Many companies unwittingly shift the responsibility for quality from development and manufacturing to service and support. One indicator of this shift is when product margins are acceptable, but service and support have excessive or overwhelming call levels, usually accompanied by unacceptable profit margins. Another indicator is the support organization putting a heavy demand on engineering resources to resolve customer-related issues.

Often, this shift results from a strong corporate focus on product introduction and rush to market and very little, if any, focus on life-cycle management. Without jeopardizing time-to-market considerations, a well-designed and implemented new product introduction (NPI) process easily can expand the initial short-term, release-oriented focus into attention to the entire product life cycle. This process ensures the building of reliability and maintainability, which directly correlate to quality in the customer’s perception, into every product in a way that optimizes corporate effectiveness and maximizes profitability.

A well-designed and implemented new product introduction process usually results in a win-win situation for every participating group. While service, which usually comes in at the tail end of the development process, gains a great deal, this gain comes from the increased synergies generated by the NPI process and does not come at the net expense of another function or group. Service, by influencing product design for reliability and maintainability, benefits not only itself but also the entire company. By demonstrating the degree to which service margins and revenues contribute to a product’s overall profitability, service can transform itself into a front-line partner in the company’s success.

Designing an Effective NPI Process
The NPI process consists of a number of phases, separated by milestones, or “gates.” During each phase, involved groups execute various coordinated activities resulting in specified deliverables. The key elements that unlock the potential for significant gain are coordination, communication, cooperation, and teamwork among the various groups. Such activities foster the achievement of shared objectives and a greater understanding of mutual needs and deliverables.

When phase activities are completed and the deliverables are ready, the gates ensure that the company fully understands and accepts the activities and deliverables and that it continues in its commitment to delivering the product. Gates provide senior management of all functions the opportunity of reviewing phase activities and deliverables. Their signatures on each gate confirm acceptance and closure on each phase and renew their commitment to contributing to the product’s success.

Tiered functional teams comprise the NPI support organization. The top tier is the corporate team, with members of all the functional groups affected by the new product. Each team member, in turn, heads a functional team that will plan and execute an activity connected with the new product. These teams are what make this process so effective. By ensuring their needs are addressed in time, they optimize resource use and implicitly improve product quality.

Service, with its focus on maintainability and reliability over an extended period, often finds itself competing with the development and manufacturing departments, with their focus on getting the product out the door at the lowest possible cost. Service needs to find ways of quantifying financial and resource demands over these extended periods. Predicting these eventual outcomes requires good forecasting and decision-support tools. These tools are essential to fostering this communication, cooperation, and understanding between service and the other functions.

A Generic Phase Plan
To demonstrate and help us understand how we can benefit from NPI, let us outline a generic NPI process and note service leverage points (Figure 1). While the process offers all departments an opportunity to benefit, we will focus our attention on service for this demonstration.

Phase	Name	Description
0	Concept	Presents the concept for formal approval
1	Business Plan	Develops a Business plan showing how the product benefits the firm; creates a requirements document.
2	Development	The product is developed to meet requirements
3	Live Testing	Product testing in live environments
4	Controlled Release	Product is sold under restricted conditions
5	Generally Available	Product is Generally Available for unrestricted sale

Figure 1

The process will have a number of phases that guide the product from concept through “service end-of-life.” (Service EOL is defined as the point in time when service determines that the product no longer can be maintained and phases out maintenance for that product. It is distinct from product EOL, which occurs when price lists drop the product and the sales department stops offering the product for sale.) We also will outline what each phase does and delivers and the gate criteria for each one.

Our plan will have six active phases, Phase 0 through Phase 5 (Figure 2). (Phase 6, end-of-life, is merely a cessation of activities.) This allows us to discuss and execute all the things essential to ensuring a “successful product,” which is a product that meets the needs and objectives of all the functions within the company. Depending on individual needs, a firm may decide to merge a phase with adjacent phases or eliminate it altogether. Remember, the objective is to create an enabling but predictable process, not one that stifles creativity or restrains responsiveness to market needs. By providing a well-understood venue for cooperation and mutual information exchange, the NPI process ensures every participant the maximum flexibility in achieving objectives.

Phase	Name
0	Concept	Concept
1	Business Plan		Business Plan
2	Development			Development
3	Live Testing				Alpha /Beta
4	Controlled Release					Contr. Rel
5	Generally Available						Generally Available	EOL

Figure 2

Each phase concludes with a review by a “gate team” composed of senior executives and management of all affected functions. This review ensures that all functions can support the product and all associated efforts.

Let us examine some activities associated with each phase and gate. Because of space limitations, these are not exhaustive, but they summarize activities during the phase.

