Total cost to perform the process group "govern and manage product/service development program" per $1,000 revenue

This measure calculates total cost to perform the process group "govern and manage product/service development program" per $1,000 business entity revenue. Total cost is the sum of personnel (compensation/benefits), systems (direct and/or allocated), overhead (direct and/or allocated), other internal, and outsourced costs. The Process group "govern and manage product/service development program" includes [Supervising the complete product/service program from innovation until its commercial success. Meeting the customer demand and expectations. Conduct further development and innovation pertaining to business goals.]. This Cost Effectiveness measure is intended to help companies understand this cost expenditure related to the process group "Perform governance and program management".

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure Id:
105214
Total Sample Size:
851 All Companies
Performers:
25th
– Median
– 75th
–
Key Performance
Indicator:
No

Compute this Measure

Units for this measure are dollars.

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(Total cost to perform the function "develop and manage products and services" * Percentage of total cost to perform the function "develop and manage products and services" allocated to the process group "govern and manage product/service development program" * 0.01) / (Total business entity revenue * 0.0010)

Key Terms

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Process Cost Components

Total cost for a process, process group, or function consists of the following five components.

Internal/In-house operating cost consists of the first four components (personnel, systems, overhead, and other).

Personnel Cost

Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and salaried/hourly employees) contributing to each respective process. Personnel cost should include all of the following costs.

Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits.

Fringe: Includes contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This should also include special allowances, such as relocation expenses and car allowances.

Systems Cost

Systems costs include all expenses, paid or incurred, in conjunction with:
Computer hardware or computer software acquired by the organization or provided to the organization through service contracts.

Any related costs to process, service and maintain computer hardware or computer software. The costs of providing and maintaining services for each applicable process (e.g., computer system(s) processing (CPU) time, network/system communication charges, maintenance costs for applications and data storage). This includes the costs related to LANs, WANs, etc. This does not include one-time costs for major new systems developments/replacements. Consultant fees should not be included in depreciation of new system implementations. Include only those costs that occur more than six (6) months after implementation, as normal system maintenance costs. Any systems cost (e.g., maintenance) which is outsourced to a third party supplier should be captured in the separate cost category labeled outsourced cost.

Systems cost should include all salaries, overtime, employee benefits, bonuses or fees paid to full-time, part-time or temporary employees or independent contractors who perform services relating to computer hardware, computer software, processing or systems support.

Overhead Costs

For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.

Other Cost

Other costs are costs associated with the specified process, but not specifically covered in personnel cost, systems cost, overhead cost and outsourced cost in this questionnaire. These other costs include costs for supplies and office equipment, travel, training and seminars. Include the cost of telephones, except for that portion captured in systems cost.

External/Outsourced Cost

In determining outsourced cost, include the total cost of outsourcing all aspects of the specified process to a third-party supplier. Exclude one-time charges for any type of restructuring or reorganization. Outsourced costs should also include costs for intracompany outsourcing (i.e., reliance on a shared services center or other business entity).

Total Annual Revenue/Net Revenue

Total annual revenue is net proceeds generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns. If your business entity is a support unit and therefore does not directly generate revenue, then provide the revenue amount for the units you support. For government/non-profit organizations, please use your non-pass-through budget. For insurance companies the total annual revenue is the total amount of direct written premiums, excluding net investment income. Note: Business entity revenue needs to only include inter-company business segment revenue when the transactions between those business segments are intended to reflect an arm's length transfer price and would therefore meet the regulatory requirements for external revenue reporting.

Cost Effectiveness

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Measure Scope

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Cross Industry (7.3.0)

