- Email: [email protected]
Use of Product Development Tools - An Empirical Study
Copyright © IFAC Automated Systems Based on Human Skill, Kranjska gora, Slovenia, 1997
USE OF PRODUCT DEVELOPMENT TOOLS - AN EMPIRICAL STUDY
Stane Moskon', JoZe Zupancie
2 University
I GISDA TA, Saranovicel'a 12, 1000 Ljubljana, Slovenia ofMarib or, Faculty of Organizational Science, 4000 Kranj, Slovenia,
Abstract: Results of a survey conducted in Slovenian manufacturing enterprises focusing on development of information systems (IS) and application of information technology (IT) emphasizing product development tools, are presented and discussed. The survey shows that the majority of companies use less powerful but relatively cheap twodimensional product development tools. In most cases, these tools are not or not adequately integrated into the corporate IS. Investments for development systems, particularly in advanced IT, are relatively low. In addition, insufficient attention is given to education and training of development tools users. Copyright © 1998 IFAC Key words: Information systems, production systems, software tools, manufacturing processes, product strategy.
development system is interrelated with other systems in the organization and must be properly integrated into the overall organizational structure (Zupancic and Moskon, 1996). Product development is only a part of the corporate development system. The competitive position of the company depends on the quality of its development function, particularly product development (Richter, 1989). The main goal of the DIS is to support the system approach to development of products and provide the information needed by the development system.
l. INfRODUCTION
Companies often attempt to meet the market demands and improve competItIveness by introducing or upgrading information technology (IT) to support business processes. However, often investments in IT do not bring the expected results. On the other hand, rapid growth of the information and telecommunication markets indicates that many organizations consider such investment cost effective and apply the technology in a productive way.
Many software tools are developed for use with DIS in manufacturing companies. In addition to general IS development and implementation tools (CASE. DBMS, LAN and WAN software, EDI software) specific product development tools are utilized Some examples are design software (CAD), manufacturing software (CAD/CAM tools) and project and data management software (PDM - Product Data Management).
This paper presents the results of a survey of manufacturing companies in Slovenia conducted in November 1996. The objectives are: 1. To collect and analyze data about perceived problems and benefits from the application of IT with emphasis on computerized tools for product development. 2. To estimate the level of integration of the development information system (DIS) into corporate IS.
3. FRAMEWORK AND GOALS
2. DEVELOPMENT INFORMATION SYSTEMS IN~AC~GCOMPANIES
The objective of this investigation was to verify the following conclusions drawn from experience and observation of development ISs in Slovenian manufacturing companies :
Development (of products and/or services) represents one of the major functions of a business process. The
113
1. The general opinion of top management in most companies is an investment in product development does not yield the expected results. 2. Top management generally supports the introduction of advanced IT, but this support is not sufficient and rarely consistent enough for successful implementation of the technology. 3. IT users do not have sufficient knowledge for the successful adoption of an advanced development system model. 4. Most companies in Slovenia use relatively low performance and poorly integrated software tools. 5. Partial applications and stand-alone tools, not integrated with other applications and tools within the development system or other corporate systems, are not cost effective or efficient.
large enterprises. These occurred during the last five years and were caused by the privatization or by the loss of a major part of the market during the transition period. The smallest company in the sample employed only 23 people, while the largest 2600 has people, with an average of 375 employees. Investment ability represents an important factor for maintaining or increasing the competitive advantage. Therefore, respondents were asked to indicate a percentage of total revenue that the company invests in product development (Table 2).
Table 2: % of the revenue invested in development
% of investment 0-1 1-3 3-5 5 - 10 10+ No response TOTAL
Questionnaire data should also help to answer the following questions: • Are the technological and organizational levels of manufacturing companies in Slovenia prepared for the introduction of advanced IT in their development systems? • What are the major problems that hinder implementation of advanced IT in development?
11 10 5 1 71
Observations indicate that a major decrease of investment in development in manufacturing companies occurred during the last five years. One reason may be the privatization process, a time when companies are not at all interested in investment. In most cases, they want to decrease the value of firms because they are interested in internal privatization (take-over) of the firm. Another reason may be that companies tend to achieve short-term savings and profits by focusing on the production of items that are currently demanded by the market. This necessitates neglecting the medium and long term development perspective, particularly upgrading technology, training or purchasing equipment for development systems. Companies that have already been privatized must compensate for the delay of investments in basic manufacturing facilities. Therefore, they tend to minimize investments in development systems, particularly in advanced IT.