Phase 0: Concept
Phase 0 is where marketing or another group broaches an idea for a new product or offering. The “product champion,” usually the product manager of the proposed product’s space, creates an initial business plan that outlines the nature and size of the opportunity, product features and requirements, associated time frames, and expected product lifetime for senior management’s review and acceptance. This initial business plan includes the following:

• General size of the opportunity in terms of potential units sold.
• Product features, advantages, and benefits (FAB).
• Ancillary products and services required.
• Price points for product and services.
• Strategic considerations.
• Internal products affected.
• Competitive products and nature of competition.

Service generally plays a background role in this phase, unless the proposal is service-related.

At Gate 0, the product champion presents the concept and the supporting initial business plan, covering the points noted above and any other applicable data to the gate team. Acceptance by the Gate 0 review team indicates that the proposal merits further investigation and that the firm will fund the investigation. Acceptance also signals to all interested functions and groups that the company is launching a new product and they need to get involved.

Phase 1: Business Plan
The product champion now expands on the initial plan, firms up the product’s features and requirements, and convenes a new product team to assist in getting the product to market. Members of this team, delegated by their groups within the company, will spearhead their group’s efforts supporting the product.

The development and manufacturing teams study the proposal and determine whether the product can meet cost, performance, and time-to-market targets. They will develop firm plans and schedules accordingly.

This is a critical phase for the service unit. Doing things correctly now has great payback over the life of the product. Service now gets its first chance to influence product development by publicly stating maintainability requirements for the product as determined by the targeted market’s needs. It has an opportunity to create new service offerings that can enhance the service portfolio for the product.

Service must request appropriate data from the development and manufacturing teams. Mean time between failure (MTBF), mean time to diagnose (MTTD), and mean time to repair (MTTR) are the most important factors affecting product maintainability. Development calculates the MTBF while the support function, in conjunction with other functions, determines MTTD and MTTR. Replacement and repair cost estimates generally come from the manufacturing unit.

Service contributions to the master business plan should include service financials, activities, deliverables, and requirements to support the new product. This should include a subsection for each service function. Including service financials in the master product plan ensures visibility and recognition of service contributions to the company’s financial performance. This particularly is important when the service department requests changes in design or manufacturing process to improve maintainability. Comparing cash value of service benefits, as forecast by a reliable and generally accepted service business model, to the cash value of implementing requested changes enables rational and valid decisions.

A qualitative statement that describes the proposed service portfolio and how the product fits within it usually helps non-service functions internalize the service unit’s needs and helps reduce resistance to its requests.

Marketing product ramp-up and volume estimates are very important in helping to determine service resource allocations.

The training department’s section should include preparing training materials and developing courses. The field unit needs to schedule labor hours for training staff. The support unit and the call centers need to determine their product needs and resource allocations for the new product. Logistics and the repair depot should determine general spares quantities and deployment locations.

The service unit also should match the product to existing products under maintenance. A close match, such as adding extra ports to an existing board, indicates the new product is unlikely to have major unknowns and that performance and reliability forecasts are likely to be more accurate. A close match also indicates that a lengthy period of live testing or controlled release may not be necessary. The product may transition from a short live-testing period directly into general availability.

A radically new product that does not match existing products under maintenance suggests a closer, more intimate involvement with the development department through the development cycles. Careful site selection for live testing is critical. Careful attention to controlled release criteria is particularly important. This helps the service unit ensure it can adjust its plans as the product matures through Phase 2.

The business plan is updated with current information, particularly performance and financials, with the sections on internal and live testing and controlled release brought up-to-date for review and acceptance by the gate review team.

Acceptance by the Gate 1 review committee puts the product officially on the product calendar. The company commits itself to funding all activities involved in bringing the product to market.

Phase 2: Development
This phase encompasses all activities required to develop the product and manufacture it, including design verification and internal testing. Support, as the technical arm of service, assists in verifying that the product meets service requirements. Service, in refining its plan to accommodate ongoing refinements to the product specifications and business plan, will detail support methodology, spares requirements, training needs, and all the other information needed by first- and second-line management to gear up to support the product.

Support should be closely involved in the design and execution of testing. Allocating a portion of a support engineer’s time to the project pays tremendous dividends in improved maintainability and reduced resource demands for maintenance. Aside from verifying maintenance strategies, it also helps the support unit to better understand the product and minimizes the learning period. Support must share this knowledge with all other service functions. Logistics and the repair depot confirm schedules and ensure that manufacturing sources incorporate service’s needs into build plans. Training completes course development and completes an initial training course for service personnel involved with live testing and controlled release.

