Detecon Opinion Paper Next-Generation PLM - Strengthen Competitiveness in The Telco Business: An Introduction To The 4-Pillars Approach of Integrated Product Lifecycle Management

> Opinion Paper
Next Generation PLM –

Strengthen Competitiveness
in the Telco Business
An Introduction to the 4-Pillars Approach
of Integrated Product Lifecycle Management
2008 / 10
www.detecon.com
Next-Generation PLM
Table of Contents
1 Executive Summary............................................................................................. 4
2 The Shift towards a New PLM Paradigm............................................................. 5
2.1 The Increasing Relevance of PLM .............................................................. 5
2.2 Requirements on an Integrated PLM Approach .......................................... 9
2.3 Spotlight on Multi-Lifecycle Management .................................................. 10
3 Integrated PLM Framework for the Telco Business .......................................... 12
3.1 PLM Process and Organization ................................................................. 13
3.2 Product Meta-Model .................................................................................. 18
3.3 PLM IT-Architecture................................................................................... 21
3.4 Lifecycle Value Management .................................................................... 23
4 The Proof of Next-Generation PLM ................................................................... 25
4.1 The Challenge ........................................................................................... 25
4.2 The Task.................................................................................................... 25
4.3 The Solution .............................................................................................. 25
4.4 The Approach ............................................................................................ 25
4.5 Benefits for the Client ................................................................................ 27
5 Conclusions & Recommendations..................................................................... 28
6 Outlook: Study ‘Next-Generation Telco PLM 2009’........................................... 30
7 Reading on ........................................................................................................ 31
8 The Authors ....................................................................................................... 33
9 The Company .................................................................................................... 34
Opinion Paper 3 Detecon International GmbH

Next-Generation PLM
1 Executive Summary
The telecommunications market has faced a great variety of challenges over the past five
years. Tough competition, price war and regulatory risk exposure have been leading to
decreasing price, declining revenues and EBITDA margins.
Product Lifecycle Management (short: PLM) is more and more regarded as a key to
business excellence. Due to market dynamics and the rapid global availability of new
technologies, telco providers have finally started to realize the necessity for holistic PLM as a
highly critical business success factor for managing the increasing product complexity.
Complexity, and the inability of an organization to manage it adequately, is a major obstacle
for telco providers to proceed on their path towards operational excellence. The emergence
of multi-layered product structures, as well as industrialization trends, call for new
management approaches. Arising challenges have to be alleviated by an integrated PLM
approach that encompasses a company’s product diversity, innovation efforts, globalization
issues and continuously changing legal framework.
Over the past few years, consultants of the Telco Effectiveness & Product Lifecycle
Management Group at Detecon have worked on the development of an integrated PLM
concept that was successfully implemented in various projects within the
telecommunications industry worldwide.
The objective of this paper is to provide an overview on the 4-Pillars approach of integrated
PLM which, through its integrated and holistic nature, is capable of alleviating the multiple
dimension of PLM complexity. The foundation of the approach is a process view put across
four pillars of PLM that are to be integrated in a holistic sense. These include 1) PLM
Process and Organization, 2) PLM Meta-Model, 3) PLM IT-Architecture and 4) Lifecycle
Value Management. The model is based on best-practice experience from the telco industry
and the adoption from existing frameworks from industries with a higher PLM-maturity level
such as the automotive or manufacturing industry.
In order to make the effects of our approach quantifiable, Detecon has defined a set of PLM-
relevant success factors and KPIs which enables our clients to evaluate the value of the
implementation of the 4-Pillars approach. Currently, the Telco Effectiveness and Product
Lifecycle Management Group of Detecon, in cooperation with the Research Institute for
Operations Management at the RWTH Aachen, are conducting an international expert study
on the status quo and perspectives of PLM in the telecommunications industry. The general
objective is to validate and evaluate interdependencies between PLM parameters, success
factors, and strategic company goals.

Next-Generation PLM
2 The Shift towards a New PLM Paradigm
2.1 The Increasing Relevance of PLM
Due to the dynamic nature and momentum of the telecommunications industry, there are a
variety of different market trends and developments that leverage the relevance of PLM.
Reality has hit providers harshly, as they have to deal with the evidential intensification of
competition, decreasing market prices, increased customer expectations regarding
functionality and individuality of products, shortened product lifecycles and order lead time,
simply in order to achieve and sustain competitiveness. The following graphic illustrates the
aforementioned market trends and developments.
Customer Migration Number of Competitors (Global Markets)
Quality Revenue
+50% +150%
Pressure Pressure
1990 2000 2010 Source: Mercer Management Group 1990 2000 2010 Source: RegTP, 2004
Duration of the Product Lifecycle Achievable Market Prices
Innovation Cost
-50% -50%
Pressure Pressure
1990 2000 2010 1990 2000 2010

Source: Christensen, The Innovator’s Dilemma, 2003 Source: Federal Communications Commission, 2004
Figure 1: Market Trends
These challenges share a common evolutionary path due to recent technological and
market-driven advancements, and immensely increased complexity. As a result, they have to
be included in Next-Generation PLM considerations.
In the following sections, the main business drivers with the greatest impact on the telco
business model are introduced. An effective PLM implementation helps to manage the
challenges that these drivers impose on the industry.

Next-Generation PLM
2.1.1 Management of the Extended Product
The dichotomy between tangible goods and immaterial services is subject to change. This
development towards an extended product can be observed in both, telecommunications
industries, as well as in the traditional industries (i.e. manufacturing or automotive).
An exemplarily critical success factor in the manufacturing industry is the ability to provide
more suitable services along with the tangible good. The combination of tangible and
intangible attributes in terms of the extended product increases the complexity in managing
the product lifecycle.
The extended product (compare Thoben et al. 2001) can be characterized by the fact that it
consists of a bundle of components/modules that in sum create the customer benefit - as this
holds particularly true for products offered in the telecommunications sector. Each module
embodies its own lifecycle, a high variance in functionality, and implies an additional product
complexity in terms of module design, module management and module elimination from the
product.
2.1.2 Globalization and Emerging Technologies
Global and deregulated markets result in global competition that every company is
confronted with. This result in a shift from a suppliers’ market to a buyers’ market in which
the customer has to be regarded as the focal point. This business driver forces companies to
follow either a cost- and efficiency-leadership strategy or a differentiation strategy on a global
scale.
Q In order to perform in the cost-leadership role, companies not only have to
implement efficient processes for the development of complex products, but
also need the ability to efficiently handle the order management process.
Simultaneously, companies have to cooperate with numerous business
partners resulting in significantly higher coordination efforts.
Q A product differentiation strategy implies processes that ensure short time-to-
market on the one hand, and a high degree of freedom in process definition for
increasing the effectiveness of innovation activities on the other hand.
Due to the rapid developments in the telecommunications industry and shorter product and
service lifecycles, providers are forced to increase their level of flexibility and agility. From a
PLM perspective, emerging technologies have to be assessed thoroughly as they present
the fundamental basis for the introduction and launch of new services, applications and
product opportunities. However, it is vital to maintain a healthy balance between complex
lifecycle management and innovation initiatives to maintain competitive advantages, protect
market position and remain profitable.