4. SURVEY DESIGN To collect the data needed for verification of these observations questionnaires were mailed to 300 randomly selected manufacturing companies in Slovenia. Questionnaires were sent to executives of development departments in companies. At least 90% of managers were identified by name. Respondents who supplied the data came from companies which (1) are predominantly manufacturing (metal, wood, food processing, textile, ... ) with (2) a minimum of 20 of employees. Usable responses came from 71 firms - a 23% response rate.
5. SURVEY RESULTS The total nwnber of employees for tlle responding companies is presented in Table 1.
Table 3 shows the formal educational level of development personnel in the surveyed companies. The relatively low level of education indicates insufficient investment in human resources, as well as limited recruiting of recent university graduates.
Table 1:Totalnumber of employees Employees 0-49 50 - 99 100 - 249 250 - 499 500 - 999 1000+ No response TOTAL
No. of firms 13 31
Companies 12 4 19 20 11
Table 3: Formal educational structure of the development personnel Formal education High school Associate degree University degree Master, Ph.D. TOTAL
4 1
71
A relatively large number of small and medium sized companies are the consequence of downsizing by
114
% 56 20 22
No.of employees 795 287 31 3
2
28
100
1423
companies we asked the respondents to describe the level of integration (Table 6). In the questiOIUlaire, the integration was described as data transfer, use of common data, and ability to browse the data. The responses indicate that DIS is not integrated into the corporate IS in a relative large portion of companies.
Table 4 summarizes the use of tools in the surveyed companies. Besides typical development tools (CAD/CAM group of software used by 55.7% of the firms) production control software, such as job release (manufacturing order release) and shop floor control packages (which are in fact production control packages) are used in some companies. Four companies begun to use PDM packages which can be considered as application of advanced IT for product development.
Table 6: Integration ofDIS into the corporate IS Level of integration Integrated Partly integrated Not integrated No response TOTAL
Table 4: Use of software tools in the development SW tools in development CAD - Design CAD - Construction CAM CAQ Production Management Production planning PDM
NO.offirms 9
63 16 17 29 20 4
% of tools 5.7 39.9 10.1 10.8 18.3 12.7 2.5
Appropriate education and training is one of the most important prerequisites for successful effective and fast implementation of advanced tools. Therefore we asked the respondents to rate the average amount of training provided per employee of the Development Department (Table 7).
Table 7: Average number of days of education and training per employee per year in development Man - days 0-5 6 - 10 11 - 15 16 - 20 No response TOTAL
Table 5: Export orientation and use of SW tools 2D 5 3 5 7 4 2 0 10 10 46
% of finns 18.3 46.5 33 .8 1.4 100.0
Nearly a half (45%) of the surveyed companies plan major technological changes in the development process (mostly purchase of new hardware and software) in the nex1 12 months, and 15% plan to buy advanced product development tools.
Table 5 presents the use of two-dimensional (2D) and three-dimensional (3D) tools in the development grouped by the percentage of exports in the total revenue of the finn . The data strongly indicates that export oriented companies who are exposed to strong competitive pressure on the world markets, used relatively expensive and sophisticated 3D tools considerably more than companies that are oriented towards the domestic market. A few firms used both 2D and 3D tools, but about 80% of the 3D tools were installed in eX1'Ort oriented companies. We can expect that the increasing competition of foreign companies on the domestic market will force more companies to invest in advanced IT.
Export % 0-9 10 - 19 20 - 29 30 - 39 40 -49 50 - 59 60 -69 70 -79 90 - 100 TOTAL
No. of firms 13 33 24 I 71
3D 1 0 1 0 1 1 1 5 11 21
No. of firms 27 28 6 3 7 71
C}~
38.0 39.4 8.5 4.2 9.9 100.0
Results (Table 7) showed that 75% of firms provide their employees on average less than 10 days of training, and the average time was less than 7 days. Our experience indicates that managers of research and development departments often succeed to gain management support for investments in equipment but not for education and training of its staff. Therefore, product developers frequently spend a lot of time and effort to overcome initial problems in application of developer's tools. which could be used in a more productive way if developers were offered appropriate training. This may result also in an incompetent and inadequate. and therefore inefficient use of the tools, and may raise questions about the justification of the investment in the tools.
