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The Engineering Executive's Strategic Agenda

Designing for the Enterprise and the Environment

June 2008

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© 2008 Aberdeen Group. Telephone: 617 854 5200

Executive Summary Research Benchmark

Aberdeen’s Research Benchmarks provide an in-depth and comprehensive look into process, procedure, methodologies, and technologies with best practice identification and actionable recommendations

When it comes to running an engineering organization, it seems executives are facing pressures that seem to be mounting by the day. Through a survey of over 600 discrete and process manufacturers, Aberdeen has found that while shrinking development schedules is the top pressure (60%), rising raw material costs (33%) and decreasing product price-points (28%) make for a difficult combination for the engineering organization. The first question to address is a simple one: given these formidable challenges, are any engineering organizations performing well?

Best-in-Class Performance According to their performance on four key metrics, respondents were classified into one of three tiers, the top 20% (Best-in-Class), the middle 50% (Industry Average) and the bottom 30% (Laggard). These criteria evaluated their ability to meet crucial and often conflicting goals, including the percentage of their products that meet the release to manufacturing target dates, customer or market requirements, product cost targets, and engineering phase development costs. Analysis of these reveals a large gap between Best-in-Class performers and their peers, most notably, they are:

• 33% more likely than the Industry Average and over twice as likely as Laggards to meet design release to manufacturing targets

• 18% more likely than the Industry Average and 91% more likely than Laggard performers to meet direct product cost targets

• 21% more likely than the Industry Average and 57% more likely than Laggards to meet engineering phase development cost targets

Strategies of the Best-in-Class Given that some engineering organizations are performing well and others are not, another question arises: what are the Best-in-Class doing differently? Fundamentally, they are pursuing two sets of strategies at a faster rate than other companies:

“We’re refining our processes to make natural short cuts more systematic. Our ability to respond to shorter cycles gives us a distinct advantage over competitors as long as our procedures are still effective enough to deliver on our promises.”

~ Campbell James Engineering Manager

Protected Mobility Systems Thales Australia

• Within their own domain, engineering executives of the Best-in-Class are assessing product performance early (71% versus 40% of Laggard companies), capturing and redeploying engineering knowledge (61% versus 42%), designing in a modular fashion (64% versus 45%), developing plans to protect intellectual property (52% versus 27%), and deploying lean principles to their organization (54% versus 30%).

• As part of a larger product steering council, these executives are also engineering their products for the enterprise and the environment by designing for service (71% versus 40%), cost or manufacturing (77% versus 55%), quality (67% versus 39%), and for green initiatives (53% versus 36%).

www.aberdeen.com Fax: 617 723 7897



Competitive Maturity Assessment While identification of differentiated strategies offers executive direction, more detail is often required for the tactical execution of change. Survey results show that firms enjoying Best-in-Class performance share several common characteristics. These stand out as differentiators of Best-in-Class performance, and include:

• Assessing and optimizing product performance and then correlating those results to real world tests. The Best-in-Class are 30% more likely to digital assess the structural and fluid flow characteristics of their design. Additionally, they are 50% more likely to place simulation tools in the hands of everyday engineers as casual users for directional analysis. Lastly, they are 45% more likely to use Computer-Aided Testing (CAT) applications for simulation and test correlation.

• Assessing their products against more than just form, fit and function such as compliance (85% versus 65%), quality (79% versus 64%), serviceability (81% vs. 57%) and raw material costs (84% versus 67%). The Best-in-Class enable this approach with applications and plug-ins that automate assessments of compliance (45% more likely), quality (47% more likely), and cost (30% more likely).

• Create, track, and manage formal interfaces between subsystems (86% more likely) and map product capabilities down to specific subsystems (97% more likely) in order to organize, coordinate, and enable outsourced design and platform design strategies.

• Educate the staff within the engineering department on Lean concepts and their application in engineering (72% more likely) and deploy Lean specialty tools to help track and measure their ability to streamline engineering processes (twice as likely).

Required Actions In addition to the specific recommendations in Chapter Three of this report, to achieve Best-in-Class performance, companies must:

• Assess product performance digitally in the design phase with simulation and analysis applications

• Correlate simulation and test results with CAT applications

• Assess product regulatory compliance, quality, serviceability, and cost with specialty applications and plug-ins

• Create, track, and manage interfaces as well as map requirements and product capabilities down to subsystems and subassemblies

• Deploy Lean methodologies in the engineering organization to gain operational efficiencies




© 2008 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897

Table of Contents Executive Summary....................................................................................................... 2

Best-in-Class Performance..................................................................................... 2 Strategies of the Best-in-Class .............................................................................. 2 Competitive Maturity Assessment....................................................................... 3 Required Actions...................................................................................................... 3

Chapter One: Benchmarking the Best-in-Class ..................................................... 6 The Challenges of the Engineering Executive.................................................... 6 The Maturity Class Framework............................................................................ 7 The Engineering Executive's Strategic Agenda.................................................. 8 The Best-in-Class PACE Model ..........................................................................12

Chapter Two: Benchmarking Requirements for Success ..................................14 Competitive Assessment......................................................................................14 Design for Form, Fit, and Function ....................................................................14 Engineering for the Enterprise and the Environment: Design for Green, Service, Cost and Quality.....................................................................................15 Distributed Design Gets Globalized and Modularized..................................18 Taking Lean Principles into Engineering............................................................21

Chapter Three: Required Actions .........................................................................23 Design for Form, Fit, and Function ....................................................................23 Engineering for the Enterprise and the Environment....................................23 Distributed and Modular Design Strategies.....................................................24 Taking Lean Principles into Engineering............................................................25

Appendix A: Research Methodology.....................................................................27 Appendix B: Related Aberdeen Research............................................................29

Figures Figure 1: Top Performers Earn Best-in-Class Status ............................................ 7 Figure 2: Strategies within the Engineering Sphere of Influence ........................ 8 Figure 3: Product Steering Council Strategies......................................................11

Tables Table 1: Top Five Pressures on Engineering Executives ...................................... 6 Table 2: The Best-in-Class PACE Framework .....................................................13 Table 3: Competitive Framework: Form, Fit, and Function..............................15 Table 4: Competitive Framework - Design for Green, Service, Cost and Quality ...........................................................................................................................16 Table 5: Supporting Technology - Design for Green, Service, Cost, and Quality ...........................................................................................................................17 Table 6: Competitive Framework - Distributed Design ....................................18 Table 7: Supporting Technology - Distributed Design.......................................20



Table 8: The Competitive Framework - Taking Lean to Engineering.............21 Table 9: The PACE Framework Key ......................................................................28 Table 10: The Competitive Framework Key........................................................28 Table 11: The Relationship Between PACE and the Competitive Framework.........................................................................................................................................28



Chapter One: Benchmarking the Best-in-Class

The Challenges of the Engineering Executive Fast Facts

√ Within their own domain, engineering executives of the Best-in-Class are assessing product performance early (71% versus 40%), capturing and redeploying engineering knowledge (61% versus 42%), designing in a modular fashion (64% versus 45%), developing plans to protect intellectual property (52% versus 27%) and deploying lean principles to their organization (54% versus 30%)

√ As part of a larger product steering council, these executives are also engineering their products for the enterprise and the environment by designing for service (71% versus 40%), cost or manufacturing (77% versus. 55%), quality (67% versus 39%) and for green initiatives (53% versus 36%)

The pressures weighing on engineering executives fall into two general categories: the issues that stem from the performance of their department and the issues that stem directly from the products (Table 1).