Next-Generation PLM
Technologies shape customer expectations and requirements that have to be addressed by

the offered services. The concretion of such abstract concepts like miniaturization, seamless
interaction or Evernet, provides enough space for carriers to pursue various product
development opportunities.
In the course of the telecommunications industry turning into a global marketplace, a

possible internationalization of services should not be disregarded. It is highly important to
manage lifecycles of product modules on a global scale as increasing customer expectations
call for the flawless functionality of end-devices all over the world. The strategy of
international cooperation and service offering is to be put in place, and coordinated with
respect to the integrated PLM-approach.
2.1.3 Legal Frameworks and Organizational Impact
Increased regulations such as safety, environmental and product reliability will further
influence a company’s PLM process. Especially the resulting effort for ensuring traceability
will have an impact. Traceability has two dimensions in the PLM context.
First of all, it is related to the PLM process itself. Effective measures have to be put in place
in order to ensure the seamless flow of transactions to identify where material misstatements
due to error or fraud could occur (Sarbanes-Oxley Act).
Further, traceability in the order-delivery process is about the tracking of individual product
units or components. Legal frameworks like the TREAD Act (for the automotive industry in
the U.S.) or REACH (for the chemical industry in EU) can be subsumed under this
dimension. Affected companies have to arrange the implementation and integration of these
regulations in the existing processes at the lowest possible lifecycle costs.
Another aspect of this business driver describes the fact that service providers have just
started to realize that the vertical alignment of organizational business units on the basis of
network technologies for fixed, mobile voice, data and content services, presents a mere
relict only suitable for the historical context in which those services had been in fact
separated from one another. From a Next-Generation perspective, the necessity for each
independent unit to assume the role as a network, service and content provider proves to be
highly inefficient.
As historically bundled monopolies got unbundled in the course of market deregulation

process, providers now have to meet the challenge of re-bundling their units horizontally
along the entire integrated value chain with a stringently implemented customer orientation
instead of technology orientation. The result is a functional layer-oriented organization
(NetCo, ServCo, SalesCo) similar to traditional industries such as automotive or
manufacturing.

Next-Generation PLM
In closing this section, following table summarizes the business drivers:
Strategy Impact Impact on Processes Impact on IT

Business Less vertical integration, Collaborative PLM-process Data exchange
Driver 1: more horizontal with defined interfaces standards
Mgmt. of integration of the value Process readiness for the IT-representation of
Extended chain management of complex complex products
Product Focusing on product products and services Appropriate fulfilment of
modularization and the information need
utilisation of product and
service platforms to
enable the re-use of
components
Business Commitment to either a Improvement in the Enterprise Application
Driver 2: product individualisation process automation Integration with external
Globali- or product Inter-company wide business partner
zation standardisation strategy process standards Support of the process
Focus on innovations execution by providing
appropriate IT-
functionality
Business Comply to regulations Support for traceability of Management of product
Driver 3: e.g. Sarbanes Oxley Act, products by standardised related information
Legal TREAD Act and well documented during the whole
Frame- processes lifecycle
works Support for traceability of
processes
Table 1: Business Drivers and Their Impact

Next-Generation PLM
2.2 Requirements on an Integrated PLM Approach
Cost reduction initiatives and revenue generating strategies are vital for the achievement of
common business goals in a time marked by tough competition and price reduction.
Management aspects such as the proper positioning in the market, innovation initiatives,
introduction of new products, and customer satisfaction combined with the cost efficiency
measures, are becoming more important than ever.
PLM can be defined as the activity of managing a company’s products across the entire
lifecycle, from the early stages of conception to the final withdrawal or recycling of a product.
By this definition, a strong interrelation between the value creation process and PLM can be
deduced.
In order to support such value creation process, an integrated PLM approach has to be
followed, which holds the mandate to encompass and optimize all aspects required to
leverage the efficiency and effectiveness of the company’s PLM.
An integrated PLM approach is necessary to counter the multitude of challenges placed on

telecommunications companies. Such an approach is characterized by the consideration of
process models and consistent IT-support, as well as by the ability to structure products or
their components in a form that provides commonality on product level in particular (such as
by means of same parts management as an analogy from the automotive or manufacturing
industries), but also on process and technology level to support the provisioning of such
products across their lifecycle. With singular optimization of PLM processes without any
consideration of the IT-architecture for instance, such implementation efforts would have to
be regarded as incomplete, eventually leading to suboptimal results.
Taking the current globally changing business environment into account, PLM can be
considered as a strategic weapon for enabling companies to provide an additional value to
customers, and thereby gaining a competitive advantage over their competitors. Especially in
the telecommunications industry which experienced a significant change in its environment
over last five years, PLM is considered to be essential for coping with shortening innovation
cycles.
The key to achieving innovation and customer satisfaction at reasonable costs is a holistic
view out across the company and its processes, enabling an enterprise organization to meet
the new challenge of managing multiple lifecycles for providing one product to the customer.
Until now, no such holistic PLM-approach addressing the real challenges of the modern
business environment in the realm of telecommunications has been developed.

Next-Generation PLM
2.3 Spotlight on Multi-Lifecycle Management
The aforementioned challenges pressure telecoms to achieve operational excellence while

providing mass-customized services to an evermore demanding customer front at the same
time. The increasing relevance of the concept of product individualization results in two
complexity levels. On one hand, customer expectations become more complex on a global
scale; on the other hand, internal complexity increases as well since heightened product
expectations lead to more complex product structures with varying lifecycles and
functionalities that have to be encountered with the efficient and effective management of
multiple module lifecycles.
Multi-Lifecycle Management (MLM) can be considered as a key challenge within the PLM
context that holds especially true for the telecommunications industry due to the multi-
layered nature of its products. For the purpose of this paper, we define MLM as follows:
MLM is the activity to manage a company’s extended product that is

characterized by consisting of product modules with individual lifecycles,
across the complete product lifecycle in order to provide the customer
with a unified product experience.
Providing a unified experience to the customer, requires the synchronisation and

coordination of multiple lifecycles that in sum are perceived as one product from the
customer perspective. According to the TM Forum 2007, this synchronization has to occur
on several layers (Figure 2).
Product Layer
Infrastructure
Lifecycle
Variance
Service
Lifecycle
Device
Lifecycle
Application
Lifecycle
Perceived
Product
Product (v1.0) Product (v1.5)

Time
Figure 2: MLM in the Telecommunications Industry

Next-Generation PLM
By considering MLM as an increasingly important aspect of an integrated PLM approach,

following potentials can be leveraged:
Q Realization of mass customization improving customer satisfaction by meeting
the exact micro segment-specific customer requirements
Q De-coupling of development process and thereby reducing internal complexity
Q Increased internal efficiency through synchronization of multiple layers from a
consolidated perspective
In the following chapter, the 4-Pillars approach will be introduced along with relevant
implementation principles for each layer.

Next-Generation PLM
3 Integrated PLM Framework for the Telco Business
The integrated PLM-Approach consists of four components as depicted in the figure below.
4-Pillars Approach
PLM Process and Product PLM IT Lifecycle Value
Organization Meta-Model Architecture Management
Increases efficiency of Ensures product and
Builds the basis for the
Defines the overall product PLM-process by the service quality aligned with
PLM success by
structure and enables provision of best-of-breed requirements of the
facilitating an operational
effective management of software components to relevant market along with
excellence to the highest
product components support product consistent reporting
degree
development infrastructure
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Product Configuration from the manufacturing perspective
Class.
Gates
Internal Production
Decision Support
Approval by the product board General Scalable System
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Solution Area
Optional
Gates
Fuzzy
space
View
Approval by the product board via Fuzzy gates Strategic Resource

CAS Value Management
Fix
Management Value
Defined
Bounding
Gate 4 Gate 5 Gate 6

Solution Oriented
Process
Box
PLM-
space Services
Bounding Box Approval by the Product Board Obligatory Product-Development Marketing Management Product Exit Management Portfolio
Alternatives
Management
Operational Support System
Alignment
1 Innovation 2 3 4 5 6 7 Multi-Project- Product-Data-Management
Marketing Collaboration Tools
Evaluation Planning Implementation Launch Exit Management System System
Management Management
Product Configuration from the customer perspective
Market & Market roll- Implement Monitor &
Market
persp.
Product Product
Product description
Management report
Workflow- Management System

Mailbox
Firewall
capability out market manage Market exit

Confer-
gement
Lifecycle Value
SPAM-
Mana-
Modules
ence
Sales & market
filter
launch Service Modeling System

Detailed design
ID-
Single Double Triple Quadruple

Business plan
Launch report
analysis planning plan KPIs

Basic Module Play Play Play Play
Idea paper
Management
Technic.
Flatrate
Develop Technical
Tarif A
Tarif B
persp.
Monitor & Additional Module Cus_

view
QoS
Technical Technical Technical Mobile

technical implementa ens. product Seg1
evaluation
concept tion
Go-Live success exit Services
Cus_ Integration-layer (SOA)
PLM
kBit/s
kBit/s
kBit/s
Customer Needs Reporting and

