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MARKET GUIDE FOR PRODUCT PORTFOLIO MANAGEMENT

Published 3 November 2021 - ID G00753662 - 16 min read

By Sohard Aggarwal, Michelle Duerst, and 1 more

--------------------------------------------------------------------------------

Business growth, a top CEO priority, can be accelerated by continually
cultivating and efficiently delivering an optimal product portfolio. CIOs
mandated to promote business strategy alignment in product ideation and
innovation process must champion adopting a product portfolio management tool.



OVERVIEW




KEY FINDINGS

 * Business leaders lack the overarching visibility and agility to efficiently
   manage product portfolio activities along with timely reporting on critical
   key performance indicators (KPIs).
 * Product portfolio management (product PM) solutions improve product strategy
   decision making, managing resources and timelines, and managing tasks over
   traditional project management tools.
 * Product PM enhances manufacturers’ ability to manage product portfolios. It
   augments the digital product life cycle management (PLM) ecosystem, but does
   not replace it.
 * Traditional ideation processes do not align new product requests with
   prioritized strategies, resulting in overwhelmed R&D teams and missed
   deadlines.




RECOMMENDATIONS

Manufacturing CIOs seeking to improve product development performance and
accelerate digitalization must:
 * Reassess KPIs, business intelligence (BI) and analytics capabilities in
   product development activities’ current product-centric applications. Engage
   with business units to build process maps, identify pain points and define
   metrics to measure product development effectiveness.
 * Differentiate product PM vendors from traditional project management
   solutions by assessing current and future out-of-the-box capabilities that
   allow strategy prioritization and scenario modeling, and incorporate BI,
   analytics and reporting.
 * Deploy project PM solutions to simplify product ideation and portfolio
   selection and improve product success rate by harmonizing product PM software
   with other product-centric applications related to PLM.
 * Accelerate product ideation and time-to-market cycle by enhancing visibility
   into critical KPIs and identifying potential obstacles and strategic
   opportunities to manage resources, project deliverables and timelines.




MARKET DEFINITION

Product PM applications contain many of the mission-critical capabilities needed
for executive and product manager decisions without the risk of changing the
actual product or losing the intellectual property rights of a proprietary
product design.

The product PM solution market includes applications that link, assess and
aggregate product data from siloed product-centric applications.

These applications use advanced analytics to provide actionable dashboards and
reporting for executives and their teams. Aligned with business strategy,
product PM solutions efficiently manage shared resources and deliverables.



MARKET DESCRIPTION

Manufacturing users responsible for product innovation often express confusion
over similar-sounding solutions addressing product PM, PLM and project
management used for product-centric activities. Manufacturing CIOs can
distinguish between them by their scope, objective, focus, user group and, of
course, capabilities.

Product PM applications ensure the product strategy’s alignment to both
short-term and long-term business objectives, with the ability to model changes
for agile project management, as shown in Figure 1. A single product PM
application can govern multiple product-centric applications with project
management capabilities, but it must be harmonized with other applications.

Figure 1: Product Portfolio Management Builds on Project Management to Provide
Strategic Objectives and Focus






Product PM applications can support simplification, standardization and
navigation of complex portfolio selection, besides accelerating time to market,
budget optimization and meeting project timelines.
Preconfigured constraints provide objective, automated assessments based on
current and past product performance from multiple applications in the digital
PLM platform. They reference data points, such as:
 * Costs
 * Resources
 * Workflows
 * Timelines
 * Revenue
 * Inventory


The end result is an objective assessment of each and every idea, with the
ability to reduce the number of manual reviews to just those with the highest
scores. Machine learning continually updates the algorithms based on changes to
the data points and performance in the market.

But a product PM application cannot replace a PLM application, especially for
R&D or regulatory team members. PLM capabilities include the ability to analyze
product designs and formulations to ensure regulatory compliance, while the
product PM provides visibility to completed product validation.