Table 1: Top Five Pressures on Engineering Executives

All Respondents Pressures

Project schedules for engineering products are shortening 60%

Cost of raw goods is increasing (e.g. steel, aluminum, etc.) 33%

Development budgets for product engineering are shrinking 32%

Decreasing target product price-points driving down product cost targets 28%

Market or customer requirements demand increasingly “smarter” products 22%

Source: Aberdeen Group, June 2008

On the operational side, executives must contend with simultaneously shrinking schedules and budgets. This is part of the overall trend of product development. Executives are simply demanding that more be done with less time and money. Interestingly, the pressure to improve the pace of engineering processes appears to create an increasingly greater burden on departments, as shortening product schedules are reported nearly twice as often as shrinking budgets (60% compared to 33%).

From a product perspective, two pressures make designing and engineering products a highly constrained problem. On one hand, the cost of natural resources necessary to develop products is skyrocketing (33%). This is related to the rapid industrialization currently underway in developing countries such as China, India, and Brazil. The explosive development of infrastructure in these regions has driven the price of natural resources up dramatically. At the same time, market pressure is driving the price-points of products lower (28%). The result is that product profits are squeezed from both ends.

In addition to these conflicting cost pressures, products must be more capable than ever before. Markets are demanding products that are easier to use, more connected, and more intelligent than at any point in the past (22%). This only intensifies the challenges on the engineering department, which is tasked with developing more advanced products under tighter constraints.




The Maturity Class Framework Between May and June 2008, Aberdeen Group surveyed over 600 manufacturers about the strategies they are adopting to improve the performance of the engineering department. To determine what strategies can provide the most tangible business benefits as well as how they can be most effectively implemented, Aberdeen benchmarked respondents according to four key performance criteria. These criteria evaluated their ability to meet crucial engineering goals, including the percentage of products meeting the following:

• Release to manufacturing

• Customer or market requirements

• Product cost targets

• Engineering phase development cost targets

Using these metrics, Aberdeen classified companies into the top 20% (Best-in-Class), the middle 50% (Industry Average) and the bottom 30% (Laggard) of performers. Figure 1 displays the performance gaps that define each category.

Figure 1: Top Performers Earn Best-in-Class Status

90% 91% 88% 88%73% 81% 75% 73%

56%46%

60%42%

0%

50%

100%

Release design tomanufacturing on

time

Satisfy targetcustomer or market

requirements

Product cost targets Engineering phasedevelopment costs

Best-in-Class Industry Average Laggard


These take on additional meaning in light of the multi-faceted pressures on the engineering organization. For example, shrinking schedules is the top pressure on engineering organizations, and while the Best-in-Class are hitting their targets at a high pace, the Laggards are struggling mightily, meeting release to manufacturing targets only 42% of the time. Even though they are painfully aware that speed is a problem, they are still searching for the means to resolve it. At the same time, there is a large gap between the Best-in-Class and Laggards' ability to meet development costs in the engineering phase. The Best-in-Class meet engineering-related development costs 57% more often than Laggard organizations.




What is important to keep in mind is how these measures can impact one another. For example, an engineering organization can rush a product to design release on time, but doing so can inordinately drive product costs higher as the time has not been taken to optimize costs. The Best-in-Class are not just achieving in one area. They are able address the full range of their pressures and fulfill disparate performance targets at the same time, releasing products that meet customer and market requirements on time on schedule, but also under budget.

The Engineering Executive's Strategic Agenda As engineering executives determine how to design products with a host of concerns in mind beyond the traditional form, fit, and function, they are also put under tighter constraints in terms of both time and money. Many of strategies they are adopting are rooted in the need for an innovative response. Just as engineering executives are burdened by both pressures related to the operation of the department and the product itself, the strategies they have available can either be determined internally or dictated by product steering decisions. On one hand, strategies that address the operational needs of the department are solely at the discretion of the engineering executive. On the other, there are strategies that are related to the product itself. These are often decided upon by the enterprise at large. Both groups can have a considerable impact on how an engineering organization operates.

Strategies within the Engineering Sphere of Influence Under the direction of the engineering organization, a number of strategies proved to be pursued at a higher frequency than the Industry Average (Figure 2). These include initiatives designed to improve the efficiency of the engineering organization and largely address the challenges of time and cost demands that were reported as the top three pressures on the engineering department.

Figure 2: Strategies within the Engineering Sphere of Influence

52%54%61%64%72%

40%40%42%53%51%

27%30%45% 42%40%

0%

25%

50%

75%

Get productperformance'right the f irst

time'

Design productsin a platform

fashion

Capture andredeploy designand engineering

know ledge

Apply leanprinciples to

engineering orR&D

Increaseprotection of

productintellectualproperty






Apply Lean principles to engineering or R&D. Originally popularized by Toyota Motor Corporation, Lean principles have been present in the manufacturing organizations of many companies since the early 1980s. Lean has taken many forms since the emergence of the Toyota Production System, expanding significantly to include how companies develop products as well as manage supply chains. In all cases, the basic tenets of Lean have remained the same: the elimination of 'waste' and non-valued added tasks. As manufacturers have seen success with Lean programs, the concepts have been applied upstream to the new product development process. The extension of Lean into engineering is an interesting development as the engineering organization continues to transform their processes from a “black art” that is difficult for non-engineers to understand to a more transparent and formally defined process.

Lean manufacturing is often about the reduction of operating costs, reported by 79% of participants in Aberdeen's February 2008 Extending the Lean Enterprise Benchmark Report. Within product development, however, Lean is more often about streamlining repetitive and redundant processes in order to free engineers to focus on innovation. To this end, Aberdeen's May 2007 Lean Product Development Benchmark Report identifies how Lean product development principles are leveraged by Best-in-Class enterprises to create 53% more productive time per employee than Industry Average performers. As with the larger product development process, Lean engineering can help alleviate the challenges created by tightening project schedules. The Best-in-Class are nearly twice as likely as Laggard organizations that routinely struggle to meet engineering phase development costs and release to manufacturing targets.

