NB: In this article, it will be necessary to distinguish between the notion of “product sold to the customer” and the notion of “product used in the composition of another product”. For the sake of clarity, we will refer to the former as a product and the latter as a component.
Products, services and offers as well as product portfolio management are at the heart of the business and the future of B2B/B2G high-tech companies. This means that on the one hand there will be a need for “product portfolio management” and on the other hand for “product lifecycle management”.
In order to do this, it is necessary to have clearly defined what one must “manage”, i.e. to have defined one’s products. This is not so simple because defining your “products” in technology is much less easy than in the general public.
Defining what a product is
There are in fact several ways of defining what a product is
- For the average person, a product is a physical product that you can touch, for example your laptop
- For a mainstream marketer, the product is by definition what is sold, but it is not only the physical product: if you ask him “what is the product?” by showing him a bottle of mineral water, he will never answer that it is the water contained in the bottle. For him, and to put it very briefly, the product is the whole formed by the content, its packaging, its brand and its image. Thus a 25cl bottle of sparkling water sold under brand name A as facilitating digestion will be for him a totally different product from a 75cl bottle sold under brand name B as improving health, even if the water contained in the two bottles is absolutely identical.
- This very “consumer marketing” definition of the product is largely insufficient in technology because the notion of product portfolio is much more complex. One can certainly consider that the product goes beyond the physical product as soon as it is sold, but that is not really the problem.
- The real problem consists in defining one’s product portfolio, whereas products and offers in technology can be composed of elementary components, building blocks, equipment, subsystems, systems, systems of systems, services and complete solutions. Should each component be managed, whatever its level, and how, knowing that each level will have to undergo technical developments in coordination with the others?
However, this definition of products is essential for defining the portfolio of products that will have to be managed by making trade-offs between products and by accompanying each product throughout its life cycle.
In technology, the response will generally be based on the following principles:
- From a competitive product market perspective, a product is defined as “that which is sold to customers”. Whether it is an elementary component (if it is ever sold externally) or a large system. Using this definition, the product portfolio will be described, within which product portfolio or product line trade-offs will be made, it will be decided which products will be the subject of a “product plan” and which products will be managed throughout their life cycle.
- A product managed in the product portfolio as well as in its life cycle can therefore be either a physical component (elementary component, building block, system), or a service, or a solution composed of both physical products and services.
- In this respect, from the point of view of product markets and competition, a service is considered to be a product like any other, as is generally the case in marketing.
- On the other hand, components, whatever their nature and ‘level’, which are not sold to the customer but are part of the composition of the product or offer, will of course also be referenced but managed essentially from a technical performance and cost point of view (including by comparison with those of the competition). This management of components will be done in coordination with the product(s) in which they are integrated. However, these components will not be the subject of a product plan, nor of arbitration within the product portfolio, nor of product life cycle management.
Management of components and products in technology
So we see that in technology, components and products will be managed from two different perspectives:
- The first perspective is an internal management perspective in which any product or component (or any reference), whether it is an elementary component, a building block, etc., must be listed, whether or not it is sold to customers. This means that not only the products sold to customers but also everything that is integrated into these products is recorded. These components are managed essentially from a technical performance, cost and technical roadmap perspective. This management is of course based on a product database.
- The second perspective is a marketing and product policy perspective in which the product is defined as “what is sold to customers”. It is only these products that are the subject of a complete product plan, arbitration in the product portfolio and monitoring throughout their product life cycle.