MARKET DIRECTION

Product PM’s capabilities to define, prioritize and assess corporate strategies
exist only in niche vendor offerings, as shown in Table 1.



TABLE 1: PRODUCT PM PROVIDES CAPABILITIES BEYOND TRADITIONAL PROJECT MANAGEMENT

Enlarge Table
Capability
Use
Primary Benefits
Strategies
 * Create a strategy hierarchy with supporting programs.

 * Evaluate new ideas with alignment to the most strategies or highest-priority
   strategies.
 * Assess current performance based on specific strategies (reports, dashboard
   views).

Ideation
 * Formalize ideation processes with structured data forms.
 * Automate assessments based on predefined constraints for a team member’s
   initial review, including:

- Strategy alignment
- Costs
- Available resources
- Probability of success (based on similar products)
 * Reduce the number of manual reviews needed, and expedite the process.
 * Expand idea contributors by using online structured data forms.
 * Allocate resources for test phases to determine success.
 * Reduce the bottleneck in R&D.
 * Eliminate costly pet projects.

What-if or predictive modeling
 * Model scenarios using machine learning to refine algorithms based on current
   and past product or project performance.
 * Implement a sandbox environment to model all activities without impacting
   current workflows.

 * Increase success rates by continually refining assessment criteria.
 * Visualize the impacts of changes across timelines, resource constraints,
   priorities, strategies, and overall costs or revenue.

Resource allocation
 * Allocate resources for the entire product, based on skill set, all costs,
   project deliverables, strategy alignment and priority.

 * Optimize revenue by identifying higher-priority or higher-potential projects.
 * Reduce the product cost by allocating the lowest required skill set.

KPIs, BI, analytics and reporting
 * Use the existing library, or configure reports and widgets for status
   updates, notifications and alerts to potential issues.

 * Identify potential issues before they become costly delays.
 * Reduce the number of meetings with instant status updates.

Profit and loss (P&L) and funding
 * Analyze past, current and future revenue or costs.

 * Identify low performers to retire (SKU optimization).
 * Compare new ideas with the performance and success rates of past similar
   products.
 * Project the impact of new products on current product lines
   (cannibalization).
 * Evaluate current products or projects in production, with the ability to stop
   and reallocate funds to other candidates with higher potential (kill or no
   kill).




Source: Gartner (November 2021)

The users of product portfolio management (PPM) solutions need:
 * Preconfigured, personalized and integrated solutions tailored to their
   specific business needs, eliminating the need to manage multiple PM tools
 * Integration of advanced-analytics-based tools to generate role- and
   context-specific views
 * Improved user experience with an easy-to-navigate user interface (UI) to
   promote natural learning, ability to focus on modules and views, and support
   self-service
 * Increased visibility into dependencies, drive overall portfolio refinement
   and measure product performance in real time
 * Integration with other collaboration tools and applications to boost
   productivity, streamline workflow validation and centralize related data


Best-in-class product PM applications deliver:
 * Cloud-based solutions that are secure, can be easily configured based on use
   cases and scaled according to business needs
 * Open integration standards and APIs to deliver composable solutions that can
   be deployed as a subset of other large-scale transformation initiatives, such
   as PLM
 * Integrated decision-making tools, gated-project governance and dashboards
   updated in real time for reporting and risk mitigation
 * Embedded support for more collaboration tools, networking applications, and
   enhancing user interfaces to improve adoption and reduce training needs
 * Generative artificial intelligence (AI) capabilities, including integration
   of bots and machine learning (ML) platforms


ERP and PLM vendors have developed or acquired project management (project PM)
applications to augment their incumbent solutions, but lack strategic
capabilities. Read more in Product Portfolio Management: Aligning Strategies,
Ideation and Innovation.