100
200
400
Business Adjust Monitor Control Finalize … Data Seg2

persp.
Financial
Fin.
case business business business business Business Business Applications Business

… Cus_
rating
Management Controlling
Hotspot
WLAN
introduction case case case case Seg3 Applications Applications

CuDA SCM ERP CRM CAD
Voice (Supplier) (Customer)
Scope
Q Definition of overall process

model Q Reduction of product Q Enabling higher degree of
Q Definition of product portfolio
complexity process automation
Q Classification of business Q Enabling Lifecycle Costing
activities and their Q Introduction of modular Q Seamless integration of
Approach
organizational purposes product structure Information
Q Facilitation of consistent
Q Description of roles and Q Facilitation of product Q Provision of consistent IT-
reporting infrastructure
responsibilities components reuse based view of the product
Figure 3: 4-Pillars Approach of Integrated PLM
The foundation of the 4-Pillars approach is a process view put across four dimensions of
PLM that are to be integrated in a holistic sense. Extensive consulting experience with PLM
implementation and optimization projects has shown that the actual pain points for
telecommunications companies circle around these four major areas:
Q PLM Process and Organization – facilitating the execution of the collaborative
process (efficiency goal) and aligning the activities with the strategic goals of
the company (effectiveness goal)
Q Product Meta-Model – enabling product component reusability by defining
constraints and rules for decomposing the product functionality into meaningful
modules with coherent data models
Q PLM IT-Architecture – increasing the PLM process execution efficiency by
providing a best-of-breed framework of IT-components and their interrelations
Q Lifecycle Value Management – ensuring alignment between product and
service portfolio and market by continuously identifying the requirements and
demands of actual and potential markets
These pillars are subject to further elaboration in the following sections.

Next-Generation PLM
3.1 PLM Process and Organization
Companies in the service industry should take a disciplined, analytical approach for the
development of new products relying on targeted customer input. The main design goals of
this approach is to facilitate the execution of this collaborative process (efficiency goal) and,
equally important, to align the activities with the strategic goals of the company
(effectiveness goal). In the following sections, PLM process variants and principles are
introduced which present the foundation of the process pillar of our integrated PLM
approach.
3.1.1 PLM Process Variants
Long-living products with a limited variance in their product structure along their lifecycle are
becoming less and less relevant. Those products have been replaced by a new type of
product: the extended product. It is characterized by the fact that it consists of a bundle of
components/modules, each with a different lifecycle and a high variance in functionality. As
the product concept has changed, the PLM process has to be adapted accordingly. Based
on the typical characteristics of product components, several specifications of a PLM
process have to be defined.
Q PLM-Flex: This process variant ensures an efficient and effective PLM with the
highest possible degree of freedom for product design and pricing. Typically,
radical innovations with an associated high risk of failure can be managed with
this process variant (i.e. new network technology).
Q PLM-Max: Based on standardized activities, this process variant focuses on
efficiency improvements and the simplification of knowledge-intensive
development processes for products for which boundary conditions are known.
Q PLM-Fast: This process variant is characterized by the highest level of
standardization and simplification of the decision-making process. It focuses on
the highest possible reduction of processing time under known conditions.
Component characteristic
Lifecycle- Product- Innovation-
duration Complexity Level
PLM-Flex
Q Radical-Inno-
vation
Long High
Degree of process standardization
Low Q Architectural
Innovation
PLM-Max
? Modular
Gate 2
Gate 4
Gate 5
Gate 1
Gate 3
Medium Medium Medium-high

innovation
?
PLM-Fast
E-Mail VoD Content Tarif
Tarif
Incremental
High Tarif Short Low
Tarif
Innovation
… …
Figure 4: PLM Process Variants

Next-Generation PLM
3.1.2 PLM Process Principles
Our PLM process approach is based on following four principles which have to be
considered when implementing PLM processes:
Q Enhanced Stage-Gate approach
Q Multi-perspective view
Q Metrics-based management
Q Process modularity
Principle One: Enhanced Stage-Gate Approach
Most telecommunications companies utilize the Stage-Gate approach

Stage-and-Gate approach as a conceptual and
operational model for the development, A Stage-Gate process is a conceptual
marketing and elimination of a product during its and operational roadmap for moving a
lifecycle. The Stage-and-Gate approach is very new-product project from idea to launch.
significant to the management because it Stage-Gate divides the effort into distinct
restricts investment and expenditures in the next stages separated by management
decision gates. Cross-functional teams
stage until the management is comfortable with
must successfully complete a prescribed
the outcome of the current stage. The gate can set of related cross-functional tasks in
be effective for monitoring and controlling each stage prior to obtaining
product quality, as well as development progress management approval to proceed to the
and costs. next stage of product development.
The typical PLM-Max process in the

telecommunications industry consists of several Source: Stage-Gate Inc; www.stage-gate.com
stages - from idea generation to withdrawal from
the market. Every stage consists of a distinct number of activities that have to be
accomplished by specific process stakeholders at the given phase. The entrance to each
stage is a gate; these gates control the process much like quality control checkpoints. Each
gate is characterized by a set of deliverables as input, a set of exit criteria and an output.
Gates are manned by senior managers that form the so-called product board. The product
board acts as a gate-keeper that evaluates the results from one stage by a given set of
criteria. Based on this evaluation, the product board can either decide whether the product
idea is ready to proceed to the next stage, should be re-started at the previous stage, or is
completely rejected.
The standard Stage-and-Gate PLM process with its frozen gates has several characteristics
that lead to significant problems in the development of low-complexity telecommunications
products, as well as highly innovative extended products and solutions (i.e. time-to-market
delay). Weaknesses of the Stage-and-Gate model - such as narrow criteria, long review
preparation time, slow and serial decision making process - provide reason for the necessity
of introducing hereby two additional approaches: the aforementioned PLM-Flex and PLM-
Fast process variants.
The process solution for standardized products could be a simplification and automation of
gate decisions, and elimination of some gates/stages.

Next-Generation PLM
For highly innovative extended products, the Stage-

and-Gate approach exhibits some additional weak
Fuzzy Gates
points. Stage-and-Gate processes force
Fuzzy Gates approach introduces fundamental project decisions to be made earlier
more flexible stage-gate than necessary, and hence, resulting in increasing
requirements model that allows costs of change, as well as inflexibility in regards to
keeping reasonable balance between adequate reactions to possible changes. Moreover,
time-management and risk- flexible development techniques are more suitable
management goals. It focuses on the for development projects rather than phased
quicker decision-making which
approaches. The introduction of “fuzzy gates” that
implies possible suspension of
decision-making body approval, allow “go-forward” decisions to be made in spite of
introduction of decision- making tools shortage of certain information (with prospect to
and project supervision on the final achieve certain results at a later date) does not
steps of every stage. solve the issue completely.
Robert G. Cooper, ‘Winning at New
A further developed alternative to Stage-and-Gate
Products: Accelerating the Process from
processes – Bounding-Box approach – is
Idea to Launch’
essentially a management-by-exceptions technique
by which certain critical parameters of a project,
such as profit margin, project budget, product performance level and launch date, are
negotiated in form of a bounding-box. By this, the team is free to move ahead unimpeded as
long as it stays within the box (Doyle, 2003).
The adoption of Stage-and-Gate and Bounding-Box models allows for the development of a
new approach for designing variants of a PLM-process in the telecommunications industry
Bounding Box
Principle Two: Multi-Perspective View
PLM-related projects are often accompanied by a A further development and simplification

conflict of objectives between the product of the Fuzzy Gates Concept is
marketing and the technical units within a Bounding Box. The Bounding Box
company. Several case studies have represents a strictly defined zone with
documented that this conflict can eventually lead clear parameters/KPIs within which a
to higher probability of product failure in the program team is allowed to operate. As
market. This can be grounded on several long as the program is within the zone,
reasons. Either the product specification is far the team on its own meets day-to-day
from actual market demands and too much decisions, otherwise issues are
technology-driven, or the product marketing has expected to be escalated to
specified a conceptual product without management/ product board. Important
considering the technical feasibility of the idea. to mention is that bounding box should
The key is to take on a multi-perspective view - be implemented for innovation process
three perspectives on the process have to be before the launch phase starts.
taken into account in order to ensure efficient Source: Laura Doyle, Using the ‘Bounding
coordination and collaboration between the Box’ to Accelerate Product Development
relevant departments or business partners. The
three perspectives are focused on marketing, technological and financial aspects.
In the market perspective, all activities related to product marketing, such as the definition of
product specifications and the management of the product in the market-place, are included.
The technical perspective subsumes all technical or production-oriented activities. Finally, all
financial aspects and implications are categorized in the financial perspective.