Capture and redeploy design and engineering knowledge. With this strategy, engineering executives are striving to capture the implicit knowledge that their engineers maintain in their minds in a reusable form. Why? The drivers can be manifold, including the launch of a new offshore technical center or the transition to an automated configuration system. In all cases, the concept is to commit that knowledge to some reusable form, most typically a digital form, so it can be leveraged again. The Best-in-Class are 45% more likely than the Industry Average to adopt this strategy.

"We have improved our performance by having a disciplined process for customization and continuously improving that process by eliminating handoffs, eliminating waste, improving process time, etc. We are known for this in our industry and attribute much of our profitable growth to this strategy."

~ David Mommaerts, Business Process Manager,

KI

Design products in a platform fashion. When it comes to product design, the engineering organization is often asked to achieve multiple and contradictory objectives. For example, the trend of mass personalization of products demands that engineers design products that can be configured to a wide variety of variation. However at the same time, the procurement concepts that hold that larger scale purchases of the same parts yield deeper discounts continue to drive engineering organizations toward increased part reuse and consolidation.

A concept that addresses both of these demands is modular design. To this end, Aberdeen's March 2008 Tailoring Products to Customer Preferences Benchmark Report found companies are trying to do a better job of meeting customer needs and are using modular design as a cost effective way of delivering custom products. The concept is that the design of


http://www.aberdeen.com/summary/report/benchmark/4648-RA-extending-lean-enterprise.asp

http://www.aberdeen.com/summary/report/benchmark/4648-RA-extending-lean-enterprise.asp

http://www.aberdeen.com/summary/report/benchmark/4009-RA-Lean-Product-Dev.asp

http://aberdeen.com/summary/report/benchmark/4666-RA-tailoring-products-preferences.asp



products on a platform or in a modular fashion promises increases variation while simultaneously consolidating and reusing parts. As a result, many engineering organizations, including 64% of the Best-in-Class, are pursuing this strategy.

Develop a plan to increase protection of Intellectual Property (IP). Outsourcing of design is a simple fact of today's product development effort. Findings from Aberdeen Group's November 2006 Protecting Product IP Benchmark Report demonstrate that when it comes to this issue, the engineering organization is caught between a rock and a hard place. Global and outsourced design strategies require that these departments share detailed product information and data to in order to facilitate collaboration. However, they are imminently aware of how much IP is exposed when doing so. Forty-eight percent (48%) of the respondents to the Protecting Product IP Benchmark Report study identify the consequence of unprotected IP to lost market share, 44% report lost product sales, and 30% linked IP loss to increasing commoditization of their products.

Despite their recognition of the importance of keeping IP secure, only 42% of the Best-in-Class indicate having plans to increase the protection of product IP, although this is still 30% more than the Industry Average. One reason for this disparity may be related to the emergence of many recent technological advances which offer an opportunity to securely share product information and data with outsourced design partners, particularly Digital Rights Management (DRM) solutions. To this end, Aberdeen Group’s Product Innovation Agenda 2010 study found that investments in DRM are expected to grow 269% from 13% to 48% of Best-in-Class performers by 2010. However, keeping IP secure can involve more than supporting technology, to include better documentation of innovations as well as adapting design process to control how much design data is made available to partners.

Get product performance 'right the first time' in the design phase. Even though the concept of using simulation early in the product development cycle initially emerged almost a decade ago, it remains a frequently pursued initiative today. In fact, not only is it the most widespread strategy amongst the Best-in-Class at 71%, it is also the most differentiated compared to Laggards with a 32% difference. What strategic differentiation does this initiative offer? It comes down to cost as well as time. The pressures of increased cost of goods and decreased price-points are motivating manufacturers to find innovative ways to use new materials and less material overall. But most importantly, this strategy addresses the pressure of shortened engineering schedules by avoiding multiple rounds of physical prototyping. The idea is that by assessing product performance earlier, before designs have been finalized, means that issues can be resolved while there are more options available to resolve them. This, in turn, can mean less physical prototypes are built during the testing phase of product development. Ultimately, this translates to less time and lower development costs in the product development lifecycle.

“Simulation is used on our products to predict the performance before we invest $500K or so in a fully functional prototype. The output from the different simulations have proven to be fairly good predictors of performance. They have also pointed out weaknesses that we have addressed in various ways before implementing a design. ”

~ Chief Executive Officer Medical Device Manufacturer


http://aberdeen.com/summary/report/benchmark/RA_IP_JmB_3676.asp




http://aberdeen.com/summary/report/benchmark/4170-RA-inovation-agenda-2010.asp



What’s the tangible benefit? Aberdeen has attempted to validate this strategy in multiple studies. The Simulation-Driven Design Benchmark Report found that Best-in-Class performers following this strategy are able to bring products to market up to an average 158 days earlier and $1,900,000 saved in product development costs than the Industry Average for the most complex products. More recently, the September 2007 Engineering Decision Support: Driving Better Product Decisions and Speed to Market Benchmark Report found that, depending on product complexity the elimination of even one physical prototype can mean up to 99 days shaved off product development schedules and $1,200,000 saved on product development budgets. Overall, these findings point to the fact that using simulation and analysis early in the product development process is imperative and almost cannot be considered simply an option anymore.

Product Steering Council Strategies When it comes to the strategies impacting the engineering organization driven by product steering councils, three very familiar Design for X (DfX) strategies as well as a new socio-economic one emerge (Figure 3). The implication here is that engineering can no longer design and develop a product in a vacuum. Increasingly, the considerations of other organizations like service, manufacturing, procurement, and quality must be taken into account earlier in the product development process.

Figure 3: Product Steering Council Strategies

67%77%71%53% 52%

71%65%40%

55%39%40%36%

0%

40%

80%

Design green oreco-friendly

products

Design products forservice or

maintenance

Design products forcost or

manufacturingconsiderations

Design quality intoproducts



Design green or eco-friendly products. The Best-in-Class are 33% more likely than the Industry Average to report that they are pursuing the design of green or eco-friendly products. This strategy includes not only the design of products that more efficiently consume natural resources, but it also attempts to design that are more ecologically friendly. In addition, it can refer to the development of products that have less environmental impact, including designing products for recycleablity and that can be disposed of in an eco-friendly manner.

To some degree, this trend started with compliance with regulatory statutes in order to avoid stop-shipments and avoid governmental fines. However,


http://www.aberdeen.com/summary/report/benchmark/BM_Simulation_driven_Design_3591.asp

http://www.aberdeen.com/summary/report/benchmark/4151-RA-product-decisions-speed.asp




green has become a marketing and sales driver for increased revenues. Regardless of the drivers, green has taken an increasingly more prominent place on the executive agenda, with 47% of respondents to The 2008 Aberdeen Report indicating that they have green initiatives in place. This means that engineering executives are being tasked with finding innovative means to make products greener.

