2.0Develop

and Manage Products and

Services

3.0Market and Sell

Products and Services

4.0Deliver

Productsand

Services

5.0Manage

CustomerService

1.0Develop Visionand

Strategy

> > > > > > > > > > > >

OPERATING PROCESSES

MANAGEMENT AND SUPPORT SERVICES

6.0 Develop and Manage Human Capital

7.0 Manage Information Technology

8.0 Manage Financial Resources

9.0 Acquire, Construct, and Manage Assets

10.0 Manage Enterprise Risk, Compliance, and Resiliency

11.0 Manage External Relationships

12.0 Develop and Manage Business Capabilities

THE FRAMEWORK FOR PROCESS IMPROVEMENTExperience shows that benchmarking’s potential to drive

dramatic improvement lies squarely in making out-of-the-box

comparisons and searching for insights not typically found

within intra-industry paradigms. To enable this type of benefi cial

benchmarking, the APQC Process Classifi cation FrameworkSM

(PCF) serves as a high-level, industry-neutral enterprise model

that allows organizations to see their activities from a cross-

industry process viewpoint.

The PCF enables organizations to understand their inner

workings from a horizontal process perspective, rather than a

vertical functional viewpoint. The PCF does not list all processes

within a specifi c organization, and every process listed in the

framework is not present in every organization.

Originally created in 1992 by APQC and a group of members, the

framework has experienced more than twenty years of creative

use by thousands of organizations worldwide. The PCF is

supported by APQC’s Open Standards Benchmarking research.

It is continuously enhanced as APQC’s Open Standards

Benchmarking team further develops defi nitions, processes, and

measures. Please visit APQC’s web site periodically for updates.

The PCF is available for organizations of all industries and sizes

at no charge by visiting www.apqc.org/pcf.

HISTORYThe Process Classifi cation Framework was originally envisioned

as a taxonomy of business processes. The initial design

involved more than 80 organizations from the United States

and worldwide. Since its inception, the PCF has been updated

several times to refl ect changes in the way organizations do

business.

In response to feedback from users of the PCF, APQC regularly

engages practitioners, consultants, and academics to develop

defi nitions based on real-world experience with the processes.

That collaborative effort resulted in this document: a listing

of processes with defi nitions and selected key performance

indicators from APQC’s Open Standards Benchmarking

repository. The defi nitions contained in this document are to

be considered in conjunction with the PCF. The content in this

document will be updated according to research performed by

APQC and subsequent updates to the PCF. This document was

created using PCF version 6.0.0.

Version 2.0.0

PRODUCT AND SERVICE DEVELOPMENT DEFINITIONS AND KEY MEASURE

Version 2.0.0 • October 2012

2.0 Develop and Manage Products and Services

2 Permission granted to photocopy for personal use. ©2012 APQC. ALL RIGHTS RESERVED.

2.0 Develop and Manage Products and Services Defi nitions and Key Measures TABLE OF CONTENTS

2.2 Develop products and services___________________5

Key Performance Indicators _____________________5

2.2.1 Design, build, and evaluate products and services_____________________________5

2.2.2 Test market for new or revised products and services_____________________________5

2.2.3 Prepare for production ____________________6

2.1 Manage product and service portfolio _____________3

Key Performance Indicators _____________________3

2.1.1 Evaluate performance of existing products/services against market opportunities ________3

2.1.2 Defi ne product/service development requirements ___________________________3

2.1.3 Perform discovery research ________________4

2.1.4 Confi rm alignment of product/service conceptswith business strategy _____________________4

2.1.5 Manage product and service life cycle ________ 4

2.1.6 Manage product and service master data _____ 4

RIGHTS AND PERMISSIONS©2012 APQC. ALL RIGHTS RESERVED.

APQC encourages the wide distribution, discussion, and

use of the PCF and PCF defi nition documents for classifying

and defi ning processes. APQC grants permission for use

and adaptation of the PCF for internal use. For external use,

APQC grants permission for publication, distribution, and

use, provided that proper copyright acknowledgment is made

to APQC. No modifi cations to the look or content should be

made in external venues.

Please use the following text when reusing the PCF in external print or electronic content.