Next-Generation PLM
At each stage and for every perspective, a distinct deliverable is specified. Before entering
the gate, the deliverables - at least one for each perspective - are conflated and presented
as a whole to the product board.
For the purpose of achieving a higher degree of process standardization, the deliverables
should be created on the basis of pre-defined and agreed templates.
Principle Three: Metrics-based Management
In addition to process definition, the organizational and business components must not be
neglected. Since products, and consequently the PLM process, become more complex and
involve internal as well as external partners along the value chain, there is a greater need to
balance top-management control with the empowerment of self-managed, cross functional
teams. As a prerequisite for achieving this balance, the company has to implement a
metrics-based management approach by which teams are measured on strategic
performance indicators such as development cost, time-to-market and customer satisfaction.
The definition and selection of the indicators is critical for the successful implementation of
the PLM process. Our developed and tested metrics-based framework can be used to
systematically make business decisions about implementing PLM and maximizing the return
on investment (ROI).
The metrics-based framework to assess and monitor the efficiency and effectiveness of an
implemented PLM process includes four dimensions:
Q Business Metrics: All market-based and competitive metrics fall under this
category, including metrics of strategic relevance such as market share,
revenue growth, operating costs or margins.
Q Process Metrics: This category includes all metrics that are focused of the
performance and quality of the process itself, including time-based metrics (i.e.
time-to-market, time-to-prototype, time-to change, time-to-access-data, change
process cycle time), as well as quality-related metrics such as design error
rate, number of quality rejections or number of deviations or waivers.
Q Product Metrics: All metrics that related directly to the quality of the product are
subsumed under this category, including such metrics as unit costs, reliability
of the product, number of defects, number of requirements met or number of
product modules.
Q Soft Metrics: Due to the abstract nature, soft metrics are probably the hardest
dimension to measure. However, this category has to be considered as well
since all culture-related aspects are included that have an impact on the PLM
process. This fourth dimension includes metrics such as employee satisfaction,
supplier relations or customer satisfaction.
Implementation of such a framework enables a company to define and establish success

metrics that could be used to measure the effectiveness of an implemented PLM process.
By setting the weights properly, the development teams are capable to self-steer for the
greatest short-term and long-term profit, resulting in less coordination efforts and efficiency
gains especially for cross-departmental teams in particular.

Next-Generation PLM
Box / PLM-
Bounding Gate 4 Gate 5 Gate 6
Fast
Bounding Box Approval by the Product Board

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6
PLM-Max
Gates /
Fuzzy
Approval by the product board via Fuzzy gates

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6
PLM-Flex
Class.
Gates
Approval by the product board
1 Innovation 2 3 4 5 6 Marketing 7
Evaluation Planning Implementation Launch Exit
Management Management
Market & Market roll- Implement Monitor &
Market
persp.
Product
Product description
Management report
capability out market manage Market exit
launch
Detailed design
Business plan
Launch report
analysis planning plan KPIs
Idea paper
Technic.
Develop Technical
persp.
Monitor &
Technical Technical Technical
technical implementa ens. product
evaluation Go-Live success exit
concept tion
Business Adjust Monitor Control Finalize
persp.
Financial
Fin.
case business business business business

rating
introduction case case case case
Figure 5: PLM Process and Principles
Principle Four: Process Modularity
In accordance to the modularization of products, production processes have to be

modularized as well in order to enable for the flexible assembly of product modules at the
interface to the customer. A process framework encompassing the strategic and operational
business requirements for telecommunications companies is required.
The overall objective reflected in this principle is the achievement of the highest possible
degree of two aspects at once: market flexibility and internal efficiency. Modularization in
regards to process design allows the management and PLM force to decompose complex
PLM tasks into modules of process chains that can be flexibility re-adjusted and re-arranged
as needed, thus imposing a scaling effect on production efficiency. Through the streamlining
of processes, innovation cycles can be shortened – ideally in continuous sync with changing
market, technological or financial drivers.
Process modularization can be regarded as an enabler for increasing the efficiency and
effectiveness - however, following aspects have to be considered and followed in order to be
able to fully capitalize on the potentials benefits:
Q Architecture defining production and process modules and their functions.
Q Interfaces describing the relationships and input/output parameters between
modules.
Q Set evaluation criteria or standards for the modules assessment in regards to
conformity within the entire system and relative to one another.
The requirement for standardized interfaces especially presents a critical point. In order to
allow for the flexible rearrangement of interchangeable process modules, the input and
output parameters have to be defined and described precisely in a detailed fashion across all
process modules. A valid approach to such demand is presented by data modelling which
will be further explained in a subsequent section.

Next-Generation PLM
3.2 Product Meta-Model
The product meta-model (PMM) is essentially based on the consistent product definition
from a product engineering perspective, as well as from a customer (market-oriented)
perspective - which is crucial in nowadays hyper-competitive environments. The PMM
serves as a regulatory framework for managing the vast amount of information that relates to
the product during its lifecycle. Its purpose is the organization of all relevant information
pieces in order to ensure efficiency of the production process through re-usability of
components, in hand with an effective customer response that can be established by
enabling product individualization concepts.
Many present quality deficiencies originate from a diffuse definition as well as from an
inconsistent view on the ‘product’. The extended product should be clearly and precisely
defined, efficiently developed, valuably commercialized and reasonably understood by the
customer. There should be a constant product definition across the entire lifecycle and its
coherent business and operational processes.
3.2.1 Definition and Categorization of Products
The product as the main subject of the process needs to be defined, and this definition of
product should take the perspective of the customer into account. A product is defined as
anything that can be offered on a market for attention, acquisition, use or consumption that
might satisfy a wish, demand or need. It can be of physical or intangible nature, such as
services for information, communication or entertainment. A product is an entity the
customer perceives in its entirety.
The precise definition of the complete product range and their categorization remains a
considerable problem especially in the telecommunications industry. For as
telecommunications, there are four essential product categories that can be differentiated:
market product (service), standard solution, customized solution (or individual solution) and
bundle. All offered products and services can be assigned to one of these four categories.
Product definition is not simply a reflection of the engineering design. It also includes the
entire set of information that defines how the product is designed, manufactured, operated
and managed in the market, and finally withdrawn from the market when it becomes
obsolete. This product definition is continually updated throughout the entire lifecycle and its
coherent business processes. For PLM in general, the product has to be regarded as the
core information object (CIO).
3.2.2 Data Modelling as a Prerequisite for Meta-Model
Data modelling represents one of the key fundamentals for a successful implementation of
product and process modularization. It can be defined as the analysis, definition and
description of data objects and their interrelations to allow for the interoperability and
consistency of data objects. The main objective is to ease and simplify communication
between different business entities.
As data objects are transformed by processes modules, a clear and consistent picture on the
varying states of these data objects is required across all relevant processes on a high-
granular business, as well as detailed operational level, for achieving internal efficiency and
market flexibility. The Unified Modelling Language (short: UML) is commonly used as the
notation standard for data modelling.