  • 2.1.1 - Manage product and service portfolio (10061) - Managing a portfolio of product/service offerings to take advantage of shifts in the market expectations, all the while coordinating with the overall business strategy. Revisit the product/service portfolio in light of market opportunities, and overhaul it to capture value created by these opportunities. Identify gaps between current offerings and the market expectations to direct the organization's R&D activity. Create new solutions, and revise or retire existing ones so that the revamped portfolio aligns with Develop a business strategy [10015].
    • 2.1.1.1 - Evaluate performance of existing products/services against market opportunities (10063) - Assessing the capabilities and performance of existing products/services, in light of market opportunities. Examine performance of the existing line of products/services, including measures of profitability, penetration, and value delivered. Identify gaps between existing solutions' portfolio or their performance levels, on the one hand, and the current market demand, available technologies, and/or customer expectations, on the other. Consider opportunities in the present market environment and any relation with the performance. Consider input from professional services providers.
    • 2.1.1.2 - Confirm alignment of product/service concepts with business strategy (10066) - Checking the alignment of product/service portfolio, and its individual offerings, with the organization's overall strategy and planning for the development of new or revised solutions. Conduct reality checks on new product/service concepts prior to committing significant investment to ensure that the revamped solutions' portfolio is in line with the overall business strategy, aligns organizational processes for their development, and creates a plan for assimilating these changes in the organization's offerings. Enlist senior management executives.
    • 2.1.1.3 - Prioritize and select new product/service concepts (10074) - Selecting from among the potential new/revised solutions and capitalizing on market opportunities so that they meet the cost and quality prerequisites. Create an index of product/service concepts, and arrange them in order of preference. Base prioritization on adherence to Plan and develop cost and quality targets [10073], and choose options that would comprise the revised solution portfolio.
    • 2.1.1.4 - Plan and develop cost and quality targets (10073) - Setting prerequisites for the cost of development and quality standards for the new solutions' portfolio and/or its individual offerings. Set targets for the budget and quality standards for the revamped portfolio of solution offerings. Prepare a plan for the outlay required for revising and adding new product/services. Identify intended levels of quality for these, bearing in mind the existing standards of solutions offered by the organization and its competitors. Enlist senior management executives, particularly those responsible for finance and budgeting, product/service design, manufacturing/processing, delivery, and quality control.
    • 2.1.1.5 - Specify development timing targets (10075) - Determining the individual and collective timeframe for realizing new/revised solutions. Create a schedule that clearly demarcates the timeframes designated for the development of every new solution and/or revising each of the existing ones. Create a timetable by setting deadlines for each step in overhauling the product/service portfolio.
    • 2.1.1.6 - Plan for product/service offering modifications (10076) - Developing a programmatic procedure for changing products/services while paying heed to all stakeholders involved and the prerequisites identified. Create a plan for changing the existing portfolio of solution offerings. Develop a systematic program for the design, processing, and delivery of the new product/service concepts. Construct project-flow diagrams. Identify the stakeholders involved and personnel responsible for each stage, as well as the necessary decisions. Earmark the budgetary outlay, and conduct any strategic planning required.
  • 2.1.2 - Manage product and service life cycle (10067) - Manage the introduction and withdrawal of products/services. Administer associated changes, namely measuring the performance of new solution offerings and the revision of master files in the archives.
    • 2.1.2.1 - Develop plan for new product/service development and introduction/launch (16824) - Developing a program and managing a perspective for new product/service introduction and launch.
    • 2.1.2.2 - Introduce new products/services (10077) - Launching revamped product/service portfolio in to the market. Introduction in to the marketplace is done by deploying effective channels for marketing, sales, delivery, and after-sales servicing. Introduce new/revised solution offerings in a concerted effort. Coordinate a cross-functional effort.
    • 2.1.2.3 - Retire outdated products/services (10078) - Removing nonconforming products and services. Withdraw those products/services that do not conform to market realities and are not positioned to take advantage of prevailing opportunities. Coordinate with processing/delivery teams within the organization and key stakeholders in the supply chain. Create mechanisms for continued after-sales servicing, as well as deploy effective public relations efforts in order to preserve the image and goodwill of the organization through the process.
    • 2.1.2.4 - Identify and refine performance indicators (10079) - Attuning the performance measures of products/services to better reflect the revamped portfolio of solution offerings. Revise the parameters used to measure performance, apropos the organization's product/service offerings. (Modify these standards in consideration of the changes made to the portfolio by Introduce new products/services [10077] and Retire outdated products/services [10078].)
    • 2.1.2.5 - Conduct post launch review (11423) - Learning from either a test or a full production run within the consumer market. Companies use this as an opportunity to both test and react to new products, ideas, or innovations based on the initial reaction of consumers on an individual level. Within this process, analytics are used to determine the relative success of a new product offering. Within this process, companies will launch key analytics to test a products acceptance. They will also review market performance and compare to similar products and against the business case or the financial plan. Companies can also measure the effectiveness of their supply chain network, and can apply what is learned from the post launch review to other new products, processes, and procedures to ensure and enhance the product quality.
      • 2.1.2.5.1 - Carry out post launch analytics to test the acceptability in the market (19646) - Measuring the performance of marketing once the product/services are launched. This broadly covers measuring user engagement and product's/service's performance in the market.
      • 2.1.2.5.2 - Review market performance (11424) - Conducting customer and market analysis to review progress and identify opportunities for increasing market position. Track and review product/service response through sales reports, website statistics, direct response from customers, and survey reports.