Service must ensure the firming up of live testing and controlled release criteria. Completing test-site selection and all test-associated paperwork prior to Gate 2 ensures time for all test-related activity.

Training the support, call center, and field personnel that support the live testing and controlled release phases is particularly important in ensuring that the service department’s plans can be flawlessly executed when the product is generally available.

Gate 2 allows the company to verify that the product meets stated requirements and that internal testing has done its best to ensure design integrity.

Phase 3: Live Testing
In order to understand Phase 3, there are two terms that need to be defined. The first is “alpha”: This is live testing in a customer environment that is monitored and supported by the development department. It is the final test of product integrity. The development unit, upon completion of alpha testing, indicates that the product is complete and ready for the marketplace.

The second term is “beta”: This testing assumes the product is fully viable and meets all specifications and needs. Beta tests the viability of all ancillary and supporting functions, not the product itself.

Some companies blend the beta phase, or sometimes just the alpha testing, into the preceding development phase. As this phase is critical in verifying that service can, indeed, maintain the product as planned, we will discuss it a bit more thoroughly.

Live testing, which includes both alpha and beta testing, verifies that the product performs as expected and described in the product literature. In effect, it confirms that the product specifications match market expectations. Careful selection of test sites ensures that customer applications use the product in a live situation. Unlike other phases, a phase review team stays involved for the duration rather than just at the end. The team monitors test sites for actual use of product features and ensures that it performs as expected.

The development unit usually runs the alpha test. Engineering personnel interface directly with customer personnel in case of failure to perform as expected. Development publishes a set of criteria for the alpha test, with development engineers assigned to working with the selected customers to resolve any uncovered issues and problems. Of course, the service unit, with its existing customer interfaces, will be involved. However, its role here is to support the development department rather than the customer.

When the phase review committee agrees that the product passes all alpha criteria, it declares it agrees with the development unit in that the product is ready for release to manufacturing and the field.

However, ancillary supporting functions have yet to be tested. Maximal value results from regarding beta as a test, not of the product itself, but of the ability of all the other functions of the company to support the product in a live environment.

During beta testing, service and support will handle all calls and attempt to resolve them, using the development unit only as a last resort or to debug newly uncovered or previously unknown design deficiencies or failures.

During beta testing, customers will call the normal call center for assistance, with escalations through normal support processes to achieve call resolution. Logistics honors parts requests through normal channels. Careful examination of all calls confirms that all service and support functions are performed as planned.

At Gate 3, when all functions agree that the live testing has satisfied all criteria, the live testing is completed, and the company is now ready to sell the product in the marketplace. This milestone, generally known as “first-customer ship,” or FCS, starts the revenue flow associated with the product.

Phase 4: Controlled (or Limited) Release
This is an optional phase in which the company offers the product for sale only in restricted markets. This usually happens if the product uses technology so new that the company wants to allow extra time to assimilate it or to test radically new manufacturing or service processes. It offers the opportunity of taking revenue on the books but limiting downside exposure in case something unexpected turns up.

Since beta testing often is cut short by the need to declare the product ready and recognize revenues for shipped product, controlled release allows the company to recognize revenue on shipped product while continuing to limit downside exposure.

Controlled release provides final confirmation that the product performs as planned. It usually restricts sales to a specific geographic area or to specified customers, enabling rapid correctional response in case something unexpected occurs.

Management may waive this phase if the product does not pose any risk of undesirable effects. This usually happens when the product uses existing technology in an incremental design.

At Gate 4, the company is fully satisfied that the product is ready for full, unrestricted sale and declares that the product is now generally available (GA) for sale anywhere.

Phase 5: Generally Available
The product is now generally available and sold to all customers. Service maintains the product according to plan and monitors performance. The service or marketing department may request “mid-life kickers” to enhance performance or extend the sales life.

Service is usually the only function actively engaged during this phase. It should monitor product performance and compare it to forecasts so it can initiate corrective action, if necessary.

Gate 5 occurs when the service unit finds that the product is no longer maintainable according to plan. It then may deem that the product has reached service EOL.

Phase 6: Service End of Life
At this phase, the service unit declines to accept any new maintenance contracts on the product and notifies the customer base that it intends to phase out maintenance on the product. The exact notification period depends on local legislation and contractual obligations. Existing contracts stay in effect until expiration. Self-maintenance customers may place a “last buy” for parts. Service may execute subsequent requests for maintenance under time and materials agreements on a best-effort basis.

There are many strategies for managing service EOL, which will form the basis of a future Journal article.

Summary
A well-designed and well-executed new product introduction process contributes significantly to a new product’s success and enhances service performance.