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Establish Your Product and Service Leadership: How SAP Business Suite 7 Provides the Foundation to Efficiently Develop Innovative, Sustainable Products

by Thomas Ohnemus | SAPinsider

April 1, 2009

40% to 90% of new products fail in the marketplace. So how can companies ensure that they're investing development dollars in the right products?

Call it a silver lining, but I see the current economic downturn as a great opportunity for companies that produce goods and services. It’s a chance to clean up the portfolio (ridding it of underperforming goods that no longer meet customer demands) and instill a new focus on innovative and differentiating products. To seize this opportunity, product and service providers must ask themselves:

  • Which products should we offer to meet our organizational objectives and revenue targets?

  • Do we know how much it costs to develop and maintain our products?

  • How can we get products to market faster without sacrificing quality or increasing cost?

If you can’t answer these questions with confidence, your organization may be sacrificing time-to-market and market share, driving high development costs, facing compliance issues, and experiencing operational inefficiencies.

To overcome short-term challenges and still prepare the organization for long-term growth (see sidebar), manufacturers must develop strengths in three key areas:

  1. Efficient development for cost control

  2. Innovation for differentiation and long-term growth

  3. Sustainability and compliance for risk reduction

In this article, I’ll explain the challenges involved in mastering these three areas and how new user-friendly SAP capabilities, available with the release of SAP Business Suite 7, can help optimize your product and service leadership efforts (see sidebar).

Efficient Development — and Lower Costs — Through Increased Usability

Manufacturers are looking at how to design and develop products efficiently using existing or fewer resources. They’re keenly aware that, depending on the industry cluster, 40% to 90% of new products fail in the marketplace.1 So how can companies ensure that they’re investing development dollars in the right products? And how can they leverage resources, such as outsourced partners and collaborators, in the most efficient way while maintaining the balance between cost and value?

The most effective way to decrease time-to-profit is to bridge existing information gaps and IT silos and establish decision-support dashboards, enabling companies to holistically measure the critical combination of products, processes, and financials. However, closing the loop from actual manufacturing execution, field operation, and financial performance to product development has yet to become standard practice with product lifecycle management. What’s more, with companies continually striving to reduce cycle times, many are finding it difficult to achieve further substantial improvement, especially on new or breakthrough products.

To understand how their portfolios influence time-to-market, managers have two possible approaches to explore. The first is a set of tools to analyze their portfolio as it relates to risk and development capacity. The second is a set of techniques especially suited to improving the cycle time of new products. Both approaches are recommended for a comprehensive solution to greater competitiveness.

SAP’s solution offering for integrated product development provides both tools and techniques to help you tie together development, sourcing, manufacturing, and external partners, enabling collaborative development, embedded sourcing for materials and components, and integrated manufacturing for smooth production ramp-up and market launches. Portal and business intelligence technologies can also help provide real-time insight into key processes and performance indicators across your entire business network.

With the release of SAP Business Suite 7, one of SAP’s main objectives is to promote usability and simplicity.

Keeping It Simple

With the release of SAP Business Suite 7, one of SAP’s main objectives to serve customer efficiency needs is to promote usability and simplicity. To that end, a new easy-to-deploy and easy-to-use user interface provides information in an intelligent way to foster efficiency and productivity for power and occasional users. The user interface is based on the SAP NetWeaver Business Client standard and includes an enhanced product lifecycle management (PLM) dashboard and analytics.

For example, the new user-friendly, Web-based interface for a bill of materials (BOM) provides advanced display options and an overview of all BOM items and the details for one item together on one screen. Users can directly access documents, an object preview, and additional information about the materials. A new viewer — SAP Product Visualization — provides design and manufacturing process reviews, configuration control and management, visual routing, and quality inspection and reporting capabilities (see Figure 1). This intuitive and rich user interface is embedded in SAP Business Suite, allowing users to access the viewer through the SAP Product Lifecycle Management (SAP PLM) space as well as through SAP Customer Relationship Management (SAP CRM). An engineer can look at a product from a functional point of view, while manufacturing or service technicians can see how the same product is assembled or disassembled. The interface offers consistency and transparency between the users, promoting better communication.

Figure 1
Embedded product visualization capabilities enable easier and more efficient communication between users

Product-centric view capabilities within SAP PLM 7.0 integrate product-related information and analytics directly into the business application, supporting the user with a new level of quality when carrying out product design decisions (see Figure 2). Product information is aggregated from different sources within SAP Business Suite 7 and embedded in the user interface in a context-sensitive way. The context is defined by the main application (SAP PLM in the Figure 2 example).

Figure 2
The product-centric view (PCV) in SAP PLM 7.0 aggregates the enterprise information relevant to the end user in one user-friendly interface

Consider, for example, an engineer who is developing a new motherboard and needs information on a component he wants to incorporate into the design. On one configurable screen, he can now access a wealth of details about the component — for example, he can check its in-stock availability, quality record, compliance record, and pricing. With the right enterprise information easily accessible, one user can do more and make better decisions faster, driving efficiency and reducing cost (see sidebar).

Drive Innovation to Lay the Foundation for Long-Term Growth

Even in a bleak economy, companies have to lay the foundation for innovative products and services to stand apart from the competition. The business media, analysts, and many CEOs still consider innovation the key for long-term success.