Missing or only partial integration of systems within the company often results in partial solutions to problems which may later become a concern for the whole company. Many times such a solution initially meets the demands of users, but later results in disappointments. This may lead to generalized and superficial conclusion that investment in IT fails to meet the expectations and is not cost effective. To asses the extent integration in the surveyed
The duration of training in the application of tools as recommended by vendors of software tools is about 20 days in the first year and 10 days in next years, in addition to 10 days of general training each year.
115
value of the company which again impacts their investment policy.
Although recommendations by vendors can be biased, the great difference between the recommended and actual training time indicates that most companies do not provide the developers enough opportunity for professional progress and development of their potentials. Most of the education and training in the surveyed firms was general, and only around 30% covered professional software tools. This again indicates a large gap between the recommended and actual amount of training for the use of software tools.
Findings of our study showed weak interest of management in the development in general and its insufficient support to the introduction of advanced IT in the development process. In many cases investment in IT are too low to improve the development process and to be cost effective. This may explain why managers in many companies consider that investment in product development does not give the expected results and does not contribute to the competitive advantage of the firm. Insufficient on job education and training of the developers, particularly in the use of product development tools, and their relatively low formal education may be also one of the reasons for widespread use of stand-alone tools, not integrated with other applications. This indicates that many companies are not mature yet for successful adoption of advanced IT, where properly skilled development staff is one of the major obstacles to its introduction. On the other hand, the fact that export oriented firms use advanced IT in the development considerably more than others indicates that technology increases the competitive advantage of the firm.
In general, there is a lower limit for necessary investment in IT which is cost effective. We asked the respondents to indicate the range for minimum investment in IT supporting the development process that can be economically justified (Table 8).
Table 8: Minimum feasible investments in IT for product development (in million SIn Investment 0- 1 1-5 5 - 10 10+ No response TOTAL
No. of firms 9 26 19 14 3 71
% 12.7 36.6 26.8 19.7 4.2 100.0
From the medium and particularly the long term perspective, hunlaD resources are more important for competitive advantage and survival of firms, but more difficult to obtain and develop than monetary capital. Therefore recruiting, education and training of product developers seems to be a critical in manufacturing companies in Slovenia. Low level of investment in the development process limits recruiting of new university graduates. For example, mechanical engineers who were in high demand by manufacturing companies before the change of the political and economical system, now often find jobs in commerce and other organizations outside the manufacturing sector, or are even unemployed. In the long term perspective, lack of adequate human resources may prevent many companies in Slovenia to meet the challenges of the information age and to find their place in the information society.
The most frequent response was 1 to 5 million SIT 01000 to 55000 DEM) which is enough to buy only a PC level computer and 2D design tool. We believe that in most cases this is not enough for effective and efficient support to the development process. Respondents also rated the level of top management support for the introduction of contemporary IT. Responses indicate that the support was rated strong or fair in about 30% of surveyed companies, while in about 20% of companies managers of the development department felt that top management does not support the implementation of IT into the development process. The reason for the insufficient management support may be related to privatization and short tern} survival and/or profit strategy discussed in the comment to Table 2.
REFERENCES: Moskon S.. Zupancic 1. (1996). Integration of the development information system into the Organizational System of Manufacturing companies, System Integration '96, Eds. 1. Pour and 1. VofiSek Prague, June 1996, pp. 175-183 .
6. DISCUSSION Increasing competition of foreign manufactures on Slovenia's market caused by the liberalization of import regulations, forces domestic manufacturing enterprises to reduce the costs and improve the quality of their products. Therefore many companies neglected long term issues and minimized investment in development, particularly investments advanced IT and development of human resources. Liberalization coincides with privatization. In many cases this caused instability in the management style and inclination of the management to reduce the
Richter H.1. (1989). Arguments for Flexible Automated Manufacturing under the Aspect of Economy, Organization and Information Systems, Proceedings of International Conference , Kaltnekar Z., Gricar 1. (Eds.), Bled 13-15 September 1989, pp. 885-889.
