This slide deck was used at my presentation during PM Labs in Moscow on Nov 18th 2010. The purpose of this session was to demonstrate best in class practices for IT product and service development. It showed tools and techniques that allow project and product managers to select most promising idea, develop, and successfully launch it in the market

1. Stage gate process in IT product
and service development
PM Labs, Moscow, November 18th

2. Agenda
 Introductions
 Technology adoption basics
 Stage gate process basics
 Stage gate process in practice
 Q&A
Page 2

3. Introductions
Page 3

4. Page 4
Source: http://www.linkedin.com/in/pberendt

5. Luxoft
Page 5
Key Facts Services Domain Focus
 Founded in 2000 in Moscow
 Subsidiary of IBS Group (Xetra: IBSG)
 Serving world-leading companies across
the industries
 Solid financial performance:
– FY 2009 revenues: $149M
– FY2010 forecast: $190M
 Global headcount: 4000+
 Global presence: 17 locations worldwide
 Best-of-breed processes:
– Europe’s first SEI CMMI v1.2 Level 5
– ISO 9001:2008/ISO 27001:2005
– Agile, XP, Lean, Kanban
 Custom application
development and
maintenance
 Application support
 R&D/Product engineering
 Re-engineering and
migration
 Independent QA services
 Performance engineering
 IT Consulting
 SE/CMMI Consulting
 Automotive
 Aviation
 E-Commerce
 Energy & Utilities
 Financial Services
 Heavy Industries &
Manufacturing
 Telecommunications
 Travel
2009: #1 IT Outsourcing Service
Provider in Eastern and Central
Europe – by Black Book of
Outsourcing
Recent Luxoft Recognition
2009: “Leaders” category of the
2009 Global Outsourcing 100 list
by IAOP
2009: #1 in the “Emerging
European Markets” Category in
Global Services 100 rating

6. Technology adoption basics
Page 6

7. Diffusion of innovation
Page 7
 What influences spread of new idea:
 The innovation
 Communication channel
 Time
 Social system
Source: http://en.wikipedia.org/wiki/File:Diffusionofideas.PNG

8. 5 stages of adoption
 Knowledge
 Exposed to innovation,
 Lacks information
 Not inspired to seek more info
 Persuasion
 Interested
 Actively seeks detail
 Decision
 Evaluate concept
 Advantages / disadvantages
 Adopt or reject
 Implementation
 Employ innovation to a varying
degree
 Determine usefulness
 Search further info
 Confirmation
 Decision to continue using innovation
to its fullest potential
Page 8
Source: http://en.wikipedia.org/wiki/File:DoI_Stages.jpg

9. Technology adoption basics
 Rate of adoption - speed with which members of a social system
adopt an innovation
 Measured by time required for % of social system to adopt
innovation
 Critical mass – point where enough individuals have adopted an
innovation so further adoption is self-sustaining
Page 9

10. Adopter categories
 Innovators
 First to adopt
 Willing to take risk
 Youngest
 Interaction with other innovators
 Early Adopters
 Second to adopt
 Opinion leadership
 More socially forward than late
adopters
 More discrete in choices than
Innovators
Page 10
 Early Majority
 Take time to adopt
 Seldom hold opinion leadership
 Late Majority
 Adopt after avarage member of sociaty
 High degree of skepticism
 Laggards
 Last to adopt
 No opinion leadership
Source: http://en.wikipedia.org/wiki/File:DiffusionOfInnovation.png

11. Examples: Poor adoption
 Listed as one of the ‘The 10
Biggest Tech Failures of the Last
Decade” by Time
 100 milion USD for product
development
 Only 30 000 units sold from 2001
to 2007
Page 11

12. Example: Great adoption
 Launched 2004
 Today > 500 000 million
 2010 revenue est. 1 bln
USD
Page 12
Source: http://www.penn-olson.com/2010/02/10/infographic-facebooks-amazing-growth/

13. Example: Adoption Rate
 Years to reach 50 million users:
 Radio – 38 years
 TV – 13 years
 Internet – 4 years
 iPod – 3 years
 Facebook - 175 million users in less than 11 months
Page 13