Next-Generation PLM
Product and process modularization goes hand in hand with data modelling, and therefore a
systematic approach for such should be followed for the efficient implementation of the
Product Meta Model pillar. An illustrious example for such model is given with the Shared
Information and Data Model (short: SID) which is based on UML, and widely applied as the
de-facto standard for data modelling in the telecommunications industry.
SID can be regarded as an information model, providing a high level business oriented view,
as it defines entities (representing objects) that are of interest for the service provider, as
well as the associations between entities.
In regards to PLM, several benefits can be realized if such data modelling standards like SID
are applied. All involved entities, be it internal division or external partners, are in position to
share a common understanding in terms of functions, relationships and the associated
information requirements of each business entity. The overall objective is to increase
effectiveness and efficiency of system interaction.
3.2.3 Separation of Concerns – the Need for a PMM
A product model can serve several purposes. In regards to the telco industry, a product
model is necessary for the definition of products from two distinct perspectives: the
production point of view (telco factory) and from a customer perspective.
A product model from the latter perspective is necessary for providing the customer with the
possibility to configure the product in exact accordance to one needs (compare to the car
configurator in the automotive industry). In an ideal case, the product configurator from the
customer perspective is directly integrated with its counterpart on the production side, and
vice versa. The bi-directional integration ensures consistency and thereby efficiency
improvement in the maintenance of product data.
The purpose of PMM lies in the definition of the underlying linking rules, as well as the type
of modules in both perspectives. In Figure 6, module types have been defined from the
production point of view. These module types can be instantiated for the definition of a
product. The same principle is applied for the definition of the product from the customer
perspective. The alignment, or as mentioned before, the bi-directional integration, is
achieved by the consistent use of the PMM.

Next-Generation PLM
Internal Production Product Configuration from the manufacturing perspective
General Scalable
Solution Area
Optional
space
View
Defined Fix
Solution
space Services
Obligatory
Alternatives
Alignment
Product Configuration from the customer perspective

Mailbox
Firewall
Confer-
gement
SPAM-
Mana-
Modules
ence
Sales & market
filter
Service Single Double Triple Quadruple
ID-
Basic Module Play Play Play Play
Flatrate
Tarif A
Tarif B
Additional Module Cus_

view
QoS
Mobile
Seg1
Services
Cus_
kBit/s
kBit/s
kBit/s
100
400
200
… Data Seg2
… Cus_
Hotspot
WLAN
CuDA Seg3
Voice
Scope
Figure 6: Modular Product Structure Model
3.2.4 Benefits of Product Structure Standardization
The definition of the product as a CIO based on a PMM is the fundament for the
standardization and modularization of products in the telecommunications industry. Product
standardization changes the process landscape and reduces costs. Modular product data
structure ensures linking the sales perspective to the internal (production) perspective in
relation to the offered products and services. The main objective of introducing a modular
product structure is the optimization of the product development and the sub sequential
production.
Consequently, applying the concept of modularization with all its advantages regarding
reusability refers not only to the market but also to the technological side. Therefore a
modular product structure is to be followed by a modular production structure. This poses a
critical aspect since in order to achieve efficiency, competitive pricing and rapidness in terms
of production, the product processes have to be industrialized through modularization. This
enables providers to flexibly serve a heterogeneous customer base with a relatively stable
product portfolio re-arranged in a customer-specific fashion.
The product database and the corresponding processes should be implemented by

considering the existing processes, company structures, and cultures. Requirements from
the affected functional areas flow into the definition of the product data structure. One master
product data management fits all needs of the main processes and its interfaces. Using
modular product structures leads to simplification and cost optimization of product
engineering.

Next-Generation PLM
3.3 PLM IT-Architecture
The basis for the evolution of a product through its complete lifecycle is a solid PLM IT-
architecture that is customized for the company-specific PLM requirements. Since systems
and applications primarily serve to support the business and operational processes, such
has to be implemented as a holistic enterprise architecture to support the PLM process in all
relevant dimensions: (1) decision support, (2) process support and (3) enterprise architecture
integration. A standardized off-the-shelf PLM system is therefore not the tool of choice as
Ausura and Deck (2007) point out.
As previously mentioned, it deems important - following the concept of product and process
modularization - that also IT components should be implemented in a modular structure
within an integrated enterprise architecture to allow for efficiency and flexibility.
Instead of a one-size-fits-all approach (meaning one software system for the support of the
entire PLM process), it appears advantageous to rely on an IT-architecture that reuses and
respectively customizes existing components as far as possible. In following sections, an
overview on the essential IT components that a PLM IT-architecture should consist of is
provided.
Architecture View
Decision Support
System
Strategic Resource
CAS Management Value Management
Process
PLM -
Product -Development Marketing Management Product Exit Management
Operational
Process Support
Support
System
System
Multi -Project - Product -Data -Management

Collaboration Tools
Management System System
Product Product
Workflow Management
Workflow - Management
System System Document Management System
Modeling System
Modeling System
Integration Layer
-layer(SOA)
(SOA)
Business Business Applications Business

Applications Applications
SCM ERP CRM CAD
(Supplier) (Customer)
Figure 7: PLM IT-Architecture Model
3.3.1 Decision Support System (DSS)
The main purpose of a DSS is to gather and consolidate data from operative systems in
order to provide aggregated information on the product lifecycle to the senior management. It
is mainly based on three components: The Computer Aided Selling (CAS) provides
functionality for product configuration and product pricing. Aspects regarding the planning of
long-term resource capacities are handled by the Strategic Resource Management
component. The Value Management component covers product portfolio management
aspects.

Next-Generation PLM
3.3.2 Process Support System
On the operational level, the PLM process execution is supported by the Process Support
System, consisting essentially of 5 components. The Workflow Management Systems
(WFMS) enables a higher degree of process automation. Especially in the context of
distributing and releasing unstructured content like product specifications in cross-functional
teams, the WFMS plays an essential role through a strong link to the Product Data
Management System (PDM). The Product Modelling System and the PDM are closely
coupled. The former defines the product structure, providing an overview on the types of
modules a product is composed of. In a database context, this functionality is similar to a
scheme definition. The PDM system stores all product relevant data according to this
definition, and provides different views for each stakeholder, be it from a marketing and
engineering department. The Multi-Project Management System and collaboration tools are
instruments for the management of the product in different phases in a collaborative
environment.
3.3.3 Enterprise Architecture Integration
A PLM IT-architecture is supposed to hold the promise to seamlessly integrate and present
all information produced throughout all phases of a product’s lifecycle to everyone in an
organization including external business partners. For ensuring this functionality, an EAI-
approach has to be implemented. According to recent research activities, a Service Oriented
Architecture (SOA) is most suitable to integrate business applications across company
boundaries, allowing for an increase of efficiency.
In order to ensure end-to-end interoperability between modules, the implemented technology

architecture components have to be consistent, or at least, interoperable to one another. The
challenge lies not in the selection of single solutions which might work well in a silo context,
but in the holistic implementation of an integrated modular enterprise architecture, which
allows for flexibility through its modularity and an increase of process performance on
grounds of its integrated nature. Hence, the technology architecture roadmap has to be in
sync with the product roadmap, and vice versa.

Next-Generation PLM
3.4 Lifecycle Value Management
In such a highly competitive market

as telecommunications, lifecycle-
oriented product planning is a
Value- necessity which is to be imple-
Oriented mented as a robust and systematic
Portfolio
Management process combined with the right
organizational environment. Life-
cycle Value Management (LVM)
Lifecycle Value
Management can be defined as a holistic
PLM management approach for plan-
Customer
Reporting and
Needs ning, steering and controlling the
Controlling
Management
development, marketing and retire-
ment of products and portfolios
across the entire value creation
process and lifecycle. The overall
objective is a maximization of a
Figure 8: Lifecycle Value Management Model company’s value by striving for an
optimal degree of coverage

between customer and market demands and product and portfolio functionalities. Within the
context of the overall value chain, LVM ensures that extended products that are developed
and offered in the market place, fulfil the market requirements and reflect the market
demand. LVM requires permanent attendance in regards to analysis and planning,
orientation towards customer benefits and the alignment to overall company functions. In the
following sections, the three supplementary building blocks of LVM in telecommunications
are introduced. The implementation of these three building blocks, combined with a modular
product data structure, ensures a ‘state-of-the art’ Lifecycle Value Management.
3.4.1 Value-Oriented Portfolio Management
The value-oriented portfolio management process consists of strategic alignment and value-
based product portfolio management. Focusing on clearly defined and specified products
makes a significant contribution to effective portfolio management. Products can be
positioned without overlaps or threatening cannibalization effects, and in accordance with
pre-identified market demands. Sales and marketing departments benefit from the increased
transparency of the product range and enhanced comprehensibility for the customers.
The portfolio management can be achieved by either portfolio restructuring towards a

modular structure or rationalization by means of product elimination. This analysis is to be
carried out with a strict value-orientation based on qualitative and quantitative parameters,
including aspects of budget allocation across products of a portfolio.
Value-oriented portfolio management should ideally be based on both quantitative and

qualitative parameters. The quantitative dimension is focused on value contribution in
monetary terms, as well as expected resource requirements, complexity costs and
quantitative implementation risks. The qualitative perspective is based on a product
performance assessment, including such aspects as customer benefits, reusability of
modules, cross-selling potentials, degree of imitableness and strategic relevance.

