Pittiglio Rabin Todd & McGrath (PRTM), my alma mater in terms of the management consulting industry, has just released a benchmarking study done jointly with eBay. The study, authored by Director Joe Lo, focuses on uncovering the best product development practices within the internet software industry, and the study is purported to be the first of its kind – it contains a good amount of numerical and factual information about the sector and a functional area within that sector. Note that the internet software industry consists of companies like Yahoo!, Google, and eBay.
Some of the key findings which strike a chord close to me (being involved in the Web 2.0 space):
- Best-in-class (BIC) companies spend on average 5% more time in the concept/requirements phase and 5% less time in the test/rollout phase compared to worst-in-class (WIC) companies
- Internet software companies have a tremendous advantage in that they can simply launch new products or features on the website and see how customers react. The companies can track page-views, click-throughs, etc. This is tracking actual usage. If the product does well, invest more. If it doesn’t, pull it from the site.
- BICs have development cycles of eight weeks, while WICs take 22. Note that eBay has an R&D process that enables the company to launch 80 projects per "release train" (think of the train leaving the station as one release) with 26 trains per year.
- The study goes further to illuminate that shortening the cycle time has other positive effects not immediately obvious – defects decline by 25%, and worker productivity increases 20%.
The report by Joe Lo is a very nice piece of work. Check it out here (registration required).
So how is your company going to change towards becoming best-in-class? One doesn’t always need a change management consulting firm to accomplish change, but a company still needs that capability and fortitude to improve itself.