MARKET ANALYSIS

The 2021 Gartner CEO and Senior Business Executive Survey found manufacturing
respondents emphasized on accelerating growth, improving profitability and
focusing on corporate-related activities among their top business priorities.1
In FY21, 70% of the responding CEOs are expected to increase investment in R&D
and innovation compared with FY20, and 69% in building digital capabilities.
Digitalization and e-commerce are viewed as the new technologies that will most
significantly impact their industry in the next three years. The survey further
highlights that increasing digitalization and improving efficiency are top
priorities for CIOs from a CEO’s perspective.

As shown in Figure 2, strategies help differentiate what is important and how
resources should be spent. Product PM solutions must be harmonized with
different applications as part of the digital PLM ecosystem to deliver
exponential value.

Once data points and workflows are harmonized, product PM can:
 * Provide robust evaluation of ideas that generate more concepts for the
   pipeline, with online structured data forms accessible by all team members,
   suppliers and even customers.
 * Govern product activities across multiple applications, including costs and
   alignment to long-term corporate initiatives.
 * Meet demands for configurable reporting, with the ability to aggregate,
   compare and combine regions, product lines, strategies, resources, teams,
   plants and so on.
 * Create digital threads from product ideation to managing requirements that
   can be used later to generate product audit logs to provide traceability from
   concept through product retirement.


Figure 2: Strategies Are the Backbone of Product Portfolio Management






The 2022 Gartner CIO and Technology Executive Survey shows that, while IT
budgets are expected to increase on average by 3.3% in asset-intensive and by
4.5% in the consumer goods subindustry, enterprises will rebalance their
technology portfolios.2 And there is an increasing demand in the market for
cloud-based offerings.

The product PM market is showing three main trends:
 * Cloud-based solution offerings: Most vendors in the PPM market are offering
   cloud-based solutions to gain maximum profits. Cloud systems make better use
   of technology and enable the sharing of infrastructure among multiple users
   and offices, offering a greater level of scalability and reducing the ongoing
   cost of implementation and continual development. The following benefits are
   expected to drive the adoption of cloud-based product PM solutions across
   verticals:
   * Cost savings compared with internal hosting
   * Minimal requirement for internal IT support
   * Quicker to get a system up and running
   * Expandable/scalable resources
   * Easy-to-scale-up security
   * The system can be configured to fit needs
   * Availability and ease of deployment of tools
   * Agility, flexibility and innovation
   * Reduce time to market
   * Less capital expense
   * Increase collaboration within team
   * Integration of AI and ML capabilities


 * Inclusion of analytics capabilities: The market is moving toward a more
   data-driven product PM solution, which empowers companies to be more agile
   and responsive to market conditions. Product PM centralizes all the
   information and processes needed to identify, prioritize and manage products.
   Integration of AI and ML capabilities, in addition to advanced analytics, can
   provide powerful analysis, reporting and dashboard capabilities, and improve
   transparency and decision making about product priorities and resource
   allocation in various scenarios.
 * Composable solutions: Manufacturing enterprises must look for solutions that
   are delivered preconfigured and tailored to their specific business needs,
   guiding them toward best practices. A product PM solution built on open
   architecture and APIs can be integrated with other product-centric
   applications, enabling mass personalization, bundling of partner products,
   superior channel experience and optimal leveraging of the ecosystem. See Note
   1 to understand what makes composable business architecture (see Note 2).
   Manufacturing CIOs can significantly increase the ROI for a product PM by
   harmonizing with other applications in a digital PLM ecosystem, as shown in
   Table 2.


TABLE 2: INCREASE ROI OF PRODUCT PM SOLUTION IN A DIGITAL PLM ECOSYSTEM

Enlarge Table
Application to Harmonize
Primary Purpose in Digital PLM Platform
Benefits in Product PM From Harmonization With the Digital PLM Platform
Application
ERP




 * Act as the financial system of record to PLM for costs and resources.
 * PLM acts as the system of record to ERP for synchronizing the bill of
   materials (BOM).