Next-Generation PLM
In order to allow for a quantitative and qualitative assessment, portfolio management uses
the tools provided by the IT-supported portfolio database. Within the increasing complexity of
product marketing, it is highly important to rely on an appropriate and efficient data basis that
compensates for the lack of business transparency and low synergies in the value network.
The modular structure of the portfolio promotes the use of common parts in the production
processes, increasing the ratio of mass production to overall production.
In addition, not only the current portfolio should be evaluated and in terms of qualitative and
quantitative aspects, but also potential future portfolio scenarios. In praxis, several product
innovations originate from technological advancements. The implementation of an innovation
radar to realize the function of recognizing and assessing upcoming market and technology
trends at an early point of time can be a helpful tool to include an outlook perspective in
value-oriented portfolio considerations.
3.4.2 Customer Needs Management
Customer Needs Management is a discipline within PLM that ensures that customer needs
or requirements are communicated to all product development stakeholders across the
lifecycle. Customer Needs Management effectively decreases the potential of design flaws
and delays associated with misinterpretation and discontinuous communication, while
improving productivity, efficiency and quality at the same time.
A standardized product data structure forms the prerequisite for the continuity of the
processes, spanning from production to sales and marketing. The development process for
market products becomes faster and cheaper. A higher level of process automation
improves production quality and process cost efficiency (i.e. by savings in IT operating costs
and headcount). Besides process continuity, the data quality along with certain level of
automation has to be ensured.
The development of an integrated database between the Product Lifecycle Management and
Product Portfolio Management has to be regarded as a critical factor to achieve consistency
in regards to information flow. A possible concept for this is the implementation of a Data
Warehouse which enables consistent realization of data exchange between production and
sales system, and provides for the opportunity to up-value the existing Product Data
Management and to assure early identification of value creation opportunities.
3.4.3 PLM Reporting and Controlling
An effective PLM reporting and controlling solution is based on a successfully implemented

IT database, as well as standardized product definitions. The main objective is to increase
transparency by ensuring the availability, accuracy, timeliness and completeness of
information for assessing and monitoring all relevant key metrics as mentioned in a previous
section. The unambiguous correlation of basic data to business management indicators
along the lines of a standard product structure provides staff and management with precise
and timely information about all of the critical success factors that help staff and
management to make the right decisions at the right time. Necessary information will have to
be aggregated in a dynamic fashion and in real-time – fulfilling varying information needs by
different stakeholders in different situations (i.e. development, launch, growth, maturity or
withdrawal)

Next-Generation PLM
4 The Proof of Next-Generation PLM
4.1 The Challenge
A renowned company in the telecommunications industry carried out an extensive

restructuring program which would enable it to maintain its competitive position in a
deregulated market environment. The objective was to convert the previously technically
driven approach for the product design to an approach focusing more on customer needs
and requirements. But even more important, the company had a strong interest to develop
and implement an integrated PLM approach – following the 4-Pillars approach as described
in this paper.
In the initial situation, the implemented PLM solution with its platform was not ‘state-of-the-
art’ – due to a lack of both, product withdrawal concept and decision gates, as well as an
unacceptable time-to-market ratio. Until then, no portfolio management process was
designed and implemented.
The existing portfolio was oriented on the organizational or technical structure, and not
organized from the customer’s point of view. The product portfolio was characterized by a
large number of product variants and features. All of these products needed to be handled
individually from the IT management perspective. This broad variety of products needed to
be realized and implemented within all operative processes, IT-applications and -systems, as
well as sales information tools. Hence, the provider had to struggle with enormous
complexity impeding the maintenance of IT-landscape and the management and
optimization of the processes. Neither for the company itself, nor for its affiliates or partners,
was an integrated IT-solution architecture available or implemented.
4.2 The Task
The product portfolio was subject to thorough analysis throughout the whole company. The
aim was to balance product categorization, to understand the customers’ requirements and
to broadly define the product itself that the company was expected to offer on the market.
The precise definition of the product was expected to support and enable accurate reporting.
The integration of several standalone IT-solutions into one integrated IT-architecture was
vital to enable effective decision-making procedures and to reduce the complexity and
inefficiencies.
4.3 The Solution
During the project the integrated PLM approach valid for the company and its affiliates was
developed. The implementation of the 4-Pillars approach at this particular company resulted
in valuable benefits for solid product development, marketing and strategy.
4.4 The Approach
The approach was based on the four pillars of our approach of integrated PLM. Following a
thorough analysis to assess the status quo of the implemented PLM solution and identify
potentials for optimization, a wide range of activities was defined for each specific dimension
as a work package.

Next-Generation PLM
‘PLM Process Introduction was carried by designing specific PLM processes for the financial,
technical and market perspectives with set key deliverables for each. The steps taken
included:
Q Design and implementation of three variants of Stage-Gate PLM-processes
(PLM-Fast, PLM-Max, PLM-Flex) for different types of products
Q Introduction of fuzzy gates concept for a lean decision-making process.
‘Implementation of the Product Meta Model presented a highly critical aspect since the
company specifically demanded the shift towards more customer orientation. Following this
mandate for the redefinition of the product portfolio from the customer’s point of view, the
integration and harmonization of the decision-making process in which various stakeholders
from different departments are involved, presented another key aspect. The steps taken in
this regard constitute:
Q Adoption of easier know-how exchange and the guaranteed usage of the
“common language” throughout the product development, as well as fast and
efficient communication between international partners.
Q Definition of harmonized and modularized product portfolio for all national and
international affiliate companies.
Q Introduction of innovative and effective materials reuse.
Q Adoption of the product data platform in all international subsidiaries.
‘PLM IT-Architecture Development was regarded as the technical fundament which provides
a range of useful utilities to ensure a successful and reasonably-priced integration of the
PLM-process within the company. The steps taken included:
Q Concept development and implementation of DMS Management and Workflow
Project Management system.
Q Implementation of the product concept within the ERP-system.
Q Implementation of the shared platform for documentation and entire project
management.
Q Roll-out of the one-physical-server concept to support separate PLM processes
in all divisions and subsidiaries.
Assurance of Effective Lifecycle Value Management was focused to accompany the product
lifecycle from the market launch through to the market withdrawal of a product. Issues
considered in this regard were:
Q Introduction of the value-based portfolio management process
Q Development of sound marketing strategy by means of early market needs
recognition, standardized information and environmental issues.
Q Assurance of detailed input for controlling for the sake of exact allocation of
revenues and costs to the products.
Q Introduction of simple allocation at cost centres and cost units.