Design products for service or maintenance. For products with longer operating lifecycles, the serviceability and maintainability of the product must be considered early in the design phase. This includes determining how to diagnose product issues as well as execute disassembly, service and assembly procedures often in field conditions. This is often adopted in sectors that rely on service and maintenance as major components of product profitability, such as industrial equipment manufacturing. For these companies in particular, unplanned warranty and service costs can erode profitability over a product's lifecycle.

Design products for cost or manufacturing considerations. With the cost of raw goods skyrocketing in the world economy while product price-points are simultaneously being driven down, engineering organizations are being forced to become keenly aware of the cost implications of their decisions, both from a recurring and nonrecurring cost perspective. The strategy here is to assess and address this critical aspect of the product early and often throughout the design phase.

Designing quality into products. A specific focus on designing for higher product quality can have two important downstream benefits. One is the reduction of non-conformances in production after the design is released to manufacturing. The other is that it answers customer demand for better product operability and addresses the pressure of market or customer demand for increasingly “smarter” products. Designing quality into products often does not have immediate benefits within the engineering organization, but can impact product profitability. It is also often related to design for service and maintenance.

The Best-in-Class PACE Model There is no one strategy that was reported overwhelmingly by the Best-in-Class. No easy secret to improving performance. However, these companies are more likely to have implemented a number of the top strategies that are being talked about. What they are doing is balancing strategies in a way that allows them to address the diverse pressures on their organization.

Achieving the promised benefits of any of these strategies has as much to do with their effective execution as they do with adoption. This requires investment more than the adoption of a set of tenets, but the coordination of business processes, distribution of information, organizational alignment and supporting technologies. Table 2 summarizes the capabilities that Aberdeen found to be most clearly tied to Best-in-Class performance.

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Table 2: The Best-in-Class PACE Framework

Pressures Actions Capabilities Enablers Project schedules for engineering products are shortening Increasing raw materials costs and shrinking engineering budgets

Apply Lean principles to the engineering organization Get product performance right the first time in the design phase Design products in a platform fashion Design for the environment and for the enterprise

Product capabilities or requirements mapped to specific subsystems Formal interfaces between subsystems are defined, tracked, and managed Experts with downstream insight into design decisions are embedded into the engineering department The results of simulation and physical tests are correlated to one another

Computer Aided Test (CAT) Regulatory management Requirements management Project management and collaboration applications Workflow Cost assessment Tolerance analysis


Aberdeen Insights — Strategy

Often, engineering is thought of as a black-box organization and has been left alone to work the magic that hardly anyone else within the company could understand. The advent of 3D modeling brought a change in this thinking. As designs could be interrogated interactively, as virtual models, project managers and executive management gained the means to understand the progress of a products performance.

This has whet the appetite of many corporate executives, who have sought greater visibility into the performance of the engineering department. This appears likely to only increase. The 2008 Aberdeen Report findings indicate that the application of Business Intelligence (BI) tools to product development is the top area of technology investment in product development with 37% of respondents currently using these tools, and another 55% planning to implement them in the coming year. The prominence of Lean development and the host of strategies that focus on downstream benefits of design decisions also indicate the greater interest the executive suite is taking in engineering.

Often this leaves engineering executives with not just the problem of improving the performance of their departments, but doing so under greater scrutiny. With Laggards struggling to meet their performance targets half of the time and the Best-in-Class consistently meeting or exceeding expectations, the way that these companies execute their programs is often as important as what programs they adopt.

In the next chapter, we will see what the top performers are doing to achieve these gains.





Chapter Two: Benchmarking Requirements for Success

Competitive Assessment Aberdeen Group analyzed the aggregated metrics of surveyed companies to determine whether their performance ranked as Best-in-Class, Industry Average, or Laggard. In addition to having common performance levels, each class also shared characteristics in five key categories: (1) process (the approaches they take to execute their daily operations); (2) organization (corporate focus and collaboration among stakeholders); (3) knowledge management (contextualizing data and exposing it to key stakeholders); (4) technology (the selection of appropriate tools and effective deployment of those tools); and (5) performance management (the ability of the organization to measure their results to improve business).

These characteristics (identified in Table 3 through Table 8) serve as a guideline for best practices and describes how the Best-in-Class differentiate themselves within four distinct categories: assessing and optimizing product performance earlier, engineering for the enterprise and the environment, modular and global design strategies, and taking Lean to engineering.

Design for Form, Fit, and Function For as long as products have been developed, three tasks have always been on engineering's critical path: define the product's form, fit, and function. Simulation tools have begun to allow engineering organizations to perform this work sooner and assess many features of product designs before physical prototypes are built. The Best-in-Class are 41% more likely than the Industry Average to use Computer Aided Test (CAT) tools. However, the important theme here is not simply that the Best-in-Class are using these tools to “get it right the first time,” but how they are using them.

These companies begin by assessing the structural integrity and examining the fluid flow or heating characteristics of the product. These are steps being taken by all manufacturers and are not particularly differentiating of Best-in-Class performance. However, these capabilities are critical aspects of engineering's function and lay the groundwork for the more advanced steps of how the Best-in-Class leverage simulation.

Additionally, in order to ensure that results from the digital world match with the real one, they are 38% more likely than the Industry Average to correlate the results of simulations with tests performed in physical environments. This is similar to the findings of Aberdeen's September 2007 Engineering Decision Support study which found a connection between correlation of digital and physical tests and Best-in-Class performance. Through iteration on the simulation model and continued correlations, companies can better understand what will and what won’t work with virtual prototypes. Over time, the answers from the virtual world and real world will converge, increasing the accuracy of simulations.

Fast Facts: Form, Fit, and Function

√ The Best-in-Class are 30% more likely to digital assess the structural and fluid flow characteristics of their design in order to optimize performance

√ Additionally, they are 50% more likely to place simulation tools in the hands of everyday engineers as casual users for directional analysis





Table 3: Competitive Framework: Form, Fit, and Function “We have tried increasing the amount of simulations we run on our products to improve performance. The hope is that this will cut out a number of Engineering Change cycles and allow us to meet the competition's ability to spit out product quickly.”