      • 2.1.2.5.3 - Review effectiveness of supply chain and distribution network (11425) - Determining the performance of supply chain to all departments and logistics from input to shop floor. Seeking performance reviews at each intersection and communication channels. Review effectiveness of supply chain and distribution to check if it is meeting the demands of the various groups and organizations that are concerned with its activities (groups might include customers, partners, suppliers, and vendors).
      • 2.1.2.5.4 - Apply data and analytics to review supply chain methodologies (19647) - Collecting and examining raw data with the purpose of drawing conclusions about that information and correlate gaps and efficiencies to the existing supply chain channels. Apply the information to make better business decisions to the related supply chain methodologies to meet efficiency.
      • 2.1.2.5.5 - Review quality and performance of the product/service (11426) - Identifying the quality and performance of the product/service delivered to customers. Analyze data from the customer feedback, audits, measures of customer satisfaction (such as product quality complaints and recalls), and organizational policies on delivery.
      • 2.1.2.5.6 - Conduct financial review (11427) - Evaluating organization's financial reports and financial reporting processes. Review and document the ROI catered by the product/service delivery to the customer in the market.
      • 2.1.2.5.7 - Conduct new product development process assessment (11428) - Analyzing the steps involved in the development of new product, its effect on existing product, resources, and functions related to the development of the new product until its sale in the competitive market place.
  • 2.1.3 - Manage patents, copyrights, and regulatory requirements (19985) - Determining the attributes necessary to protect and safeguard intellectual assets, maximize the value of IP assets through streamlined process, and collaboration between departments. Focus on needs to safeguard, critical assets, and assets' value.
    • 2.1.3.1 - Conduct mandatory and elective reviews (19941) - Conducting necessary performance reviews on enforcement of processes and steps to ensure protection. Determine policies and reviews for Manage patents, copyrights, and regulatory requirements [19985].
    • 2.1.3.2 - Review infringement of patents and copyrights (16826) - Reviewing activities in regards to patentability and infringement. The usage of Open Source in commercial product development will be reviewed in regard to licensing, community development, etc.
    • 2.1.3.3 - Determine patent and copyright needs (16827) - Determining the business need for patents and copyrights. The patents and copyrights are managed by Manage copyrights and patents [11062].
    • 2.1.3.4 - Define product technical documentation management requirements (19697) - Defining sourcing and procurement requirements for new product technical documentation management. Make sourcing-based decisions that identify the capabilities that will be required in order to launch the new product. This documentation will be used to support the product following entry into service. It is compiled and managed in Manage product and process related data [12082], but the capability to manage and maintain this documentation must be defined and established.
    • 2.1.3.5 - Manage regulatory requirements (12771) - Aligning regulatory activities related to managing industry requirements. Train employees on regulatory requirements. Records for the appropriate regulatory agencies must be maintained and the new product process must be approved by the appropriate regulatory body before it is published to the organization. The submission lifecycle - i.e. creation, review, and approval of the submission and its components must be managed in a collaborative fashion.
      • 2.1.3.5.1 - Train employees on appropriate regulatory requirements (12772) - Conducting training and impart learning to existing and new employees. Training will relate to the most recent/enforced regulations of the business to meet Manage regulatory requirements [12771].
      • 2.1.3.5.2 - Maintain records for regulatory agencies (12773) - Identifying steps and procedures to manage and regularly update the records for regulatory agencies. Updates will be made to safety procedures, identity and access management, software tools and applications, internal accessibility policies, internal quality parameters, etc.
      • 2.1.3.5.3 - Manage regulatory submission life cycle (12776) - Determine and follow the timely input and update of regulatory information by assessing reforms, regulatory policies, and guidelines.
  • 2.1.4 - Manage product and service master data (11740) - Controlling/authorizing to enable services' and products' data and other critical data of these functions through a well secured storage and accessibility processes backed by siloed applications/IT systems.
    • 2.1.4.1 - Manage materials master lists (11741) - Controlling the details of materials' storage and utilization, supplier details linked to materials, in a defined sequential manner and ensuring regular updates with permissible accessibility.
    • 2.1.4.2 - Manage bills of material (11742) - Managing the purchase details/bills through regular and error free updates to applications. Create manual entries wherever necessary and ensure timely review of the laid processes and systems.
    • 2.1.4.3 - Manage routings (11743) - Controlling and executing the flow of operations from raw form to finished product in a defined format using industry applications/routing sheets for the specific product/service layout.
    • 2.1.4.4 - Manage specifications (11744) - Direct, supervise, and control the product/service details necessary to execute the process. Adhere to details and descriptions for product/service through identified or guided parameters towards final outcome in the market with due critical analysis formed on organizational objectives.
    • 2.1.4.5 - Manage drawings (11745) - Administering the specifications of the product/service and ensure accessibility for product alteration/new product development.
    • 2.1.4.6 - Manage product/material classification (11746) - Controlling the details of the product and the input materials. Manage classification throughout the production process, and for future accessibility to new product development or product enrichment.
    • 2.1.4.7 - Develop and maintain quality/inspection documents (11747) - Determining procedures required to assess the sustainability of defined criterion for product/service delivery to customers. Retain results for further review as a procedural practice.
    • 2.1.4.8 - Maintain process specification data (11748) - Directing and handling data with respect to the procedures followed across different functions and mission critical applications.
    • 2.1.4.9 - Manage traceability data (11749) - Identifying and handling data accessed by the permitted touch points. Ensure that no data is accessible to any unnecessary recipient. Data flow should be controlled through secured access and free from unauthorized access.
    • 2.1.4.10 - Review and approve data access requests (11750) - Determining the requests pertaining to data accessibility. Review the requester details based on internal data security policies and permit data access only if internal policies and data access parameters are met.