The process of capturing, documenting, and agreeing on requirements for product change or development takes on an entirely different scope for companies engaged in Engineered to Order (ETO) businesses. While these requirements are generated internally for Make to Stock (MTS), Assemble to Order (ATO) and Configure to Order (CTO) product lines the ETO business relies on external sources. While everyone is familiar with the formal Request for Quote (RFQ) process, very few engagements will adhere to this. More likely, is a process of starts and stops requiring many man-weeks, months and years. The ability to efficiently; quote, process, develop and ultimately deliver an ETO solution is dependent on the enterprise’s ability to capture just enough information at the project’s inception to describe the product criteria, but not overly constrain the design team. Many a post-mortem analysis has revealed very small or non-existent margins from “specials”. By attending to the requirements at the project’s inception and ensuring that those requirements are of sufficient depth and breadth to quote and create specifications, scope creep can be prevented and margins preserved.

A requirement is a capability which the product or project needs to incorporate. For standard products, these are developed over time by internal teams during the ideation phase of product development.  The design and associated intellectual property are then developed as the project moves from ideation to fulfillment.  While this may describe the development of Intellectual Property (IP) for an ETO business, a different front-end is followed for ETO solution delivery.  As soon as the opportunity is identified by the sales team data (requirements) capture begins.  At an advanced maturity state, this data will be entered into the Customer Relationship Management (CRM) application with the correct associativity and visibility to the downstream (application engineering, procurement, etc) functions.  More often than not the customer contact data and a subset of the original notes will be entered. Another set of data is now stored in notebooks from phone calls and meetings. As more people become involved during the wooing and quoting phase more set of notes are created and NOT captured or associated formally to the opportunity.  Eventually, a quote is generated for the solution and delivered to the potential customer.  It is at this point where the troubles can really begin.  As the quote is iterated the data behind the iterations and the associated cost implications do not have as stringent review as the originals. When the project is finally won the margin has usually been eroded significantly from the original intent even before development starts.  During the quote iterations, technical oversight of the requirements is minimal.  This causes the potential solution being quoted to deviate from a variant of a previous design to the requirement to develop entirely new designs.  The effect is that the time estimates for the original design are now terribly inaccurate and the project won have been underbid.  If aware, most companies will choose to “eat” some of this as development time.  The problem is that most companies are not aware of this and schedule resources around original project estimates instead of the last iteration of the quote.  Now the pressure on the development team is substantial, to meet the new product deliverables at the same time allotted for the original quote.

To combat this, rules and guidelines governing the boundaries for the solution need to be put in place. These guidelines can be as simple as size and complexity constraints or for often quoted, complex designs, configurators can be employed to accurately capture application data.  At the very minimum templates for customer data need to be developed and used to accurately capture the customer’s data. The templates need to be established with clear boundaries so that the correct oversight is employed as the quote is developed.   As important, is maintaining the data as the quote is iterated.  All data needs to be readily available to the enterprise for use during all phases of the project as well as reference material for similar projects.  Associating the original customer data to the quote and any subsequent design files will enable the organization to comprehend the effects changes will have on the overall project.  This data associativity and transparency will help to maintain the intended margin and ensure the project stays on track.

An enterprise’s ability to manage projects and programs will determine to a large extent the success or failure of the products they produce. Benefits reported by those companies that have completed Program Management Initiatives include:

• 27% greater return on investment in projects
• 30% improvement in project budget performance
• 34% improvement in project schedule performance
• 24% improvement in project risk
• 39% improvement in project requirements performance

Bottom line; Companies with a more comprehensive business perspective of program management are more successful. So how do these companies realize their program management goals?  By clearly defining key success factors, phases, milestones, roles and executing in accordance with these outlines.  Below we will define these characteristics and present a way to describe your organization’s implementation maturity.

The items we identify as key success factors are sometimes referred to as competencies.  We identify these as Key Success Factors to underline their importance in driving your project’s success. The order presented here is for convenience and should not be mistaken by the reader as ranking importance.

Key Success Factors

• Governance
• Alignment
• Coordination
• Management
• Planning
• Finance

Governance is the metrics and operations utilized to guide and measure progress. The development and adoption of these metrics enable the program team to gage progress. Incomplete adoption of this key success factor will cause misalignment of the team and the business decision points required for success.