~ Engineering Manager Consumer Electronics

Manufacturer

Best-in-Class Industry Average Laggards

Product simulations performed by casual users 28% 27% 19%

Assess structural integrity of the product 81% 83% 63%

Examine fluid flow and / or heating characteristics of the product 57% 59% 46%

Optimize product to satisfy requirements 80% 72% 59%

Correlate the results of simulations and test to one another

Process

77% 56% 43%Computer Aided Test (CAT) software application

Enabler 41% 29% 29%


In particular, these performers are allowing casual users to perform product simulations. This is an emerging trend among all three tiers of the maturity class framework, although the Best-in-Class are currently 47% more likely than Laggards to be doing it. Allowing non-specialist engineers to perform more mundane and directional simulation tasks frees expert users to focus on more advanced tasks. It is also closely tied to the strategy of capturing and redeploying lessons learned of how to use simulation and analysis tools not only in an easy fashion, but also more accurately.

The Best-in-Class are more likely to use simulation to optimize the product in order to satisfy requirements. Optimization can include a number of approaches used to achieve the right balance between form, fit, function and other characteristics of a product like cost, manufacturability and eco-friendly considerations. Engineers might optimize their products through iterations, automated optimization approaches as well as automated design of experiment applications and systems. But in the end, the purpose is to not over-engineer a product. Interestingly, it is a practice adopted by the Industry Average nearly as often, but where Laggards are falling considerably behind.

Engineering for the Enterprise and the Environment: Design for Green, Service, Cost and Quality As engineering is being opened up to the larger organization, it's not just about form, fit, and function anymore. A myriad of other considerations must be taken into account when designing and developing products, ranging from other organizational concerns within the enterprise to regulatory compliance and even corporate social and environmental responsibility.




Table 4: Competitive Framework - Design for Green, Service, Cost and Quality

Fast Facts: Enterprise and Environment

√ Assessing their products against more than just form, fit and function such as compliance (85% versus 65%), quality (79% versus 64%), serviceability (81% versus 57%) and raw material costs (84% versus 67%)

√ The Best-in-Class enable this approach with applications and plug-ins that automate assessments of compliance (45% more likely), quality (47% more likely) and cost (30% more likely)


Check product substance quantities against regulations and requirements

85% 67% 65%Develop a tolerance stack-up and understand resulting quality implications

79% 70% 64%Assess the serviceability and / or maintainability of the product

81% 74% 57%Analyze the raw materials costs within the product

Process

84% 77% 67%Manufacturing experts embedded within the engineering department

80% 59% 48%Service experts embedded within the engineering department

64% 38% 30%Procurement experts embedded within the engineering departments

Organization

56% 41% 31%


The Best-in-Class are expanding from the traditional mandate of engineering to assess the product against a wide range of considerations in digital form. Again, the goal is to identify and resolve as many issues as possible early on in the design phase when more options are available instead of waiting for a physical item. To this end, they are 27% more likely than the Industry Average to use digital models to check substance quantities. They are also more likely to perform tolerance stackups and analyze the raw material costs within the product. In addition, they are more likely to assess product serviceability and maintainability early and often when iterations are easier to perform and are less costly.

In order to better design for considerations outside of engineering, the Best-in-Class embed subject matter experts within the design team. Specifically, they are 36% more likely than the Industry Average to have manufacturing experts, 37% more likely to have procurement experts, and 68% more likely to have service experts sit within the engineering office to provide constant feedback on the downstream impact of design decisions.

However, having experts on hand to review all design decisions is not a scaleable solution. The Best-in-Class supplement that approach with additional software tools (Table 5). The Best-in-Class are more likely to use a range of applications, plug-ins, and systems to assess and track the designs against their goals for eco-friendly operation, serviceability, cost, quality, and




manufacturability. By taking advantage of automation in this way to track and assess more mundane aspects of their products, they enable embedded experts to focus their efforts on larger problems. Many of these tools are now plug-ins to CAD applications. This allows engineers to use the tools in a familiar environment and reuse existing engineering assets, such as the 3D model.

Table 5: Supporting Technology - Design for Green, Service, Cost, and Quality


Regulatory management systems 51% 35% 35%

Cost assessment software applications or plug-ins 31% 24% 24%

Manufacturability assessment software applications / plug-ins 29% 23% 17%

Tolerance analysis software applications / plug-ins 41% 35% 28%


Case Study — Industrial Equipment Supplier

A manufacturer of semiconductor processing supplier produces complex electromechanical systems used in the manufacture of products. Much of their products are used in 24/7 production facilities, where ease of service is a basic need. They design their products with this in mind, to ensure that the design team understands the requirements of end use and think more like a user than a designer. This has resulted in a simpler product that they find are more tailored to their customer’s requirements.

They are taking steps to better asses the accuracy of planning. Many of the products they design are leading edge technology, so they often do not have established practices to follow. How well they assess the efforts required in advance can have a major impact on the success of the current and even future products.

This also involves a more critical view on project prioritization, focusing resources on fewer projects. ” We have instigated weekly briefing meetings and monthly full reviews, with at least one Board member is present at both. These are more to assist with removing bottlenecks than check specifically on progress,” reports the engineering Business Director of this organization, “but the weekly meetings do have the effect of giving short event horizons to almost every activity.”



Distributed Design Gets Globalized and Modularized Fast Facts: Distributed Design

√ The Best-in-Class create, track, and manage formal interfaces between subsystems (86% more likely) and map product capabilities down to specific subsystems (97% more likely) in order to organize, coordinate, and enable outsourced design and platform design strategies

Many of the capabilities that the Best-in-Class exhibit are applicable to both global design and modular design strategies. Both involve a form of distributed design, whether it’s the parts of the product itself or the design team that is distributed. For each, the approach taken by the Best-in-Class follows two major themes:

• Mapping product capabilities or requirements to specific subsystems. When a product concept is first defined, specific capabilities or requirements are defined so the product can be a success in the market. What is not clear, however, is how these capabilities or requirements are fulfilled by each aspect of the product, especially as complexity increases. The Best-in-Class are 30% more likely than the Industry Average and twice as likely as Laggards to formally map capabilities or requirements down to specific subsystems or subassemblies. This provides a means of communicating what an aspect of a design needs to do to that specific owner, removing any ambiguity of what the subsystem or subassembly needs to achieve.

• Defining formal interfaces. The Best-in-Class formally define items called interfaces that describe how a subsystem or subassembly engage and interact. These often include geometric definitions such as the 2D outline of mating surfaces as well as parametric information such as the definition of the communication protocol between a control box and a sensor. Changes to the interface notify owners of the subsystems so they can understand the implication of that change on their subsystem and react accordingly.

How these two aspects apply to global and modular strategies specifically are discussed below.