 * Configure reports based on unique constraints to aggregate financial data
   from ERP. For example, a specific product line’s performance can be
   evaluated, based on strategy alignment and sales within a defined region.
 * Reduce overall resource costs by evaluating required skill sets, current pay
   grade and defined timelines.

PLM, product information management (PIM) and product data management (PDM)
 * Provide advanced capabilities to design and verify product content data, such
   as designs; formulations; and (EH&S) profile.
 * Provide reporting and analytical tools to:
   * Validate compliance
   * Maintain version control
   * Generate required documentation, such as specifications and BOM used to
     manufacture products
   * Validate product safety and sustainability claims

 * Generate product requirements from the approved ideas.
 * Initiate change requests by activities from other applications, such as
   failed tests.

Market research
 * Report on current trends and incorporate other market data, like competitive
   analysis, global product potential and voice of the customer.
 * Identify emerging trends with the greatest ROI potential.

 * Provide new concepts to the ideation pipeline, define product positioning and
   target customer profile.

Predictive costing
 * Estimate the total cost of a product from R&D, suppliers and production;
   delivery logistics; and any other costs related to the sale of the product.

 * Refine product success by modeling scenarios based on total costs.
 * Evaluate whether higher costs can be supported by the market.

Sales and operations planning (S&OP) and CRM
 * House customer profiles to create product requirement templates for faster
   fulfillment and notification.

 * Create a product pipeline with ideas from customers and sales.
 * Provide product status updates and alerts from and to applications.
 * Project the impact on revenue, costs and delivery timelines, based on
   activities and status updates in S&OP.

Quality management system (QMS)
 * Establish a defined protocol to conduct quality checks.
 * Log issues, and document corrective actions for greater quality control and
   traceability.

 * Create workflows and notifications, based on QMS results.

Manufacturing execution system (MES)
 * Reference BOM to manufacture products, while documenting all processes and
   activities for traceability.

 * Create variance alerts that go to product managers and the executive team,
   based on deviations from the defined parameters.

Supply chain management (SCM)
 * Provide inventory, specifications, certifications and delivery updates for
   purchased materials.

 * Update product costs and timelines based on real-time updates of deliveries,
   product costs and required documentation.
 * Create visibility into current inventory overages or shortages as part of the
   optimization (identifying new ideas that may alleviate the issue).

Labeling and artwork management
 * Provide product content data on the pack, the pallet or online. Capabilities
   include version control by region, translation, product line and changes.

 * Use online labeling information as a platform for engaging consumers to
   contribute to new product ideas or for evaluating the product’s web
   analytics.




Source: Gartner (November 2021)

The specialty product PM market is niche, and there are only a few technology
providers. Recently, few ERP solution providers and PLM software providers
competing primarily in markets other than product PM have introduced some
capabilities of product PM, including advanced analytics and reporting in their
offerings.
These providers include:

 * Speciality product PM vendors: Provide integrated capabilities from managing
   product ideation to retirement through a stage-gate process. Foundational
   capabilities that differentiate them from other solutions include
   requirements management, scenario modeling, advanced analytics, reporting on
   critical user defined or prebuilt KPIs in alignment with overall business
   strategy.

 * ERP and PLM solution providers: ERP software primarily automates and supports
   a broad range of administrative and operational business processes. PLM
   software integrates processes to design, build and maintain products
   throughout their life cycles, and includes capabilities such as formulation
   or managing BOM, supplier collaboration, regulatory and compliance
   management, and enterprise labeling. These solution providers have integrated
   capabilities, like reporting and dashboards, but may lack scenario modeling,
   creating strategy hierarchy, or profit and loss funding.

 * Technology platform providers: There are some vendors that provide other
   technology platforms and have project portfolio management software that
   includes some of the capabilities of specialty PM vendors. But they are not
   considered in this Market Guide.


This Market Guide doesn’t include providers of project management solutions. As
noted in The PPM Market Now Supports Strategic Portfolio Management and Adaptive
Project Management, the project PM market is evolving to support expanding
technology needs of enterprises engaged in digital business.