116
USE OF PRODUCT DEVELOPMENT TOOLS - AN EMPIRICAL STUDY
Stane Moskon', JoZe Zupancie
2 University
I GISDA TA, Saranovicel'a 12, 1000 Ljubljana, Slovenia ofMarib or, Faculty of Organizational Science, 4000 Kranj, Slovenia,
Abstract: Results of a survey conducted in Slovenian manufacturing enterprises focusing on development of information systems (IS) and application of information technology (IT) emphasizing product development tools, are presented and discussed. The survey shows that the majority of companies use less powerful but relatively cheap twodimensional product development tools. In most cases, these tools are not or not adequately integrated into the corporate IS. Investments for development systems, particularly in advanced IT, are relatively low. In addition, insufficient attention is given to education and training of development tools users. Copyright © 1998 IFAC Key words: Information systems, production systems, software tools, manufacturing processes, product strategy.
development system is interrelated with other systems in the organization and must be properly integrated into the overall organizational structure (Zupancic and Moskon, 1996). Product development is only a part of the corporate development system. The competitive position of the company depends on the quality of its development function, particularly product development (Richter, 1989). The main goal of the DIS is to support the system approach to development of products and provide the information needed by the development system.
l. INfRODUCTION
Companies often attempt to meet the market demands and improve competItIveness by introducing or upgrading information technology (IT) to support business processes. However, often investments in IT do not bring the expected results. On the other hand, rapid growth of the information and telecommunication markets indicates that many organizations consider such investment cost effective and apply the technology in a productive way.
Many software tools are developed for use with DIS in manufacturing companies. In addition to general IS development and implementation tools (CASE. DBMS, LAN and WAN software, EDI software) specific product development tools are utilized Some examples are design software (CAD), manufacturing software (CAD/CAM tools) and project and data management software (PDM - Product Data Management).
This paper presents the results of a survey of manufacturing companies in Slovenia conducted in November 1996. The objectives are: 1. To collect and analyze data about perceived problems and benefits from the application of IT with emphasis on computerized tools for product development. 2. To estimate the level of integration of the development information system (DIS) into corporate IS.
3. FRAMEWORK AND GOALS
2. DEVELOPMENT INFORMATION SYSTEMS IN~AC~GCOMPANIES
The objective of this investigation was to verify the following conclusions drawn from experience and observation of development ISs in Slovenian manufacturing companies :
Development (of products and/or services) represents one of the major functions of a business process. The
113
1. The general opinion of top management in most companies is an investment in product development does not yield the expected results. 2. Top management generally supports the introduction of advanced IT, but this support is not sufficient and rarely consistent enough for successful implementation of the technology. 3. IT users do not have sufficient knowledge for the successful adoption of an advanced development system model. 4. Most companies in Slovenia use relatively low performance and poorly integrated software tools. 5. Partial applications and stand-alone tools, not integrated with other applications and tools within the development system or other corporate systems, are not cost effective or efficient.
large enterprises. These occurred during the last five years and were caused by the privatization or by the loss of a major part of the market during the transition period. The smallest company in the sample employed only 23 people, while the largest 2600 has people, with an average of 375 employees. Investment ability represents an important factor for maintaining or increasing the competitive advantage. Therefore, respondents were asked to indicate a percentage of total revenue that the company invests in product development (Table 2).
Table 2: % of the revenue invested in development
% of investment 0-1 1-3 3-5 5 - 10 10+ No response TOTAL
Questionnaire data should also help to answer the following questions: • Are the technological and organizational levels of manufacturing companies in Slovenia prepared for the introduction of advanced IT in their development systems? • What are the major problems that hinder implementation of advanced IT in development?
11 10 5 1 71
Observations indicate that a major decrease of investment in development in manufacturing companies occurred during the last five years. One reason may be the privatization process, a time when companies are not at all interested in investment. In most cases, they want to decrease the value of firms because they are interested in internal privatization (take-over) of the firm. Another reason may be that companies tend to achieve short-term savings and profits by focusing on the production of items that are currently demanded by the market. This necessitates neglecting the medium and long term development perspective, particularly upgrading technology, training or purchasing equipment for development systems. Companies that have already been privatized must compensate for the delay of investments in basic manufacturing facilities. Therefore, they tend to minimize investments in development systems, particularly in advanced IT.