Table 6: Competitive Framework - Distributed Design


Create, track, and manage formal interfaces between subsystems or subassemblies

69% 60% 37%

Map product capabilities or requirements down to specific subsystems, subassemblies, or parts

73% 56% 37%

Synchronize design data between distributed design locations

57% 46% 32%

Provide remote access to design data to external parties

Process

55% 35% 31%





Supporting Distributed Design Whether it's new offshore technical centers being opened or outsourced design to an external partner, distributed design is simply a fact of today's product development environment. Being productive and efficient in this type of environment requires some unique approaches compared to a co-located engineering organization. Here's how each of the capabilities described above provide value:

“We have adopted a concurrent engineering approach, following a top-down design methodology. We provide shrink wraps or STL data of adjacent parts / components / sub-systems to external stakeholders, enabling them to participate effectively in the design process. This has allowed improved visualization of the entire design, error free designs, and quicker reviews.”

~ Director Engineering Operations

Industrial Equipment Manufacturer

• Interfaces for distributed design. Managing change across subsystems or subassemblies is never easy. Distributed design teams make it even harder. In these scenarios, interfaces are used as a formal means of communication for engineering groups. When engineering groups are thousands of miles away, this sort of organized control of change reduces the chances of a miscommunicated change of turning into a design error.

• Mapped capabilities or requirements for distributed design. In a similar fashion to how interfaces are used in a distributed design scenario, explicitly linking a requirement to a subsystem enables the associated engineering stakeholder know exactly what tasks need to be accomplished. This removes ambiguity regardless of communication skills and language barriers.

• Getting on the same page with product data. A significant challenge involved in the coordination of outsourced design efforts is the traditionally large file size of design data. As distributed engineers make design decisions, it is important they are fully informed of other engineer's design decisions. This means they need to see the design data that is relevant to their subsystem. The Best-in-Class are accomplishing this by synchronizing design data between distributed design locations. They are also using design data translation software applications to get that data into the right format. All in all, they are making design decisions based on the most recent information.

• Protecting product data. In addition to communication challenges with outsourced design, manufacturers are caught in a catch-22 when it comes to sharing product data with their outsourced partners. On one hand, they want to facilitate collaboration. On the other, they are exposed to the risk of product data getting to their competitor. The Best-in-Class are addressing this issue with secure sharing portals along with Digital Rights Management (DRM). Secure sharing portals allow manufacturers to share their design data without the risk of competitors getting the data easily. Additionally, DRM adds some redundant security, where even if a competitor gets the design data files, they cannot open them directly.




Table 7: Supporting Technology - Distributed Design


Requirements management capabilities of PLM 39% 34% 18%

Project management capabilities of PLM 48% 36% 22%

Data sharing portals (outside the firewall) 44% 30% 20%

DRM technology (IP protection) 34% 16% 13%

Design data translation software applications 44% 35% 22%

Real-time design collaboration applications 36% 27% 18%

Meeting collaboration applications 62% 46% 45%

Source, Aberdeen Group, June 2008

Taking Products Modular In the end, modular design is about creating interchangeability through standardized interfaces with the right capabilities deliberately delivered by specific subsystems. It promises increased product variation and increased part reuse, which provides the ability to vary product capabilities without performing custom work. How do the Best-in-Class approach modular design?

• Interfaces for modular design. Manufacturers would like the ability to switch out a subsystem of a product and change the product's capabilities. The barrier to doing this easily in the past has been that each subsystem has often had different ways to work with its mating subsystems. A unique interface had to be defined for each and every combination of subsystems. Standardizing interfaces allow for increased variability without unique interactions between subsystems. This means that they can be swapped out easily and quickly.

• Mapped capabilities or capabilities for modular design. Migrating to a modular design, however, isn't as simple as standardizing interfaces. Another hurdle has been that single subsystems often have an integral design that offers multiple capabilities, such as a mobile phone with an embedded system that enabled text messaging and GPS navigation. When a manufacturer wanted to offer a product variant that had one capability and not the other, perhaps the text messaging without the GPS navigation, the manufacturer had to develop a new embedded system. The Best-in-Class take a different approach. They explicitly map which capabilities or requirements will be delivered by which subsystem.



They will often go through iterations given the different product variants they desire. Ultimately, this enables the manufacturer to switch out a specific subsystem and get the exact capability set they need to serve the market.

Taking Lean Principles into Engineering Engineering executives are pursuing Lean in order to improve the efficiency of their organizations. Extending Lean to the engineering organization starts with simply educating the engineering organization on Lean concepts. The Best-in-Class are 34% more likely than the Industry Average to educate engineers on Lean concepts. In addition, the Best-in-Class are more likely to track specific metrics as a measure of engineering productivity. This often will take the form of a dashboard or scoreboard that lays out the metrics so they can be easily understood by executives. Rather than do this in an ad hoc or informal way, the Best-in-Class use specialized applications to track and measure their progress against these metrics. They are 52% more likely than the Industry Average to take advantage of these tools. They also use the workflow capabilities of Product Lifecycle Management (PLM) as a means to remove inefficiencies from the process.

Fast Facts: Lean Engineering

√ The Best-in-Class educate the staff within the engineering department on Lean concepts and their application in engineering (72% more likely) and deploy Lean specialty tools to help track and measure their ability to streamline engineering processes (twice as likely)

Table 8: The Competitive Framework - Taking Lean to Engineering

“We have fostered a Lean culture through “top down” and “bottom up” corporate lean objectives. We have robust new product development (NPD) processes that are documented and continuously evolve as we learn, enabling us to reduce non-value-added steps or processes.”

~ Dave Converse Director of Engineering

Exmark Manufacturing Co. Inc., a division of The Toro Company

Best-in-Class Industry

Average Laggard

Knowledge and application of Lean concepts within engineering (or R&D) Process

55% 41% 32%

Track specific metrics as means to measure engineering productivity Performance

Measurement 57% 47% 39%

Specialty tools for Lean

41% 27% 20%

Workflow capabilities of PLM Technology

Enablers

40% 33% 26%





Aberdeen Insights — Technology

Designing for form, fit, and function has always been and will continue to be engineering's mandate. Designing for cost, manufacturing, quality, and service have been ongoing initiatives for some years. Adding modularity to product designs and design outsourcing are trends that have been pursued heavily in the last five years.

What are truly on the horizon are Green and Lean. Green has grown out of regulatory compliance into an outwardly facing program. The transition to green makes the difference between documenting regulated substances, emissions, and other metrics to governmental bodies to full disclosure supporting a public stance on socio-economic issues. Amazingly, this trend is actually sweeping through what were once thought to be commodity markets and offering product differentiation.

The other trend is Lean. It is an older concept than green but has only begun to find traction with engineering organizations. While it has yielded enormous success in manufacturing organizations, engineering organizations cringe at thoughts of Lean's application to design. This resistance to Lean has become prevalent enough that a Lean engineering initiative often must be renamed to something more palatable to engineering minds. Yet the benefits can be significant in an environment where time is precious and increasingly compressed.