14. Crossing the Chasm
 Chasm (Gap, Crater) between Early
Adopters (enthusiasts / visionaries) and
early majority (pragmatists)
 Visionaries and pragmatists have
different expectations
Page 14Source: http://en.wikipedia.org/wiki/File:Technology-Adoption-Lifecycle.png

15. Techniques for Crossing the Chasm
 Choose target market
 Understand whole product
 Position the product
 Build market strategy
 Choose distribution channel
 Pricing
Page 15

16. Stage gate process basics
Page 16

17. Stage Gate Process
 The stage-gate model was developed and first suggested
by Robert G. Cooper (McMaster University) in his book Winning
at New Products, published in 1986
 Stage-Gate® is a registered trademark
 Stage gate is a technique in which a (product, process, system)
development process is divided into stages separated by gates.
 The stage-gate model may also be known as stage-limited
commitment or creeping commitment.
Page 17
Source: http://www.prod-dev.com/stage-gate.php

18. Why Stage-Gate
 70-85% of leading U.S. companies uses Stage-Gate to drive new products to
market
 Optimize cost
 Optimize final product
 Identify problems early
 Increase likelihood of product success
Page 18
Time
Cost
Project Costs
Cost of Change

19. Stage
 Stage – phase of the project where team undertakes activities to
advance the project to next gate or decision point
 All business functions are involved
 Investment grows as project proceeds through stages =
incremental commitment
 Structure of stage:
 Activities
 Analysis of results
 Stage deliverables presented at the Gate
Page 19
Source: http://www.prod-dev.com/stage-gate.php

20. Stages
 Typical model (organizations adopt it to their business)
 Stage 0 – Discovery/Ideation
 Stage 1 – Scoping
 Stage 2 – Build business case
 Stage 3 – Development
 Stage 4 – Testing and Validation
 Stage 5 - Launch
Page 20
Source: http://sites.google.com/site/biosenseglobal/idea-funnel

21. Gates
 Gate – review point, where Deliverables from Stage are assessed
against Criteria
 Gate ends with an Output:
 Go
 Kill
 Hold
 Redo/Recycle
Page 21
Source: http://www.prod-dev.com/stage-gate.php

22. Gates Decision Criteria
 Strategic Alignment
 Is the project still aligned with corporate strategy?
 Adoption
 Will users adopt it?
 Production Feasibility
 Will it work and can we supply it?
 Financial Value
 Will it create value?
Page 22

23. Sample Stage Gate process
in practice
Page 23
*Following slides are my recommendations for stage gate techniques adaptation,
it is based on my personal experience, not Product Development Institute Inc guidelines
The aim of marketing is to know and understand the customer so well the
product or service fits him and sells itself.
- Peter F. Drucker

24. Stage gate for IT Product and service development
Stages:
 Discovery
 Design
 Development
 Ready
 Launch
Page 24

25. Discovery
 Stage question:
 What exact idea are we considering to fund?
 Stage activities
 Identify target group
 Identify benefits
 Validate idea
 Architect review
 Stage output/Gate review criteria
 Is target group clearly defined?
 Are we clear on benefits we want to deliver to user?
 Do users see value in using our idea?
 Are users willing to use/buy our product/service?
 Is it technically feasible to develop product/service?
Page 25

26. Discovery activities
 Identify target group
 Analyze existing data
 Segment into multiple groups based on many dimensions
 Profile (age, sex, nationality, education, etc)
 Need
 Technology use
 Identify benefits
 Day in a life technique
 User scenarios
Page 26

27. Discovery activities
 Validate idea
 Write down on A4:
 Existing user problem
 Your solution to the problem
 Reason why users should trust you can resolve the
problem
 Price
 Test the idea with users
 Let them read it
 Ask to think out loud
 Watch their reaction
 Ask what they like/dislike about idea
 Ask if they would buy/use the product/service
Page 27