But does innovation for the sake of innovation really help companies in a turbulent environment driven by globalization? Companies must understand their portfolios and have a clear handle on which products and services customers need and want. This is particularly important in a downturn economy, as customers’ buying behavior changes. Customers are now looking more carefully at a product’s price, quality, and personal value. Manufacturers need to examine their innovation strategies to adapt their processes to the change in consumer focus.

Keeping It Smart

Software and services within SAP Business Suite 7, particularly SAP PLM, enable and support continuous product and service innovation through a comprehensive approach that links strategy to execution. Only through a combination of business insight and business process integration can manufacturing companies connect key functions — including planning, innovation management, complex project execution, and product portfolio management — to transform their ability to employ innovation as a sustainable and profitable competitive advantage.

To drive new levels of performance, organizations need to integrate innovation with closed-loop support across all stages — and within the context of value-chain capabilities and strategic objectives. Using SAP Business Suite solutions, companies can achieve differentiation and growth by:

Improving responsiveness to new market and customer opportunities. Becoming more responsive requires comprehensive business intelligence and an aggregation of relevant knowledge, including product performance analytics, project pipeline, operational metrics, competitive information, market trends, and customer analysis. SAP provides rich business intelligence and analytic tools to support collaborative approaches to proactively identifying strategic roadmap and innovation opportunities.

Leveraging the right talent, partners, and capabilities in co-innovation processes. Enhancing your company’s core innovation competencies requires tools to support the critical front-end of the product and service development process. The SAP Product Definition application supports smart idea management and integrated concept development to capitalize on the best ideas and translate them into successful, innovative products.

Achieving speed and efficiency across complex programs and projects. Realizing this goal requires accessible information across project portfolios, human resources, and financial systems. The SAP Resource and Portfolio Management application provides comprehensive visibility and management capabilities designed to improve the ongoing selection, scoring, monitoring, and review of projects and associated resources.

Measuring the strategic impact of innovation investments against overall business performance metrics. This is fundamental to understanding the return on innovation initiatives and investments and to guide ongoing strategy and planning processes. SAP supports the development of product and service performance dashboards based on actual company-wide development, supply chain, manufacturing, support, and sales metrics that are required to assess the strategic impact of initiatives and investments and to provide the foundation for a sustained and continuous approach to product and service innovation.

Sustainability and Compliance Permeates Innovation and Development

Sustainability and compliance must play an integrated role throughout the innovation and development process. Once a product is manufactured, it’s often too late to redesign it to address any overlooked legal requirements — product changes can be very costly. Yet, so can claims for damages if a non-compliant product causes harm. Moreover, product recalls can be excessively expensive and damaging to your overall brand image and credibility.

The challenge, however, is how to adhere to sustainability and compliance requirements without compromising creativity and innovation — all while staying one step ahead of the competition in all process areas of the company.

Sustainability and compliance must play an integrated role throughout the innovation and development process.

Keeping It Safe

Embracing SAP’s approach to embedded product compliance can help your company minimize noncompliance risk — thereby protecting revenue and brand — by developing compliant product specifications, manufacturing a compliant product, and keeping the product compliant throughout its life cycle. SAP enables these goals by supporting compliant product development and design processes — for example, substance/material database checks — and providing compliance-focused visibility within a single, comprehensive, global framework across the entire life cycle of the product.

Product labeling is one example of SAP’s new capabilities that enable global product compliance. Labeling in SAP Recipe Management supports the process of assembling and transforming formula information into the final view of product technical data for use on product packaging. Product definition information developed and managed in SAP Recipe Management is used to create the three main components of food product labeling: nutrition, ingredient statement, and dietary information. The benefits are obvious: By automating the various steps required to gather the necessary data for labeling, performing calculations, and consolidating and rephrasing product information into finalized product label data, you can save a significant amount of time. And, companies can reduce the risk of product recalls caused by improperly labeled products.


In a strained economy, manufacturers are looking for quick ways to reduce product development costs while avoiding any damage to long-term business growth. To emerge from the short-term struggles on top, product and service providers would be well-served to adhere to three foundational strategies: making development more efficient, continuing to innovate and doing so smartly, and reducing risk through comprehensive sustainability and compliance efforts.

To help product and service leaders achieve these goals, SAP Business Suite 7 comes at just the right time. The solution’s integrated approach to product and service development enables consistency and flexibility at all stages of the process. And with SAP Business Suite’s dramatic UI improvements, end users can see and work with complex product-related data in a way that’s easy to understand and easy to use. This is great news for all enterprise users — not just the engineer or the CAD specialist — who can now come to their product and service decisions informed and equipped to make the right choice for the business.

For more information, visit or the PLM Business Process Expert Community at

Additional Resources

  • “7 Characteristics of a Winning Product Strategy: Introducing SAP’s Integrated Product Development Approach” by Thomas Ohnemus (SAP Insider, July-September 2008,

  • “Overcome Four Common Challenges of a Product Data Consolidation Project” by Davin Wilfrid (ERP Expert, Volume 1, Number 1,

Thomas Ohnemus ( is a Senior Director of Solution Marketing
for SAP Product Lifecycle Management (SAP PLM) and product and service leadership (PSL). He is responsible for SAP PLM and PSL marketing strategy, market analyses, and long-term strategy at SAP AG. He has over 20 years of experience as a PLM expert. Thomas has spent most of his career in the PLM software area, working primarily in implementation consulting, product management, and marketing. He holds a master’s degree in engineering.

1 “Eager Sellers and Stony Buyers: Understanding the Psychology of New-Product Adoption,” John T. Gourville, Harvard Business Review (June 2006). [back]

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