4. SURVEY DESIGN To collect the data needed for verification of these observations questionnaires were mailed to 300 randomly selected manufacturing companies in Slovenia. Questionnaires were sent to executives of development departments in companies. At least 90% of managers were identified by name. Respondents who supplied the data came from companies which (1) are predominantly manufacturing (metal, wood, food processing, textile, ... ) with (2) a minimum of 20 of employees. Usable responses came from 71 firms - a 23% response rate.
5. SURVEY RESULTS The total nwnber of employees for tlle responding companies is presented in Table 1.
Table 3 shows the formal educational level of development personnel in the surveyed companies. The relatively low level of education indicates insufficient investment in human resources, as well as limited recruiting of recent university graduates.
Table 1:Totalnumber of employees Employees 0-49 50 - 99 100 - 249 250 - 499 500 - 999 1000+ No response TOTAL
No. of firms 13 31
Companies 12 4 19 20 11
Table 3: Formal educational structure of the development personnel Formal education High school Associate degree University degree Master, Ph.D. TOTAL
4 1
71
A relatively large number of small and medium sized companies are the consequence of downsizing by
114
% 56 20 22
No.of employees 795 287 31 3
2
28
100
1423
companies we asked the respondents to describe the level of integration (Table 6). In the questiOIUlaire, the integration was described as data transfer, use of common data, and ability to browse the data. The responses indicate that DIS is not integrated into the corporate IS in a relative large portion of companies.
Table 4 summarizes the use of tools in the surveyed companies. Besides typical development tools (CAD/CAM group of software used by 55.7% of the firms) production control software, such as job release (manufacturing order release) and shop floor control packages (which are in fact production control packages) are used in some companies. Four companies begun to use PDM packages which can be considered as application of advanced IT for product development.
Table 6: Integration ofDIS into the corporate IS Level of integration Integrated Partly integrated Not integrated No response TOTAL
Table 4: Use of software tools in the development SW tools in development CAD - Design CAD - Construction CAM CAQ Production Management Production planning PDM
NO.offirms 9
63 16 17 29 20 4
% of tools 5.7 39.9 10.1 10.8 18.3 12.7 2.5
Appropriate education and training is one of the most important prerequisites for successful effective and fast implementation of advanced tools. Therefore we asked the respondents to rate the average amount of training provided per employee of the Development Department (Table 7).
Table 7: Average number of days of education and training per employee per year in development Man - days 0-5 6 - 10 11 - 15 16 - 20 No response TOTAL
Table 5: Export orientation and use of SW tools 2D 5 3 5 7 4 2 0 10 10 46
% of finns 18.3 46.5 33 .8 1.4 100.0
Nearly a half (45%) of the surveyed companies plan major technological changes in the development process (mostly purchase of new hardware and software) in the nex1 12 months, and 15% plan to buy advanced product development tools.
Table 5 presents the use of two-dimensional (2D) and three-dimensional (3D) tools in the development grouped by the percentage of exports in the total revenue of the finn . The data strongly indicates that export oriented companies who are exposed to strong competitive pressure on the world markets, used relatively expensive and sophisticated 3D tools considerably more than companies that are oriented towards the domestic market. A few firms used both 2D and 3D tools, but about 80% of the 3D tools were installed in eX1'Ort oriented companies. We can expect that the increasing competition of foreign companies on the domestic market will force more companies to invest in advanced IT.
Export % 0-9 10 - 19 20 - 29 30 - 39 40 -49 50 - 59 60 -69 70 -79 90 - 100 TOTAL
No. of firms 13 33 24 I 71
3D 1 0 1 0 1 1 1 5 11 21
No. of firms 27 28 6 3 7 71
C}~
38.0 39.4 8.5 4.2 9.9 100.0
Results (Table 7) showed that 75% of firms provide their employees on average less than 10 days of training, and the average time was less than 7 days. Our experience indicates that managers of research and development departments often succeed to gain management support for investments in equipment but not for education and training of its staff. Therefore, product developers frequently spend a lot of time and effort to overcome initial problems in application of developer's tools. which could be used in a more productive way if developers were offered appropriate training. This may result also in an incompetent and inadequate. and therefore inefficient use of the tools, and may raise questions about the justification of the investment in the tools.