28. Discovery – Facebook example (2004)
 Facebook idea validation
 Existing user problem – Harvard students can’t build relationships as they
are shy to ask strangers for date
 Solution – website, where Harvard students can view profiles of others,
and invite them to a ‘social network’ as friends
 Benefit – approach strangers on line without risking social ostracism
 Reason why users should trust you can resolve the problem
- Mark Zuckenberg built facemash.com prior launching FB – proved he has
technical competency to build the site
 Price – free!
Page 28

29. Design
 Stage question:
 Is the idea good enough that the project should be funded?
 Stage activities
 Create prototype
 Perform usability test
 Create product backlog
 Draft marketing plan
 Define business model
 Stage output/Gate review criteria
 Usability test score
 Project scope definition
 Marketing plan fundamentals in place
 Pricing
Page 29

30. Design activities
 Create prototype
 Paper prototype
 Prototyping tools (i.e. Microsoft SketchFlow))
 Usability test
 Software (i.e. Morae by Techsmith)
“ The best results come from testing no more than five users
and running as many small tests as you can afford.“
J. Nilsen
Page 30
Source: http://www.smashingmagazine.com/2010/06/16/design-better-faster-with-rapid-prototyping/
Source; www.microsoft.com
Source: http://usableworld.com.au/2008/12/22/the-value-of-eye-gaze-data-during-usability-tests/

31. Design activities
 Marketing plan
 Adoption strategy
 Choose target market
 Understand whole product
 Position the product
 Build market strategy
 Choose distribution channel
 Pricing
 Communication plan
Page 31
Target group Key Message Channel Timing

32. Design – Facebook example
Page 32
Harvard
Stanford, Columbia, Yale
All universities in US
Everyone over 13 in US
Every one over 13 in the world
source: http://www.inquisitr.com/17291/facebook-turns-five-today-offers-free-birthday-gifts/

33. Design – Facebook example
Page 33
Target group Key Message Channel
Harvard Students Get to know people from
Harvard
Word of mouth, E-mail
Stanford, Columbia, Yale Get to know students from
Ivy League schools
E-mail
All US unviersities Connet with other students E-mail, Facebook
Everyone over 13 FB gives people the
power to share and make
the world more open and
connected
Facebook

34. Development
 Stage question:
 Is the project ready for release?
 Stage activities
 Deliver users stories from Product backlog
 Create training plan
 Finalize marketing plan
 Stress test product and create plans for scaling up
 Stage output/Gate review criteria
 Working software
 Marketing plan ready
 Product stress tested, and ready to scale
Page 34

35. Development
 Create training plan
 Different user segments require different trainings
 Use proper channels to deliver training
Page 35
Segment Training Level Refresh frequency Delivery channel
Data entry user Expert Yearly In Class
Reporting user Expert Yearly In class
Manager Standard Yearly Web training
Top Management Awareness Once A4 one page
document

36. Ready
 Stage question:
 Is the project ready for launch in the given market?
 Stage activities
 Localize product, marketing and training plans for the market
 Ensure all legal aspects related to launch are covered
 Confirm pricing for the given market
 Stage output/Gate review criteria
 Product localized, tested and ready to scale on the market
 Marketing plan elements ready to execute
Page 36

37. Launch
 Stage question:
 Did we succeed on given market?
 Stage activities
 Measure product performance and user feedback
 Measure commercial success (user traction, sales)
 Adjust if necessary : marketing, training, support
 Capture any ‘stories learned’ before launching on other markets
 Stage output/Gate review criteria
 Results captured and used as input to ‘next release’
 Results captured and used as input to Launch on other markets
Page 37

38. Launch – Facebook example
Page 38
Source: http://wehrintheworld.blogspot.com/2009/03/facebook-growth-chart.html

39. Q&A
Page 39

40. Visit us on Facebook
Page 40
Source: http://www.facebook.com/Luxoft.Poland

41. Check career opportunities at Luxoft
Page 41
Source: http://www.facebook.com/Luxoft.Poland?v=app_108545145879287
Source: http://www.luxoft.com

42. Thank You
Page 42