Next-Generation PLM
4.5 Benefits for the Client
Although particular benefits for the customers were to be expected for each of the four
dimensions, due to the holistic and integrated nature of the implementation and the tight
interdependencies between all dimensions, synergetic effects could be realized, thus
increasing overall efficiency and effectiveness of PLM and innovation management.
The PLM Process and Organization solution was based on the introduction of all three
variants of the Stage-Gate approach (PLM-Flex, PLM-Max and PLM-Fast) combined with the
fuzzy-gates concept. Due to these processes, the time-to-market ratio was reduced by 25%,
the product-success ratio was increased by 75%, and a customer-centralized product
development was achieved.
The PLM Meta-Model solution helped to achieve precise and customer-oriented product
definition that reduced the product portfolio complexity by 50%, and introduced the
modularization of the product. The modularized product portfolio increased cost reduction
chances by means of similar-components reuse.
The PLM IT-Architecture solution facilitated the introduction of an integrated IT-System

supporting the processes across the entire product lifecycle. The optimization efforts
included the implementation of Project Management System and the conceptualization of the
product within the ERP-System, enabling a consistent view on the product in the future as a
Core Information Object (COI). As a result, the CRM-system was completely renewed as
well.
The PLM-Lifecycle Value Management solution included the introduction of an after-sales

process to meet customer’s demands. As a very important step towards increased value-
oriented efficiency, a precise reporting procedure was defined with focus on quality,
functionality, performance and costs.
Introduction of Stage-Gate and Fuzzy-Gate concepts
Time-to-Market improvement
Product-success-ratio improvement
Reduction of product portfolio complexity
Project Management System implementation
Enabling effective product controlling
Figure 9: Benefits for the Client

Next-Generation PLM
5 Conclusions & Recommendations
1. PLM requires top management attention and has to be regarded as a strategic key
to ensure sustainable competitiveness and growth in the telecommunications
industry
The intensification of competition, decreasing market prices, heightened customer

expectations, shortened product lifecycles and order lead time – these are just some
examples that stress and leverage the relevance of PLM. PLM requires top-management
attention as it will have to be increasingly regarded as the strategic weapon for counteracting
these 21st century telco challenges. The 4-Pillars approach goes far beyond the traditional
understanding of PLM based solely on IT-solutions. An integrated PLM approach will have to
include all relevant dimensions that impact the management of product lifecycles: processes,
systems, products and portfolio considerations.
2. The horizontal value chain integration with external partners becomes increasingly
important as industrialization trends are coming into effect
One of the most important trends is that the telecommunications industry is becoming
increasingly industrialized. Not only does the integration and synchronization of internal PLM
processes and systems pose a critical issue, but more important, the value chain will further
has to be horizontally integrated across company borders within the supplier and partner
network. The concepts of process and systems integration, process modularization and
value chain decomposition will play a key role in accompanying carriers in their journey
towards the industrialized telco age and enable them to realize large-scale benefits.
3. The concept of multi lifecycle management helps to resolve increasing product

complexity and allows for the synchronisation of multiple product layers
The products in the telecommunications industry typically consist of several modules that in
sum create customer benefit. Each module embodies its own lifecycle, which implies an
additional product complexity in terms of module design, module management and module
removal from the product. Due to this increased complexity resulting from the multi-layered
nature of telco products, approaches are necessary for the management of these multiple
lifecycles and the coherent requirements. The integrated 4-Pillars PLM approach can provide
a solid basis for the implementation of such approaches. The ultimate objective of MLM is to
increase the degree of synchronization of the product layers in order to provide a unified
experience to the customer through one perceived product.
4. Complexity management deems highly critical as it holds the promise to create

transparency in regards to the involved processes and systems
As complexity increases, solid management approaches will have to be in place in order to

encounter this trend and to reduce complexity. The implementation of the aforementioned
process principles, especially process variants and process modularization, as well as of
SOA-oriented fully integrated systems architecture for the support of high-complexity telco
products, is important. The overall objective is to create transparency in regards to the
functions of process and system components and their interdependencies through a
structured and analytical approach, particularly in regards to the hand-off between innovation
processes and implementation and operations processes.

Next-Generation PLM
5. Effective innovation management has to follow strict customer-centric needs and

create chances for service differentiation
Clear and precise product definition based on customer centricity and customer value has to
be regarded as key for sustaining competitiveness in the telco business. Due to the
complexity of product design and the multi-perspective lifecycles of its modules, it is highly
important to understand the scope of the product and, subsequently, to adjust it according to
the customer needs. As the competitive focus shifts towards customer retention, satisfaction,
market share growth, effective innovation management within a company will further become
a critical success factor for service differentiation. The challenge will lie in the ability to
translate upcoming technological advancements into differentiated products in accordance to
customer expectations and actual market demands.
6. The inclusion of market-oriented and production-oriented perspectives has to be

accomplished through solid product and module management approaches
A fundamental concept for the achievement of internal efficiency and external flexibility is the
incorporation of two perspectives: the market-oriented as well as the production-oriented
view. Whereas the first view is focused on entities that are products or services actually
offered to the customer, the latter is more focused on modules on which basis the marketed
products are assembled and consist of. Both perspectives have to be brought operationally
in sync through complementary product and module portfolio management, and in an ideal
world, the product configurator from the customer perspective is directly integrated with its
counterpart on the production side, and vice versa. The bi-directional integration ensures
consistency and thereby efficiency improvement.
7. The implementation of PLM reporting and controlling systems presents a key

fundament to enable effective monitoring and a continuous improvement process
The basis for the introduction of a continuous PLM improvement process is the
implementation of a performance- and value-based PLM reporting and controlling system.
By this, the performance and success can be monitored on an individual product level,
facilitating the operative product management process across all relevant phases. But more
important, management attention can be created and enhanced by this since all relevant
information can be reported in a consolidated fashion to the top management, stimulating
faster decision-making and more agility in response to market demands.

Next-Generation PLM
6 Outlook: Study ‘Next-Generation Telco PLM 2009’
For the sake of unfolding the potential of PLM, it is vital to understand the success factors of
PLM, their interrelation to one another, as well as the linkage to these factors in regards to
the strategic goals of an organization.
Basic questions in this respect include the following:

Q What is the current implementation state of PLM approaches in the
telecommunications industry?
Q What impact does PLM have on profits and losses of an enterprise?
Q Is there any correlation between specific PLM goals and PLM design
elements?
Q What are essential requirements for PLM in terms of multidimensional product
management along the value chain?
In order to answer the aforementioned questions, Detecon and the Research Institute for
Rationalization and Operations Management at Aachen University (FIR) are currently
conducting an international expert study ‘Next-Generation Telco PLM 2009’ to assess the
status quo and perspectives of PLM in the telecommunications industry. The objective of this
study is to identify the success factors of PLM, and to assess their impact on organizational
performance.
In the course of this research endeavour, telecommunications companies worldwide are

encouraged to participate in order to obtain a complete and accurate view on a global scale.
Experienced researchers will interview experts at senior management positions in the
targeted industry. Based on the provided feedback, a statistical analysis will be carried out to
validate PLM potentials, and to identify the key success factors that differentiate
implemented PLM solutions within the telecommunications market.
Participants of the study ‘Next-Generation Telco PLM 2009” receive a package of valuable
benefits:
Q PLM quick-check, carried out by the experts of Detecon and FIR to assess the
maturity of the PLM implementation. This analysis should lead to constructive
benchmarking for the particular PLM implementation.
Q Increased industry and in-house awareness of PLM.
Q Exclusive priority edition of the in-depth survey before publication date that
should strengthen the competitive position.
The results of the study will enable participating companies to protect and strengthen their
existing competitive advantages on grounds of validated PLM success factors and their
organizational impact.

