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Product Portfolio Management

Proper project portfolio management is vital for success in today’s growing economy. In the following article, “HP Transforms Product Portfolio Management with Operations Research” by Julia Ward, the author highlights the importance of a proper product portfolio– as well as the ways active product portfolio management that can properly adapt to change– can drastically improve a business’s profits and human relations. PPM is the centralized management within an organization of its processes, methods, and technologies that various project managers use within any given environment.

Julia Ward’s article “HP Transforms Product Portfolio Management with Operations Research” excellently addresses the innovations within one of the largest corporations in the United States, and how product portfolio management transformations helped improve the overall work output of their company. In the article, Ward addresses the key problem affecting Hewlett Packard’s financial success, then outlines solutions the company took to help better manage their product portfolio and help improve the overall profitability of HP. Ward’s article is a well-written, well researched article about how revamping the product portfolio at Hewlett Packard saved the company from a financial fiasco. Few things are lacking from this academic article. Ward is careful to back up all of her claims with significant research, data, and statistics from Hewlett Packard themselves.

After looking at the structure of Hewlett Packard, board executives recognized problems that were causing major economic losses and problems within the infrastructure of the company. A re-structuring of their product portfolio helped Hewlett Packard recover from a financial fiasco.

Throughout the article, author Julia Ward discusses the cost analysis, stochastic inventory analysis, flow algorithms, product portfolio management, inventory management and regression at the company Hewlett Packard, a multinational information technology corporation. The facts and figures provided by Ward strongly help support her claims that Hewlett Packard’s newfound success was based around the reinvention of their product portfolio, further strengthening the claims she has made alluding to the success of HP due to proper portfolio management.

Ward is fair and accurate in her assessment of HP. She notes that Hewlett Packard has undergone a number of large changes over the past decade in an effort to benefit their more than 1 billion customers across the globe. The board of directors at the company looked at the business model for the organization and found flaws in their product portfolio. These issues were causing drastic problems to the company and needed to be addressed if the organization was going to survive. The managerial team behind Hewlett-Packard’s product portfolio saw that a new blueprint needed to be drawn up in order to be able to forecast profits in the future and predict trends in sales and inventory. “Although HP’s product offerings drove sales and market share, the variety of its product portfolio caused significant organizational complexity, created major operational and performance challenges, and caused HP to fall behind its competitors on a number of metrics” (Ward, 2010).

Ward successfully gets her point across regarding Hewlett Packard’s growth being based on their new product portfolio by outlining the problem the company recognized, as well as the solutions the company enacted to save the corporation.

Now that Hewlett Packard had identified the problems in the management of their product portfolio, it was time to look for a solution. Ward proves by this point that a failing company can recover based on the merit of an innovative and new product portfolio. Here was their problem:

“Once products were launched into the portfolio, it was difficult to measure and manage their impact. Few standards existed for how to remove a product from the portfolio. Rationalization decisions were often made based on a product’s individual revenue; however, this metric neglects key elements of the product’s importance. Moreover, the cost structure and impact of variety differed dramatically from business to business within HP.” (Ward, 2010)

Their current model was too complex and contained loopholes that did not account for new product additions, discontinuations and changes from one HP business to another. Hewlett Packard’s team of product portfolio managers came up with a number of solutions for their current product portfolio problem.

Their first solution revolved around screening new-product proposals before introduction. Their second solution involved the Revenue Coverage Optimization (RCO) tool, which organized orders by date, portfolio size and order coverage, increasing operational focus within the managerial team. Hewlett-Packard decided to use a two-sided approach to tackling their problems with product development.

Ward’s article was enlightening and inspiring. What was not covered in this paper is that Hewlett-Packard was suffering a significant series of financial losses prior to changing their approach to product portfolio management. It is great to see a company as large as HP innovating their entire organization through changes to product portfolio management. What the board of directors at Hewlett-Packard realized, many other companies and organizations need to learn to realize, that product portfolio management can make or break any size company. Hewlett

Packard succeeded by being able to adapt to the constant changing work environment, and that is how the company managed to turn their profits around all while restructuring their product portfolio management.

Ward eloquently got her point across that product portfolio management was the key to the reinvention of Hewlett Packard by backing up the article with substantial statistics, findings from the company and actual solutions the company chose to help them recover from financial disaster.

Resources

Ward, Julia. “HP Transforms Product Portfolio Management with Operations Research.” Hewlett-Packard. JSTOR, Mar. 2010. Web. 20 May 2013. <http://www.hpl.hp.com/techreports/2010/HPL-2010-66.pdf>.