As the project PM market continues to polarize into strategic portfolio
management (SPM) and adaptive PM and reporting submarkets, some of these vendors
are focusing mainly on adaptive PM and reporting technologies. Others are
increasingly innovating their products to support portfolio management and
decision making. Many of these vendors are also acquiring either portfolio
management or adaptive PM, and reporting vendors and products, to broaden their
inventory of PPM technology offerings.


REPRESENTATIVE VENDORS

The vendors listed in this Market Guide do not imply an exhaustive list. This
section is intended to provide more understanding of the market and its
offerings.
This Market Guide provides Gartner’s initial coverage of the market and focuses
on the market definition, rationale for the market and market dynamics.

Table 3 lists vendors with product PM offerings. These are primarily niche
providers (see Note 1).



TABLE 3: REPRESENTATIVE VENDORS IN PRODUCT PORTFOLIO MANAGEMENT

Enlarge Table
Vendor
Product
 GenSight
GenSight
 One2Team
One2Team
 Planisware
Planisware
 Planview
Planview Enterprise One
 Sciforma
Sciforma
 Sopheon
Accolade



Source: Gartner (November 2021)

Table 4 lists PLM or ERP vendors that have acquired or are developing portfolio
management capabilities. These have been project PM-based capabilities, not
product PM-based capabilities, and extend beyond traditional PLM project
management capabilities.



TABLE 4: REPRESENTATIVE ERP AND PLM VENDORS OFFERING ADDITIONAL PORTFOLIO
MANAGEMENT FUNCTIONALITIES

Enlarge Table
Vendor
Product
 Infor
Birst
 Oracle
Primavera, Product Life Cycle Management
 SAP
SAP Enterprise Portfolio and Project Management



Source: Gartner (November 2021)

As noted earlier, the project PM market evolves to include different
capabilities. The Market Guide for Adaptive Project Management and Reporting and
Magic Quadrant for Strategic Portfolio Management provide more information on
the vendors and capabilities this software has.



MARKET INTRODUCTION

The vendors named in this guide were selected to represent the types of
solutions discussed in the Market Analysis section.



MARKET RECOMMENDATIONS

Manufacturing CIOs seeking to accelerate digitalization must:
 * Deploy product PM applications to govern product life cycles by harmonizing
   applications, mapping data points and defining automated cross-application
   workflows.
 * Harmonize product PM application with other product-centric applications by
   selecting solutions built on composable business architecture, open
   integration and APIs that tailor solutions based on their needs.
 * Prioritize system implementation by significance, urgency and available
   funding to create a digital PLM platform. ERP and PLM are the backbone for
   product content data and should be a high priority.
 * Improve traceability from ideation, creation, refining and retirement phases
   by defining specific workflows for ideation, requirement generation and
   change management procedures that can be tracked for future product audit
   logs.


EVIDENCE

1 The 2021 Gartner CEO Survey: The Year of Rebuilding shows that, compared with
2020, the simple business priority of technology-related change went up.
Mentions of “digital” rose, and commitment to increase investment in digital
capabilities rose a little, while other investment increase intent fell back.
2 The data is based on the 2022 Gartner CIO and Technology Executive Survey,
which provides key insights on IT investment priorities across the manufacturing
industry.


NOTE 1: REPRESENTATIVE VENDOR SELECTION

The vendors included in this Market Guide were selected to represent those with
products as described in the Market Direction section, as well as the
functionality discussed in the Market Analysis section. In addition, their
products are marketed, sold and used as stand-alone product PM products or as
modules in larger suites. Finally, the listed vendors have achieved some degree
of visibility and traction in this market.


NOTE 2: COMPOSABLE BUSINESS ARCHITECTURE

Composable business architecture is a framework for the digital Industrial Age
to maximize the ability to build, assemble and reassemble business elements to
rapidly seize market opportunities and respond to disruption and threats while
being resilient.
 

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