Total cost to perform the process group "generate and define new product/service ideas" per $1,000 revenue

This measure calculates total cost per $1,000 business entity revenue to perform the process group "generate and define new product/service ideas". 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 "generate and define new product/service ideas" includes [Identifying and describing new product or service thoughts based on organizational objectives/targets.]. This Cost Effectiveness measure is intended to help companies understand this cost expenditure related to the process group "Generate and define new product/service ideas".

Benchmark Data


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Measure Category:
Cost Effectiveness
Measure ID:
Total Sample Size:
852 All Companies
Key Performance

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 "generate and define new product/service ideas" * 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.


The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

Measure Scope

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Cross Industry (7.3.0)

  • 2.2.1 - Perform discovery research (10065) - Coordinating R&D activity to identify new technologies to integrate into the revamped portfolio of products/services. Conduct early-stage R&D activity to close gaps between existing solution offerings and changing market expectations. Triangulate appropriate technologies that can support the development of a revised product/service portfolio.
    • - Identify new technologies (10070) - Determining new technologies to revise the portfolio of solution offerings. Identify recently developed technological advances that can be leveraged in the development or advancement of the organization's product/service portfolio. Enlist senior management in conjunction with personnel responsible for the design, processing, and delivery of products/services. Have the organization's research division(s) carry out the process.
    • - Develop new technologies (10071) - Developing new technologies from scratch to integrate into a revised portfolio of solutions. Develop new technological processes, models, and/or implements in-house, with the objective of improving existing solutions or creating new ones. Consider market realities, as well as the portfolio of products/services. Assess the results in conjunction with senior executives and personnel responsible for the design, processing, and delivery of these solutions. Engage the R&D function, and consider external sources such as offshore providers, specialized research agencies, and crowdsourcing communities.
    • - Assess feasibility of integrating new leading technologies into product/service concepts (10072) - Appraising the feasibility of integrating new technologies, whether developed as a custom solution or adopted from an external source, into revised portfolio of solution offerings. Examine recently developed technological advances for suitability to incorporate them into the concept of revised and/or new solution offerings. Enlist senior management, in consultation with in-house personnel responsible for the design, processing, and delivery of these solutions, as well as key supply-chain stakeholders.
  • 2.2.2 - Generate new product/service concepts (19669) - Producing and defining ideologies for new product/service offerings.
    • - Gather new product/service ideas and requirements (19986) - Collecting necessary items, documents, regulatory requirements, etc., based on Generate and define new product/service ideas [19698]
    • - Analyze new product/service ideas and requirements (19987) - Assessing and reviewing the concepts and requirements of Generate and define new product/service ideas [19698]
    • - Evaluate new product/service inputs and requirements (19988) - Assessing and reviewing the required inputs and necessary elements such as automation, technology, hardware installation, regulatory requirements, certifications, etc., for new products/services through defined process and analysis.
    • - Formulate new product/service concepts (19989) - Devising ideas and elements necessary for thoughts on new product/service development.
    • - Identify potential improvements to existing products and services (10068) - Defining potential enhancements to current products/services in order to take advantage of a shift in market expectations. Identify how the existing line of products/services may be revised--through enhancements to individual solutions or across-the-board renovations--in order to capitalize on present opportunities in the market.
  • 2.2.3 - Define product/service development requirements (19990) - Encompassing the identification and capture of new product/service requirements or potential improvements to current products/services. Collaborating with members of the supply chain to ensure the feasibility of what is being defined in the requirements. For example, a product with manufacturing requirements that supply chain cannot currently fulfill requires a corporate decision to either upgrade manufacturing capabilities or abandon the new product. Enterprise-level effects and needs must be considered. Depending on the nature of the final product or service, these requirements are often defined as a set of abilities, such as availability or reliability, that influence product development decisions.
    • - Define product/service requirements (11331) - Determining requirements related to the creation of the product/service. Explain potential achievements that could be made.
      • - Define basic functional requirements (19991) - Determining the operations of functions related to the product/service in the marketing environment.
      • - Derive interoperability requirements for products and services (16808) - Determining the ability of products and services to work together, exchange and use information in a multi-vendor, multi-network, and multi-service environment.
      • - Derive safety requirements for products and services (16809) - Developing safety requirements in line with environmental safety, occupational health and safety, and community health and safety guidelines.
      • - Derive security requirements for products and services (16810) - Implementing security requirements through authentication and encryption of CE device data stream. Utilize security measures such as cryptographic protocols and hardware security (smart cards).
      • - Derive regulatory compliance requirements (16811) - Meeting regulatory requirements set forth by such directives as RoHS, WEEE, ELV, and REACH.
      • - Derive requirements from industry standards (16812) - Complying with consumer electronic industry standards developed by the Consumer Technology Association (CTA).
      • - Develop user experience requirements (19992) - Identifying and creating steps and tools to develop the user experience.
      • - Derive ‘services-as-a-product’ offering (16814) - Productizing the service by defining the scope of the service/cost. Target market for the service and make the service more tangible.
    • - Define post launch support model (16815) - Defining SLAs (Service Level Agreement) and service level KPIs (Key Performance Indicator).
    • - Identify product/service bundling opportunities (17389) - Establishing areas of growth and further development of product/service mix, customization, market based changes, etc., to further demonstrate value to the customer in the competition.