Product-level profitability

Abstract

PurposeThe purpose of this paper is to analyse current challenges and to articulate the preconditions for data-driven, fact-based product portfolio management (PPM) based on commercial and technical product structures, critical business processes, corporate business IT and company data assets. Here, data assets were classified from a PPM perspective in terms of (product/customer/supplier) master data, transaction data and Internet of Things data. The study also addresses the supporting role of corporate-level data governance.Design/methodology/approachThe study combines a literature review and qualitative analysis of empirical data collected from eight international companies of varying size.FindingsCompanies’ current inability to analyse products effectively based on existing data is surprising. The present findings identify a number of preconditions for data-driven, fact-based PPM, including mutual understanding of company products (to establish a consistent commercial and technical product structure), product classification as strategic, supportive or non-strategic (to link commercial and technical product structures with product strategy) and a holistic, corporate-level data model for adjusting the company’s business IT (to support product portfolio visualisation).Practical implicationsThe findings provide a logical and empirical basis for fact-based, product-level analysis of product profitability and analysis of the product portfolio over the product life cycle, supporting a data-driven approach to the optimisation of commercial and technical product structure, business IT systems and company product strategy. As a virtual representation of reality, the company data model facilitates product visualisation. The findings are of great practical value, as they demonstrate the significance of corporate-level data assets, data governance and business-critical data for managing a company’s products and portfolio.Originality/valueThe study contributes to the existing literature by specifying the preconditions for data-driven, fact-based PPM as a basis for product-level analysis and decision making, emphasising the role of company data assets and clarifying the links between business processes, information systems and data assets for PPM.