Did you know it takes anywhere from tens of thousands of dollars to a few million dollars to successfully develop a marketable product? Product development is an incredibly complex and time-consuming process that requires a significant amount of investment and attention on the part of a company. There are dozens of considerations that can go into optimizing the development of any one specific product.
In fact, the actual timing of the product can have a huge impact on the expected profit. McKinsey & Co. report that “High-tech products that come to market six months late, but on budget, will earn 33% less profit over five years. In contrast, coming out on time and 50% over budget cuts profits only 4%.” It should be surprising to most that a product’s merits aren’t the only determining factors behind market success.
So, are there any methods that can actually help you get a grip on the fickle field of product development long enough for both your company to get its bearings? SAP SuccessFactors provides you with a number of tools and resources that allow you to manage, guide, and rally your company’s efforts through HR. With SuccessFactors, you’ll be able to get a bird’s eye view how product development is proceeding in your company.
Applying Cost-Benefit Considerations to Product Development
Calculating or making models of costs and benefits are a little more involved when it comes to product development because it’s hard to capture all the implicit costs. For instance, the cost of going over-budget on a product might be offset by the increased profit that comes with the product being released on time. There are two major perspectives that your company should take to break down and better illuminate these cost-benefit considerations.
- The amount of money actually spent to develop a product
- The effect of time to market on the value of the new product investment and the cost that inefficiencies have for the product development process
These perspectives effectively split how we look at our spending into direct and time-dependent costs. In other words, the major ways we can evaluate the product development process is how much it costs for the raw materials and labor combined and through the market details of the product. Again, the biggest unseen variable here is that notable reductions in time to market also produce notable gains in the overall return of the product development effort.
The Team-Dependent Nature of Product Development
Another thing to be aware of is the fact that product development is an effort that demands a team’s cooperation and collaboration. Because different departments (and sometimes even outsourced work) in a company may be called on to design a specific aspect of a product, not many people are exposed to just how much cooperation, planning, and other groups are involved in the development process. The reality is that the personnel requirements of product development are often more extensive than you might expect.
- An engineering team
- Senior management
- Backup engineers and technicians
- Preparation for manufacturing
- Prototypes and pilot runs
How do we ensure that this lengthy and sometimes disconnected process goes over smoothly? How do we account for the fact that communication among all teams may not be adequate? SuccessFactors offers several tools to address this infrastructural and organizational challenge to the product development process.
SuccessFactors Tools and Team Optimization
With SuccessFactors Workforce Planning and Analytics, most companies show 72% less manual reporting because the HR software handles planning, monitoring, and simulation. The principal application that Workforce Planning on product development lies in its ability to address resource gaps that impede success by solving strategic and operational planning inefficiencies.
Another approach that you can take to dramatically improve your team’s flexibility and adaptability when it comes to tackling product development issues is by streamlining the training process. SuccessFactors also offers a way to accomplish this through its Learning and Development module. This module is plays a vital supplementary role in optimizing team processes by improving workforce skills, increasing compliance, and even aiding in efforts to extend integration to include external learning.
The success of your company’s product development process depends on a cost-benefit analysis of the resources needed to initiate and follow through on the eventual market delivery of that product. Because a significant portion of how profitable a product is depends on its time to market, organizing an effective and efficient team also makes a difference when it comes to the cost-benefit consideration. SuccessFactors allows you to keep track of your team, as well as mobilize your team members to fit more flexibly with the strict demands of a product development schedule. These benefits to team collaboration will help you achieve your financial targets more consistently.