Chapter Three: Required Actions

Fast Facts

No one program stands out as a differentiator of Best-in-Class performance. It's the steps these companies take in the implementation of these programs that makes the difference. The following recommendations can benefit engineering organizations regardless of the initiative they pursue:

√ Assess product performance digitally in the design phase with simulation and analysis applications

√ Correlate simulation and test results with Computer-Aided Testing (CAT) applications

√ Assess product regulatory compliance, quality, serviceability, and cost with specialty applications and plug-ins

√ Create, track, and manage interfaces as well as map requirements and product capabilities down to subsystems and subassemblies

Whether an engineering organization is attempting to improve their ability to assess product form, fit, and function; to streamline processes with Lean principles; expand the scope of what's taken into account in engineering decisions; or adopt distributed design strategies, the following actions will help spur the necessary performance improvements:

Design for Form, Fit, and Function • Laggard organizations - optimize the product to satisfy

requirements. Using simulation analysis to drive product development isn't just about meeting the basic requirements of form, fit, and function anymore. By driving optimized product performance with simulation, companies have the potential to avoid unnecessary delays and costs created by engineering change orders in the testing phase and after the release to manufacturing. The Best-in-Class are 36% more likely than Laggards to do so.

• Industry Average organizations - correlate physical test results and simulation data. The Best-in-Class are able to improve the accuracy of their product assessments not simply by validating simulation data with physical test results, but also by using simulation data to better plan and prepare physical tests. This is an important step for Industry Average performers looking to improve the efficacy of both physical and digital tests.

• Best-in-Class organizations - enable casual users to perform simulations. A reoccurring theme that has emerged in this study is that engineering departments can improve operational effectiveness by allowing experts to focus on the issues that require their expertise. Only 28% of the Best-in-Class currently allow casual users to perform simulations. Enabling these users to perform mundane and repetitive simulation tasks in turn enables expert users to focus on problems with a broader impact on the enterprise.

Engineering for the Enterprise and the Environment • Laggard organizations - check product substance quantities

and develop tolerance stack-ups. Regardless of whether they are designing for cost, quality, or environmental impact, the Best-in-Class take a wider range of factors into consideration than Laggards. In particular, they are 31% more likely than Laggard organizations to check substance quantities against product requirements and 23% more likely to develop tolerance stack-ups. In order to better design for a wider range of concerns, Laggards must also widen the scope of product qualities they evaluate.




• Industry Average organizations - automate the assessment of product components with specialty tools. The Best-in-Class are 46% more likely than the Industry Average to leverage regulatory management systems. They are also more likely to expand the efficacy of Design for X initiatives by taking advantage of specialized plug-ins such as cost assessment applications, tolerance analysis applications, and manufacturability assessment software. As with more traditional engineering tasks, automation will allow the Industry Average to take many of these programs “mainstream” as standard engineering assessments.

• Best-in-Class organizations - extend the view of engineering by embedding downstream experts. The Best-in-Class are more likely than the Industry Average to place procurement, manufacturing, and service experts within the engineering department to assess the consequences of design decisions. However, their focus has been on the immediate, with 80% of these companies embedding manufacturing experts and with only a little over half including service and procurement experts. By taking advantage of the insight and experience of these experts, the Best-in-Class will be able to extend the view of engineering and enable better long-term decisions.

Distributed and Modular Design Strategies • Laggard organizations - plan product capabilities down to

specific subsystems. The globalized nature of product development means that distributed design strategies are often just a fact of doing business. Laggards can get more from these strategies and keep design projects on track by ensuring that every stakeholder in the design process knows what they need to accomplish upfront. Currently these performers fall considerably behind the Best-in-Class who are 97% more likely than Laggards to have mapped capability down to subsystems and subassemblies.

• Industry Average organizations - manage formal interfaces between subsystems. It's not enough to have subsystems clearly defined; stakeholders also need to know how their part of the design will interact with others. The Best-in-Class formally manage interfaces which allow them to better coordinate disparate design teams reducing ambiguity and the amount of rework that is needed to incorporate different parts of the design.

• Best-in-Class organizations - keep product data secure with DRM. Working with distributed teams requires that a large amount of design intellectual property be shared with partners and potential competitors. DRM tools can enable companies to make design data available to those who need to access it, but without making it vulnerable. Aberdeen Group's December 2007 Product Innovation Agenda 2010 study found that DRM will be the most significant technology investment among the Best-in-Class during the next two





years, with an expected growth in adoption by 269%. Those without it will be at a serious disadvantage.

Taking Lean Principles into Engineering • Laggard organizations - educate engineering staff on Lean

concepts. The Best-in-Class are 1.8 times as likely as Laggards to adopt Lean engineering strategies which allow them to meet release to manufacturing and engineering phase cost targets on a consistent basis. Educating the staff on Lean concepts is the first step to removing waste from engineering processes.

• Industry Average organizations - track specific metrics as a means to measure engineering productivity. Once an organization has begun to “Lean out” engineering, it is important to track progress against formal metrics and drive future improvements. The Best-in-Class are 21% more likely than the Industry Average to identify the areas where they want to improve and measure their performance with agreed upon measures.

• Best-in-Class organizations - automate Lean with specialty tools and workflow management. While they are more likely than the Industry Average and Laggard organizations to manage Lean with specialized tools, less than half currently do so. Lean software and workflow tools help improve the efficiency of the Lean program itself, providing engineers with more time to focus on productive design work.

Aberdeen Insights — Summary

There is no lack of strategies that are available to enhance the performance of the engineering organization. Choosing the right program requires finding a balance between the areas the engineering organization needs to improve with the larger priorities and goals of the enterprise. Over the past two years, Aberdeen Group has examined a wide variety of strategic initiatives that manufacturers have pursued with great success. Organizations looking to pursue a particular program more deeply, can take advantage of the following:

Lean Engineering

• The Lean Product Development Benchmark Report (May 2007)

Capture and Deploy and Engineering Knowledge

• Engineering Decision Support (September 2007)

• The Product Innovation Agenda 2010 (December 2007)

• The Transition from 2D Drafting to 3D Modeling (September 2006)

• Best Practices for Migrating from 2D to 3D CAD (May 2008) continued

http://www.aberdeen.com/summary/report/benchmark/4009-RA-Lean-Product-Dev.asphttp:/www.aberdeen.com/summary/report/benchmark/4009-RA-Lean-Product-Dev.asp


http://www.aberdeen.com/summary/report/benchmark/4170-RA-inovation-agenda-2010.asp

http://www.aberdeen.com/summary/report/benchmark/RA_2D_3D_3476.asp

http://aberdeen.com/summary/report/benchmark/5055-RA-migrating-2d-3d-cad.asp



Aberdeen Insights — Summary

Modular Design Strategies

• System Design: New Product Development for Mechatronics (January 2008)

• Tailoring Products to Customer Preferences (March 2008)