Alignment is the ability to maintain the team’s view of strategies. Product portfolio, sales and overall corporate strategies need to be within the program’s targets to ensure the product contributes to the overall success of the enterprise. Failure to align program goals with overreaching strategies will cloud decision making at every turn.

The coordination of data across the team and enterprise enables all stakeholders to work from the same assumptions. Incomplete data will disable the team’s ability to work effectively. Delays and missed targets will result if current data is not available to all.

Management’s ability to provide guidance, insure accountability and remove obstacles will set the tone for the program. Managers need to be proactive to deliver a best practice solution. Driving decision making and ensuring the team is equipped for the challenges presented.

The planning required to connect information and resources to maintain schedule and meet deliverables is the responsibility of program management. Aligning goals with the availability of information and resources will enable schedule attainment. Conversely, excessive dwell or loopbacks in the dissemination of data will cause delays.

Tracking financial goals and progress across program checkpoints to determine target alignment and support decision gates is imperative to the program’s success. Failure to do so will result in missed targets, ballooning budgets and ultimately canceled programs.

Incorporating a continuous improvement process to assess performance and take advantage of lessons learned. This is a way of institutionalizing the capture of tribal knowledge. Process improvement initiatives reduce the opportunities to repeat mistakes.

Mastering the above factors increases the enterprise’s ability to execute projects. As an enterprise’s execution maturity increases program management efficiency will follow. Continuing to monitor and improve performance will enable more projects and drive growth. Delivering successful products to the marketplace efficiently becomes engrained within the organization. On time and within budget are the typical metrics cited to define a program’s success. But, neither sufficiently define a product’s success once in the market. To do this meaningful metrics need to be established and tracked. Market share, profitability, and performance criteria targets need to be defined early in the program and tracked throughout. The phases and their respective phase gates described below enable the program team to track their progress and move the program forward

Program Management Phases

Step 0: Establish Processes for Various Types of Development Programs

• Define standard phases, gates, and decision criteria
• Develop templates for standard process deliverables
• Define guidelines for process execution and gate facilitation

Step 1: Initiate Program Phase

• Identify and recruit core program team
• Review program phase objectives and inputs
• Review standard operating procedures & identify exception
• Allocate responsibility and accountability

Step 2: Monitor, Control & Report

• Monitor process tasks, deliverables & metrics
• Manage development schedule & costs
• Manage program-level issues and risks
• Conduct internal program reviews
• Communicate to external stakeholders as appropriate

Step 3: Conduct Gate Reviews 

• Assemble gate packages for review
• Evaluate program performance against evaluation criteria
• Adjust allocated resources and funding as appropriate
• Review objectives, resources and deliverables for next gate
• Communicate to stakeholders as appropriate

Step 4: Transition Program

• Transition product to steady state management, if appropriate
• Archive program deliverables for reuse and historical reference
• Evolve, improve & institutionalize lessons learned

The above steps and their respective descriptions are provided here as the minimum criteria for a program to meet the established goals. Therein lies the secret to a program’s success; establishing the goals at the program’s inception. Without clearly defining the goals a program is essentially rudderless. After the goals have been established by a small cross functional team, a broader team can be engaged to initiate the program. Once initiated, progress is monitored to track goals and insure that all stakeholders are still informed. Monitoring is a way to manage risks as they arise. Gate reviews are performed only as necessary to maintain alignment with stated goals and milestones. As the program progresses the steps above and the associated reporting assure all stakeholders that the original targets established are to be met. Towards the end of the program when success is near certain the program transitions to archiving the success and developing a maintenance and improvement plan.

Program management is the work done to add substance and value to a set of disparate inputs to deliver products and services.  An enterprise’s success in the marketplace is determined by the ability to deliver products and services that meet the needs of the target customers. Obviously the success of the enterprise is driven by the capability to manage programs. Developing the capability of consistent governance to establish project goals and coordinate project teams will fuel growth. As these capabilities mature the enterprise will find it easier to aggregate performance metrics with financial targets.  Mastering the Key Success Factors through all phases of the program will drive increased maturity.  The ability to increase the problem solving and decision making capacity across an organization will enable the mastery of the competencies driving maturity. How an organization creates distributes and consumes data will provide the tools for solving problems and making decisions.