The PCF was developed by APQC and member companies

as an open standard to facilitate improvement through

process management and benchmarking regardless of

industry, size, or geography. The PCF organizes operating and

management processes into a number of enterprise-level

categories, including categories, process groups, and over

1,000 processes and associated activities. The PCF and its

associated measures and benchmarking surveys are available

for download and completion at no charge at www.apqc.org.

ABOUT APQC

APQC is a member-based nonprofi t and one of the

world’s leading proponents of knowledge management,

benchmarking, and best practices business research. Working

with more than 750 organizations worldwide in all industries,

APQC provides organizations with the information they need

to work smarter, faster, and with confi dence. Visit www.apqc.org or call +1-713-681-4020 and learn how to Make

Best Practices Your PracticesSM.

Version 2.0.0 • October 2012 3

2.1.1 Evaluate performance of existing products/services against market opportunities (10063)

The Evaluate performance of existing products/services against market opportunities process is used to identify gaps

between existing product/service capabilities or performance levels and the current market demand, available technologies,

and customer requirements. This process culminates in the decision of whether or not to proceed with investments in

the development of new deliverables. Input gathered from customers through exercises such as focus groups assess

marketplace need. In addition, input can be gathered from internal or third-party service organizations to support the

product/service evaluation.

Process InsightAlthough the marketplace may look for new technologies or techniques to enhance existing products and services, customers

may not be willing to pay more for them. Accordingly, remember that perfection can be the enemy of good enough. Find out

exactly what customers are willing to pay for, and ensure that efforts do not exceed the parameters of the development

business case. This is especially important with global products for which cost and availability issues may be more apparent.

2.1.2 Defi ne product/service development requirements (10064)

Defi ne product/service development requirements encompasses the identifi cation of new products/services or potential

improvements to current products/services. This process entails collaboration with members of the supply chain to ensure

the feasibility of what is being defi ned in the requirements. For example, a product with manufacturing requirements that

supply chain cannot currently fulfi ll requires a corporate decision to either upgrade manufacturing capabilities or abandon the

new product.

Process InsightDepending on the nature of the fi nal product or service, product/service development requirements are often defi ned as a set

of abilities, such as availability or reliability, that infl uence product development decisions.

• Total cost to generate new product/service ideas per

$1,000 revenue

• Total R&D cost per business entity employee for the

current reporting period

2.1 Manage product and service portfolio (10061)

This process group encompasses all processes associated with product and service portfolio management, including the analysis

of the current portfolio compared to market opportunities and the defi nition of requirements for new/evolved products and

services using that analysis. This group also includes activities related to the alignment of new additions to the portfolio with

corporate business strategy as well as the management of the product or service lifecycle. Preliminary research and development

falls in this group, under 2.1.3 Perform discovery research.

Key Performance Indicators:

4 Permission granted to photocopy for personal use. ©2012 APQC. ALL RIGHTS RESERVED.

( 2.1 Manage product and service portfolio continued )

2.1.3 Perform discovery research (10065)

The Perform discovery research process encompasses tasks and decisions associated with early-stage research and

development—when product/service assumptions are greater than knowledge. Based on the gap between current product/

service characteristics and new/changing requirements (from the marketplace, customers, or other business forces),

organizations use this process to identify and develop new technologies in support of a new product. This process also

includes an assessment of how feasible it is to incorporate those new or potential technologies into products and services.

It guides the funding and documentation of preliminary research and development projects and ensures that any fi ndings

(related to feasibility of technology or other recommendations) translate into stage-gate processes that drive overall

product/service development.

Process Insight

Consider the ramifi cations of being too “bleeding-edge” (as opposed to being on the leading or cutting edge) with new

products. Key stakeholders in the marketplace may not be ready to adopt the latest and greatest technologies, increasing the

risk that the product or service will not succeed or be adopted.

2.1.4 Confi rm alignment of product/service concepts with business strategy (10066)

The Confi rm alignment of product/service concepts with business strategy process is a reality check prior to signifi cant

investment by the organization. It ensures that the new product/service concepts are in line with overall business strategy.