Increase Protection of Product Intellectual Property

• The Global Product Design Benchmark Report (December 2005)

• The Protecting Product IP Benchmark Report (November 2006)

• Profitable Design Chains (October 2007)

Get Product Performance Right in the Design Phase

• The Simulation-Driven Design Benchmark Report (October 2006)


Design for Regulatory Compliance or Green

• The Product Compliance Benchmark Report (September 2006)


• Green Product Development (Upcoming, August 2008)

Design for Service, Cost, Manufacturability, or Quality

• Digital Manufacturing Planning (November 2007)

• Design for X: 3D as the Collaborative Medium (January 2008)



http://www.aberdeen.com/summary/report/benchmark/4576-RA-product-development-mechatronics.asp


http://aberdeen.com/summary/report/benchmark/RA_GlobalProduct_JmB_2460.asp

http://www.aberdeen.com/summary/report/benchmark/RA_IP_JmB_3676.asp

http://www.aberdeen.com/summary/report/library.asp?cid=4191



http://www.aberdeen.com/summary/report/benchmark/RA_PrCompliance_JmB_3491.asp


http://aberdeen.com/summary/report/benchmark/4203-RA-digital-manufacturing-planning.asp

http://www.aberdeen.com/summary/report/perspective/4833-AI-design-for-x.asp



Appendix A: Research Methodology

Between May and June 2008, Aberdeen examined the diverse strategic initiatives in adoption by engineering organizations in over 620 enterprises. Aberdeen supplemented this online survey effort with interviews with select survey respondents, gathering additional information on the approaches these departments took, their experiences, and the results.

Study Focus

Research participants completed an online survey that included questions designed to determine the following:

√ Current and planned strategies adopted to aid operational activities of the engineering organization

√ Current and planned product steering strategies adopted that impact operational activities of the engineering organization

√ The actions taken and technologies adopted in order to effectively implement these strategies

√ The benefits, if any, that have been derived from these strategies initiatives

The study aimed to identify what strategies provide the most tangible operational benefits to the engineering organization and business value to the enterprise as well as provide a framework by which readers could assess their own programs.

Responding enterprises included the following:

Responding enterprises included the following:

• Job title / function: The research sample included respondents with the following job titles: engineering staff (32%); engineering manager (36%); engineering director (14%); vice president of engineering (10%); and senior management (8%).

• Industry: The research sample included suppliers and OEMs from a range of sectors, including: industrial equipment manufacturing (24%), aerospace and defense (10%), high tech and consumer electronics (10%), engineering services (10%), automotive (10%), medical devices (6%), metals and mining (5%), telecommunications (5%), and consumer durable and packaged goods (4%), and other (16%).

• Geography: The majority of respondents (78%) were from North America. Remaining respondents were from the Asia-Pacific region (7%), Europe (12%), and other (3%).

• Company size: Twenty-one percent (21%) of respondents were from large enterprises (annual revenues above US $1 billion); 38% were from midsize enterprises (annual revenues between $50 million and $1 billion); and 41% of respondents were from small businesses (annual revenues of $50 million or less).

• Headcount: Twenty-two percent (22%) of respondents were from small enterprises (headcount between 1 and 99 employees); 46% were from midsize enterprises (headcount between 100 and 999 employees); and 32% of respondents were from small businesses (headcount greater than 1,000 employees).

Solution providers recognized as sponsors were solicited after the fact and had no substantive influence on the direction of this report. Their sponsorship has made it possible for Aberdeen Group to make these findings available to readers at no charge.




Table 9: The PACE Framework Key

Overview Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows: Pressures — external forces that impact an organization’s market position, competitiveness, or business operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive) Actions — the strategic approaches that an organization takes in response to industry pressures (e.g., align the corporate business model to leverage industry opportunities, such as product / service strategy, target markets, financial strategy, go-to-market, and sales strategy) Capabilities — the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products / services, ecosystem partners, financing) Enablers — the key functionality of technology solutions required to support the organization’s enabling business practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management)


Table 10: The Competitive Framework Key

Overview The Aberdeen Competitive Framework defines enterprises as falling into one of the following three levels of practices and performance: Best-in-Class (20%) — Practices that are the best currently being employed and are significantly superior to the Industry Average, and result in the top industry performance. Industry Average (50%) — Practices that represent the average or norm, and result in average industry performance. Laggards (30%) — Practices that are significantly behind the average of the industry, and result in below average performance.

In the following categories: Process — What is the scope of process standardization? What is the efficiency and effectiveness of this process? Organization — How is your company currently organized to manage and optimize this particular process? Knowledge — What visibility do you have into key data and intelligence required to manage this process? Technology — What level of automation have you used to support this process? How is this automation integrated and aligned? Performance — What do you measure? How frequently? What’s your actual performance?


Table 11: The Relationship Between PACE and the Competitive Framework

PACE and the Competitive Framework – How They Interact Aberdeen research indicates that companies that identify the most influential pressures and take the most transformational and effective actions are most likely to achieve superior performance. The level of competitive performance that a company achieves is strongly determined by the PACE choices that they make and how well they execute those decisions.





Appendix B: Related Aberdeen Research

Related Aberdeen research that forms a companion or reference to this report include:

• The Global Product Design Benchmark Report (December 2005)

• The Product Compliance Benchmark Report (September 2006)

• The Transition from 2D Drafting to 3D Modeling (September 2006)

• The Simulation-Driven Design Benchmark Report (October 2006)

• The Protecting Product IP Benchmark Report (November 2006)

• The Multi-CAD Design Chain Benchmark Report (December 2006)

• The Design Reuse Benchmark Report (February 2007)

• The Lean Product Development Benchmark Report (May 2007)


• Profitable Design Chains (October 2007)

• Digital Manufacturing Planning (November 2007)

• The Product Innovation Agenda 2010 (December 2007)


• Tailoring Products to Customer Preferences (March 2008)

• Best Practices for Migrating from 2D to 3D CAD (May 2008)

Information on these and any other Aberdeen publications can be found at www.Aberdeen.com.

Authors: Chad Jackson, Research & Service Director, Product Innovation Practice [email protected] David Houlihan, Research Associate, Product Innovation Practice, [email protected]

Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-Hanks (Information – Opportunity – Insight – Engagement – Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

http://aberdeen.com/summary/report/benchmark/RA_GlobalProduct_JmB_2460.asp

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http://www.aberdeen.com/summary/report/library.asp?cid=4191

http://aberdeen.com/summary/report/benchmark/4203-RA-digital-manufacturing-planning.asp

http://www.aberdeen.com/summary/report/benchmark/4170-RA-inovation-agenda-2010.asp



http://aberdeen.com/summary/report/benchmark/5055-RA-migrating-2d-3d-cad.asp

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