Siemens PLM Software Examines Strategies Revealed in New Product Innovation Agenda 2010 Report

Business Wire, Oct 21, 2008

New Aberdeen Group Reports Consider Product Development Efficiency Critical to Product Profitability and Time to Market across Five Key Industries

PLANO, Texas -- Siemens PLM Software, a business unit of the Siemens Industry Automation Division and a leading global provider of product lifecycle management (PLM) software and services, today responded to the findings of a series of Industry Sector Insight reports unveiled by Aberdeen Group. The reports were based on the findings of benchmark research entitled "Product Innovation Agenda 2010" which identifies best practices for creating innovation and developing it into profitable products. The study found that improving product development efficiency was a top strategy to accomplish this goal. To further this research, Aberdeen looked at product development strategies of five vertical industries and examined key themes for each industry.

Released in October 2008 and spanning Aerospace & Defense, Automotive, Consumer Packaged Goods, High Tech & Electronics and Machinery industries, the research identified key strategic initiatives and challenges specific to each industry and how manufacturers can best implement product development strategies in order to bring innovative products to market ahead of the competition.

"The Aberdeen reports reveal that balancing product performance and streamlining product development processes represent significant challenges for manufacturers across all industries," said Leif Pedersen, vice president, industry marketing, Siemens PLM Software. "Faced with burgeoning pressures to lower product development and lifecycle costs, manufacturers need to streamline and promote product development efficiencies across their organization and transform innovation into a formal repeatable process in order to drive growth and deliver innovative products to market ahead of the competition."

"Our research reveals that improving product profitability is on the top of the executive agenda for almost every industry. However, this is complicated with every industry reporting top challenges that cut into profitability such as shorter market windows and increasing customer cost pressures," said Michelle Boucher, research analyst, Product Innovation and Engineering Practice, Aberdeen Group. "To achieve their profitability goals while addressing the challenges, manufacturers across all industries need to adopt Best-in-Class product development practices that will enable them to promote product innovation, drive profitability and lower product development costs."

A summary of the Aberdeen Sector Insight report findings follows.

Aerospace & Defense

Product development for A&D OEMs and suppliers require heavy investments of money and time before products can be brought to market. In addition, extremely long certification phases can lead to product release delays. The report finds that A&D companies are focused on improving product profitability by continually streamlining product development. The study finds that A&D companies report greater attention to streamlining and promoting efficiency in product development than in product innovation. Aberdeen projects the highest product development growth area for A&D companies is in implementing lean product development concepts, which is expected to rise from 33 percent today to 78 percent in 2010, a 136 percent growth rate.

As these companies look to deliver products to market ahead of competitors, A&D OEMs and suppliers will need to centralize or coordinate innovation decision-making and establish a Product Lifecycle Management platform that seamlessly bridges the gap among all members of their extended enterprise.

Automotive

Faced with burgeoning price pressures from customers and sales, automotive manufacturers report a greater focus on lowering product development costs than other industries. The report finds that automotive manufacturers expect to realize their cost targets through a significant increase in the use of digital simulation. According to Aberdeen, digital simulation and prototyping of manufacturing processes for automotive companies will grow from 25 percent in 2008 to 85 percent in 2010, a dramatic 240 percent growth rate. By looking for ways to predict product behavior virtually, automakers can often resolve issues before bearing the cost of building physical prototypes.

To improve product development efficiencies, automotive companies will need to consider boosting PLM investments, adopting open innovation strategies, leveraging existing information assets for knowledge capture and reuse, and extending visibility to the impact of engineering decisions.

Consumer Packaged Goods

In this highly competitive sector, companies struggle to bring innovative products to market in an effort to secure premium pricing at the shelf. But new products are typically matched very quickly by competitors, placing ongoing pressure on product costs. Therefore it is no surprise that CPG companies report a greater focus on cost reduction than other industries. Consequently, CPG companies are especially focused on improving the efficiency in which they bring new innovations to market. The report finds that CPG manufacturers are more likely than those in other industries to measure innovation with performance metrics, adopt an open innovation process, and identify a C-level executive responsible for product innovation. Aberdeen projects the highest planned product development growth area for CPG manufacturers is with the use of formal product development metrics, increasing from 24 percent today to 74 percent by 2010, a 208 percent growth rate.