Missing or only partial integration of systems within the company often results in partial solutions to problems which may later become a concern for the whole company. Many times such a solution initially meets the demands of users, but later results in disappointments. This may lead to generalized and superficial conclusion that investment in IT fails to meet the expectations and is not cost effective. To asses the extent integration in the surveyed
The duration of training in the application of tools as recommended by vendors of software tools is about 20 days in the first year and 10 days in next years, in addition to 10 days of general training each year.
115
value of the company which again impacts their investment policy.
Although recommendations by vendors can be biased, the great difference between the recommended and actual training time indicates that most companies do not provide the developers enough opportunity for professional progress and development of their potentials. Most of the education and training in the surveyed firms was general, and only around 30% covered professional software tools. This again indicates a large gap between the recommended and actual amount of training for the use of software tools.
Findings of our study showed weak interest of management in the development in general and its insufficient support to the introduction of advanced IT in the development process. In many cases investment in IT are too low to improve the development process and to be cost effective. This may explain why managers in many companies consider that investment in product development does not give the expected results and does not contribute to the competitive advantage of the firm. Insufficient on job education and training of the developers, particularly in the use of product development tools, and their relatively low formal education may be also one of the reasons for widespread use of stand-alone tools, not integrated with other applications. This indicates that many companies are not mature yet for successful adoption of advanced IT, where properly skilled development staff is one of the major obstacles to its introduction. On the other hand, the fact that export oriented firms use advanced IT in the development considerably more than others indicates that technology increases the competitive advantage of the firm.
In general, there is a lower limit for necessary investment in IT which is cost effective. We asked the respondents to indicate the range for minimum investment in IT supporting the development process that can be economically justified (Table 8).
Table 8: Minimum feasible investments in IT for product development (in million SIn Investment 0- 1 1-5 5 - 10 10+ No response TOTAL
No. of firms 9 26 19 14 3 71
% 12.7 36.6 26.8 19.7 4.2 100.0
From the medium and particularly the long term perspective, hunlaD resources are more important for competitive advantage and survival of firms, but more difficult to obtain and develop than monetary capital. Therefore recruiting, education and training of product developers seems to be a critical in manufacturing companies in Slovenia. Low level of investment in the development process limits recruiting of new university graduates. For example, mechanical engineers who were in high demand by manufacturing companies before the change of the political and economical system, now often find jobs in commerce and other organizations outside the manufacturing sector, or are even unemployed. In the long term perspective, lack of adequate human resources may prevent many companies in Slovenia to meet the challenges of the information age and to find their place in the information society.
The most frequent response was 1 to 5 million SIT 01000 to 55000 DEM) which is enough to buy only a PC level computer and 2D design tool. We believe that in most cases this is not enough for effective and efficient support to the development process. Respondents also rated the level of top management support for the introduction of contemporary IT. Responses indicate that the support was rated strong or fair in about 30% of surveyed companies, while in about 20% of companies managers of the development department felt that top management does not support the implementation of IT into the development process. The reason for the insufficient management support may be related to privatization and short tern} survival and/or profit strategy discussed in the comment to Table 2.
REFERENCES: Moskon S.. Zupancic 1. (1996). Integration of the development information system into the Organizational System of Manufacturing companies, System Integration '96, Eds. 1. Pour and 1. VofiSek Prague, June 1996, pp. 175-183 .
6. DISCUSSION Increasing competition of foreign manufactures on Slovenia's market caused by the liberalization of import regulations, forces domestic manufacturing enterprises to reduce the costs and improve the quality of their products. Therefore many companies neglected long term issues and minimized investment in development, particularly investments advanced IT and development of human resources. Liberalization coincides with privatization. In many cases this caused instability in the management style and inclination of the management to reduce the
Richter H.1. (1989). Arguments for Flexible Automated Manufacturing under the Aspect of Economy, Organization and Information Systems, Proceedings of International Conference , Kaltnekar Z., Gricar 1. (Eds.), Bled 13-15 September 1989, pp. 885-889.
116