This process involves planning and developing cost and quality targets for the new products/services. It can also involve

the prioritization and timing of development activities if there are a number of concepts vying for funding or other scarce

resources. Regardless of the number of product/service concepts, this process includes planning for product/service offering

modifi cations.

Process InsightThis process is most useful when the business strategy is current. If the strategy is outdated, this process may trigger a review

of the corporate business direction and drivers.

2.1.5 Manage product and service life cycle (10067)

The Manage product and service life cycle process includes the introduction of new products/services to the market and the

retirement of outdated products/services. This process also encompasses the identifi cation and refi nement of performance

indicators.

Process InsightIntroduction of the new product/service may be timed to coincide with key marketing opportunities. Products and services

should be retired when their marketplace or cost effectiveness begins to decline below a predetermined threshold. Once a

product or service has reached marketplace maturity, its performance indicators should be continuously refi ned.

2.1.6 Manage product and service master data (14192)

The Manage product and service master data process consists of activities related to the creation and storage of information

related to both new and current products and services. This information may include design specifi cations, part descriptions,

material data sheets, product history, and any documents associated with the product or service development process.

Process InsightInternal stakeholders may need access to product and service master data. Consider creating a central repository that is

accessible by multiple groups across the enterprise.

Version 2.0.0 • October 2012 5

2.2.1 Design, build, and evaluate products and services (10080)

The Design, build, and evaluate product and services process describes the core engineering design and development of any

new product/service or existing product/service upgrade. The process includes planning the development of the product/

service and assigning resources to deliver the plan. Building on the research and development efforts carried out earlier in

the development lifecycle, the process activities defi ne a high-level business case and technical assessment. Product/service

design specifi cations are developed and documented as part of this process, and both mandatory and elective external reviews

are conducted with regard to legal, regulatory, and standards concerns. Additional activities that occur during this process

include the building of prototypes, elimination of quality and reliability problems, conduct of in-house product/service testing

and evaluation of feasibility, identifi cation of design/development performance indicators, and collaboration on product/

service design with suppliers and contract manufacturers.

2.2 Develop products and services (10062)

• Average time-to-market in days for new product/service

development projects

• Average time-to-profi tability in months for:

– existing product/service improvement projects

– new product/service development projects

• Number of FTEs who develop and manage products and

services per $1 billion revenue

• Percentage of existing product/service improvement

projects launched:

– on budget

– on time

• Percentage of new product/service development projects

launched:

– on budget

– on time

• Total cost per $1,000 revenue to:

– develop and manage products and services

– support product manufacturing or service delivery

– design and develop products/services

– test market products/services

This process group relates to the design, development, and in-service confi guration control of products and services. It

encompasses traditional design, build, and evaluation processes; confi guration and change management; manufacturing and

production process planning; and fi nal product validation and verifi cation. This process is where most of the product or service risk

is identifi ed, controlled, and mitigated.

Key Performance Indicators:

2.2.2 Test market for new or revised products and services (10081)

Test market for new or revised products and services is a more detailed iteration of the marketplace analysis that took place

earlier in the product development lifecycle. It involves preparing a detailed market study, conducting customer tests and

interviews, fi nalizing product/service characteristics and business cases, fi nalizing technical requirements, and identifying

requirements for changes to the manufacturing and delivery processes that support market delivery.

Process InsightTo prepare a detailed market study that accounts for any changes in the global environment, consider conducting a series of

interviews, workshops, and focus groups with potential and existing customers.

( 2.2 Develop products and services continued )

2.2.3 Prepare for production (10082)

In the Prepare for production process, the organization develops and tests a prototype production and/or service delivery

process to ensure optimal production time and alignment with cost targets. This process also ensures that the production/

assembly/manufacturing lines are suitably equipped to meet the demands of the new product. If they are not, new material

and equipment can be designed and obtained. With the prototype process successfully tested and production or assembly

rates realized, the full-scale production process or methodology can be installed and validated.

Process InsightThe Prepare for production process is often a key target for Lean initiatives to ensure operational and cost effi ciency.

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6 Permission granted to photocopy for personal use. ©2012 APQC. ALL RIGHTS RESERVED.