Next-Generation PLM
7 Reading on
Q Abramovici, M.; Sieg, O. C. (2002): Status and Development Trends of Product
Lifecycle Management Systems. In: Proceeding of International Conference on
Integrated Product and Process Development, Wroclaw, Poland, p. 2122.
Q Ausura, B; Deck, M (2007): The new product lifecycle management systems:
what are these PLM systems? and how can they help your company do NPD
better? Visions Magazine. Online available at
http://www.pdma.org/visions/jan03/plm.html, last visit 26.01.2007.
Q Doyle, Laura (2003): Using the ‘Bounding Box’ to accelerate product
development: The Management Roundtable, Waltham, USA.
Q Golovatchev, J.; Budde,O. (2007): Next generation PLM - an integrated
approach to product development in the service industry. In: Product Lifecycle
Management: Assessing Industry Relevance, PLM-SP3: Interscience
Enterprice Ltd, London, p. 555 - 564.
Q Golovatchev, J.; Budde, O.; Hong, C. (2008): Next Generation PLM-Process
Management for the Development of Telecommunications Products in the
Multi-Lifecycle Environment, In: Proceedings of the 2008 IEEE International
Conference on Management of Innovation & Technology Singapore, p. 391-
396,
Q Kim, J. and Wilemon, D. (2002): Sources and assessment of complexity in
NPD projects. R&D Management, 33 (1), pp. 16-30
Q Koen P. et al. (2001), Providing clarity and a common language to the ‘fuzzy
front end’. Research Technology Management, 44 (2), pp.46-55.
Q Kraemer, C.; Golovatchev, J. (2008): A Perfect partnership: Successful
product innovations in the telecommunications market depend on the
management of complexity: in DMR: Detecon Management Report, No.3,
Bonn, p. 38-45
Q Mateika, M. (2005): Unterstützung der lebenszyklusorientierten Produktplanung
am Beispiel des Maschinen- und Anlagenbaus. Essen: Vulkan-Verl.
Q Moews, C. and Rieger, Dr. V. (2007). Production Strategies for Managed ICT
Service. Detecon Management Report. Online available at http://www.detecon-
dmr.com/ en/print.html?unique_id=193401
Q Porter, M. E. (1985): Competitive advantage: Free Press New York.
Q Saaksvuori, A.; Immonen, A. (2004): Product Lifecycle Management: Springer.
Q Schuh, G. (2005). Produktkomplexität managen. München [u.a.]: Hanser.
Q Schuh, G.; Eversheim, W. (2004): Release-Engineering - An Approach to
Control Rising System-Complexity. CIRP Annals-Manufacturing Technology,
53 (1), p. 167-170.
Q Stark, J. (2004): Product Lifecycle Management: 21st Century Paradigm for
Product Realisation: Springer.
Q Teresko, J. (2004): Auto Report: Information Technology The PLM Revolution.
In: Industry Week-CLEVELAND OHIO-, Vol. 253, Nr. 2, p. 32–38.

Next-Generation PLM
Q Thoben, K. D.; Jagdev, H.; Eschenbaecher, J. (2001): Extended Products:

Evolving Traditional Product Concepts. In: Proceedings of the 7th International
Conference on Concurrent Enterprising: Engineering the Knowledge Economy
through Co-operation, Bremen, Germany, p. 27–29.
Q Wöhler-Moorhoff, Falk; Dieter, Stephan; Schwill, Matthias (2004): Telco 2010.
Telekommunikation im Wandel: Die Karten werden neu gemischt. Published by
Detecon International. Bonn.

Next-Generation PLM
8 The Authors
Dr. Julius D. Golovatchev is Managing Consultant for “Telco-Effectiveness- and Product-

Lifecycle-Management” and Head of PLM Competence Team at Detecon International in
Bonn, Germany. He holds diploma in Mathematics and a PhD in Economics. He has over 10
years of experience working as a consultant in the telecommunications industry specialising
in innovation strategy and product lifecycle management. He is the author of numerous
publications on the subject of innovation management and product lifecycle management,
and often speaks at international conferences.
He can be reached at: +49 228 700 2627 or

Julius.Golovatchev@detecon.com
Ralph Hiob is Managing Partner at Detecon International GmbH, Bonn, Germany. With over
18 years of experience in the telecommunications industry, he leads the group “Telco-
Effectiveness- and Product-Lifecycle-Management” within the Competence Practice
"Operations & Performance".

Ralph.Hiob@detecon.com
Oliver Budde is Senior Researcher at the Research Institute for Operations Management at
RWTH Aachen University, Germany. He holds a degree in Information Management. In his
research, he mainly focuses on PLM and Business-IT alignment topics. He has a wide range
of project experience in the telecommunications, automotive and manufacturing industries.
He can be reached at: +49 241 477 05-512 or

Oliver.Budde@fir.rwth-aachen.de
Chin-Gi Hong is Business Analyst for “Telco-Effectiveness- and Product-Lifecycle-

Management” at Detecon International in Eschborn, Germany. He holds a diploma in Media
Management, as well as a MS degree in Information and Communication Sciences. In the
course of his academic and professional career, he has had extensive project and research
experience in the ICT field.

Chingi.Hong@detecon.com
The authors would like to thank Dr. Roland Keil, Sergei Holmeckis and James T. O’Neal for
their great support in the preparation and development of this opinion paper.

Next-Generation PLM
9 The Company
Detecon International GmbH
Detecon International is a leading worldwide company for integrated management and

technology consulting founded in 2002 from the merger of consulting firms DETECON and
Diebold. Based on its comprehensive expertise in information and communication
technology (ICT), Detecon provides consulting services to customers from all key industries.
The company's focus is on the development of new business models, optimization of
existing strategies and increase of corporate efficiency through strategy, organization and
process improvements. This combined with Detecon's exceptional technological expertise
enables us to provide consulting services along our customers' entire value-added chain..
The industry know-how of our consultants and the knowledge we have gained from
successful management and ICT projects in over 100 countries forms the foundation of our
services. Detecon is a subsidiary of T-Systems, the business customer brand of Deutsche
Telekom.
Integrated Management and Technology Competence
We possess an excellent capability to translate our technological expertise and

comprehensive industry and procedural knowledge into concrete strategies and solutions.
From analysis to design and implementation, we use integrated, systematic and customer-
oriented consulting approaches. These entail, among other things, the evaluation of core
competencies, modular design of services, value-oriented client management and the
development of efficient structures in order to be able to distinguish oneself on the market
with innovative products. All of this makes companies in the global era more flexible and
faster – at lower costs.
Detecon offers both horizontal services that are oriented towards all industries and can entail
architecture, marketing or purchasing strategies, for example, as well as vertical consulting
services that presuppose extensive industry knowledge. Detecon's particular strength in the
ICT industry is documented by numerous domestic and international projects for
telecommunications providers, mobile operators and regulatory authorities that focused on
the development of networks and markets, evaluation of technologies and standards or
support during the merger and acquisition process.
Detecon International GmbH

Oberkasselerstr. 2
53227 Bonn
Telefon: +49 228 700 0
E-Mail: info@detecon.com
Internet: www.detecon.com

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> Opinion Paper

Next Generation PLM –

Opinion Paper 3 Detecon International GmbH

Opinion Paper 4 Detecon International GmbH

2 The Shift towards a New PLM Paradigm

2.1 The Increasing Relevance of PLM

Customer Migration Number of Competitors (Global Markets)

Duration of the Product Lifecycle Achievable Market Prices

1990 2000 2010 1990 2000 2010

Figure 1: Market Trends

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2.1.1 Management of the Extended Product

2.1.2 Globalization and Emerging Technologies

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Technologies shape customer expectations and requirements that have to be addressed by

In the course of the telecommunications industry turning into a global marketplace, a

2.1.3 Legal Frameworks and Organizational Impact

As historically bundled monopolies got unbundled in the course of market deregulation

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In closing this section, following table summarizes the business drivers:

Strategy Impact Impact on Processes Impact on IT

Table 1: Business Drivers and Their Impact

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2.2 Requirements on an Integrated PLM Approach

An integrated PLM approach is necessary to counter the multitude of challenges placed on

Opinion Paper 9 Detecon International GmbH

2.3 Spotlight on Multi-Lifecycle Management

The aforementioned challenges pressure telecoms to achieve operational excellence while

MLM is the activity to manage a company’s extended product that is

Providing a unified experience to the customer, requires the synchronisation and

Product (v1.0) Product (v1.5)

Figure 2: MLM in the Telecommunications Industry

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By considering MLM as an increasingly important aspect of an integrated PLM approach,

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3 Integrated PLM Framework for the Telco Business

Approval by the product board via Fuzzy gates Strategic Resource

Gate 4 Gate 5 Gate 6

Workflow- Management System

capability out market manage Market exit

launch Service Modeling System

Single Double Triple Quadruple

analysis planning plan KPIs

Monitor & Additional Module Cus_

Technical Technical Technical Mobile

Customer Needs Reporting and

Business Adjust Monitor Control Finalize … Data Seg2

case business business business business Business Business Applications Business

introduction case case case case Seg3 Applications Applications

Q Definition of overall process

Figure 3: 4-Pillars Approach of Integrated PLM

These pillars are subject to further elaboration in the following sections.

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3.1 PLM Process and Organization

3.1.1 PLM Process Variants

Medium Medium Medium-high

Figure 4: PLM Process Variants

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3.1.2 PLM Process Principles

Principle One: Enhanced Stage-Gate Approach

Most telecommunications companies utilize the Stage-Gate approach

The typical PLM-Max process in the

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