current PPM theory motivated this explorative multiple case study. The principal results of this study involve revealing the need for a new potential PPM governance model that enables managing commercial and technical product portfolios over life cycle phases. A governance model framework, based on horizontal and vertical portfolios managed by two centralised teams, is proposed. Based on the data, and views of industrial experts, the created new PPM governance model has potential to aid business managers in understanding PPM as an entity that has a role in managing existing product portfolios and their renewal based on commercial and technical portfolios over life cycle as collaboration between business and engineering teams in all organisational levels.

Strategic alignment of product portfolio and supplier management

“…Concerning PPM, the NPD phase is relatively well-researched (Cooper et al, 1999;Kester et al, 2011;Hoole, 2006;Droge et al, 2012); however, the research is more limited concerning the remainder of the lifecycle phases. Only a few authors recognise the other phases in conjunction with PPM (Haines, 2009;Jugend and da Silva, 2014;Tolonen et al, 2014b). This study supports the previous studies with more narrow PPM focus but particularly provides a contribution to the wider consideration of PPM through the product lifecycle and product structure levels.…”

“…Finally, because the business process management literature recognises the need for PPM and business processes alignment over lifecycle phases (Bai and Sarkis, 2012), the performance management dashboard connects the three key product portfolio performance focus areas (Cooper et al, 1999) with the business processes' strategic targets and KPIs. Implementing PPM governance model and ownership over all the product lifecycles and product structure levels are also seen necessary for effective PPM (Tolonen et al, 2014b).…”

From Product to Service Business: Productization of Product-Oriented, Use-Oriented, and Result-Oriented Business

“…In this study, the previous research on product structures concerning commercial and technical views was studied by conducting a brief literature review. Then, the logic of commercial and technical product portfolios [7,10,[13][14][15] was adapted to describe a case product sold as a product-oriented, use-oriented, and result-oriented PSS. Car was chosen as the case product due to its comprehensibility.…”

“…Additionally, understanding the needed capabilities to deliver the offering is seen difficult [5]. Due to lack of mutual understanding of products within companies, there exist inabilities to assess the profitability of individual services [6], which hinders product portfolio decision-making [7]. To be able to compare different PSS alternatives in this regard, the offerings should be modeled in a way that they can be delivered repeatably in a systematic manner with minimum changes.…”

“…In this manner, an intangible service offering, and related service processes, can be productized, making them more systematic and tangible [10]. Reference [7] presented a product structure model that connects the commercial product structure levels, namely solutions, product families, product configurations, and sales items, to the technical portfolio. Sales items are the lowest commercial items in a product portfolio and are used to configure the products according to customer needs.…”