WHITE PAPER

Product Rationalization in the Telecom Industry:

A Framework-driven Approach

Manish Juneja, Parnika Roychoudhury

 Table of Contents

Introduction............................................................................................................... 3
Customer Experience: a key Business Driver for Product Rationalization..... 3
Impact of Increasing Choices on Customer Satisfaction..................................................... 4

Impact of Increasing Choices on Market Share...................................................................... 4

Impact of Increasing Product Features on Usefulness of a Product................................ 5

Overall Impact of Product Mix on Revenue and Profit......................................................... 5

Potential Challenges................................................................................................. 6
The ‘Objective’ Dilemma.................................................................................................................. 6

The ‘Pricing’ Dilemma....................................................................................................................... 7

Who Bells the Cat?............................................................................................................................. 8

Key Considerations of Product Rationalization................................................... 9

Financial Perspective........................................................................................................................ 9

Non-Financial Perspective.............................................................................................................. 11

Business Metric and Value-driven Product Rationalization Framework........ 12

Conclusion.................................................................................................................. 13

References.................................................................................................................. 13

Appendix: Case-let of Product Rationalization................................................... 14

2
External Document © 2015 Infosys Limited
Introduction
Gaining market share and staying
profitable for an enterprise is like running
a marathon where one needs to plan,
focus, and execute session by session in
order to win the race at the end of the day.
However, in this era of hyper-competition
and saturation of traditional services,
the Product Management group is often
being pushed to innovate and launch
new products and services at an even
faster rate to stay ahead of the game.
Product managers are either augmenting
existing products or launching products,
thereby increasing the product mix as
they are pushed to win races quite often.
As a consequence, the product portfolio
is becoming heavier, wider, and deeper,
though at the same time, many of the
products in the portfolio only meet the From a consulting perspective, this white
short-term objective and not the longer paper attempts to answer the two following
term objective of an enterprise. The value- questions:
add products become value-cost products
over a period of time.
• What are the drivers of product
rationalization and what are its key
Therefore it becomes imperative to prune considerations?
the product mix and carry out product
rationalization in an enterprise. Product
• How to get started and carry out product
rationalization, leveraging a business
rationalization can be defined as a business
metric-driven framework approach?
activity of identifying and eliminating
From an implementation perspective, this
obsolete products, product lines, product
white paper can even be considered as a
features and variants, thereby significantly
‘short guidebook’ which provides detailed
aiding the realization of enterprise goals
implementation steps on how to carry out
and objectives. In this activity decisions are
product rationalization by considering
taken to either keep a product active or
multiple financial and non-financial factors
suspended, or removed from the portfolio,
supported with case-lets.
thereby rationalizing the product mix.

Customer Experience: A key Business Driver for Product Rationalization

The telecommunications industry is in an
era of hyper-completion and saturation,
where every operator offers more or less
the same proposition; no longer is it the
networks, products, and devices that create
competitive advantage for providers.
Innovation and customer experience
the engagement at conceptualization
and then carry it through to retirement
of products and services. The relationship
between the customer experience and
Customer Experience (CX)
the product experience has become more
direct, with a better product experience
being a significant constituent in realizing
an improved customer experience.
CX = k*PX

have become the differentiating factors

that enable service providers to grow
and strengthen their relationship with
customers. From a product perspective,
it is no longer sufficient for the product
management group to just launch new
products and services; they must ensure
that any new products and services are
also innovative, more relevant, more value-
driven and can be clearly differentiated
by customers. To achieve this, it requires
Product Experience (PX)
greater engagement with customers
throughout the product life cycle. The
product management group must start
Figure 1: Correlation of Product Experience and Customer Experience

3
External Document © 2015 Infosys Limited
 Impact of Increasing Choices on Customer Satisfaction

Back in 2004, American psychologist Barry in the product selection by a consumer number of choices? The below figure
Schwartz, in his scholarly book The Paradox triggers a lower product experience and depicts the customer satisfaction score
of Choice - Why More Is Less1, argued that leads to a lower customer experience. as a function of the number of choices
the elimination of consumer choice can But how do you determine the ‘optimal’ available.
greatly reduce the anxiety level amongst
shoppers. This same analogy holds true for
the telecommunications industry when
offering customers too many product
choices and too many product features.

Customer Satisfaction
Paralysis
While customers certainly enjoy choice and
welcome variety in a product range, there
Inflection
comes a point where the amount of choice
starts to lead to greater dissatisfaction
amongst customers. Excessive choice
also leads to temporary paralysis of the
No. of Choices
customer decision-making process,
significantly delaying the ability to decide Figure 2: Impact of Choices on Customer Satisfaction
on a product in a timely manner. Delay

Impact of Increasing Choices on Market Share

Secondly, correlation can also be found

between the market share and number
Shorter Customer Life cycle leads to early fall of Market Share
of choices. It is interesting to note that
beyond the optimal number of choices,
any further increase in choice leads to a
Market Share

shorter customer life cycle; the result of

which is a fall in market share. The below
figure demonstrates the reduction of
customer life cycle and impact on market Increasing Choices
share with increasing choices.
Figure 3: Impact of Choices on Market Share

Furthermore, it is clear that the minimal

cost and the maximum benefit for an
enterprise is realised at the optimal
number of choices, and not by having
more or less choices available. The
figure alongside shows that positive
feelings increase only up to a certain
number of choices, beyond which
they start to decrease and give way to
negative feelings.

Figure 4: Impact of Choices on Customers’ Feelings

4
External Document © 2015 Infosys Limited
Impact of Increasing Product Features on Usefulness of a Product

Finally, not all the features or variants

of the product increase the utility
or usefulness of the product. If we

Usefulness of Product
increase the number of features or
options beyond an optimal count,
the extra additions may not add
any extra value to the customer. So
not all features are core revenue-
enhancing, nor value-adding
features.
No. of Features

Figure 5: Impact of Increasing Features on Usefulness of a Product

Overall Impact of Product Mix on Revenue and Profit

All of the above criteria, factors, and analyses can be summed up and consolidated as per the below figure.

Figure 6: Impact of Product Mix on Cost, Revenue, and Profit

5
External Document © 2015 Infosys Limited
 Potential Challenges
The ‘Objective’ Dilemma
Now that we understand the drivers and
significance of product rationalization, it
is also important to understand what we
are trying to achieve through it. Unless
there is an understanding of the end
goal, we cannot rationalize the product
mix effectively. Instead, we may just end
up confusing ourselves, being unable
to identify the products that need to be
eliminated from the product mix.
A very important aspect to note is
that often we start with one product
rationalization criteria, and at a later stage
due to conflict of interest, we end up in a
stalemate situation and the whole product
rationalization exercise is put on hold. This
happens when the rationalization process
is started without a clear view or awareness
of the enterprise goals and focus areas in a
given timeline.
Every enterprise defines its own business
goals depending on its position in the
life cycle. As a first step it is important to
appreciate and truly believe in strategic
Based on one of the objectives above, the purpose of product rationalization can now be derived and categorised as follows:
Volume Preservation
Volume preservation means retaining
products which an enterprise is able to sell
in large volumes. Products which do not
add to volume sales will qualify for
the potential list of products to be
rationalized or retired. Profitability
volumetric analysis is a key determinant for
volume preservation.
Revenue Growth
The key objective here is to increase the
revenue growth rate. As a consequence, we
External Document © 2015 Infosys Limited
Drive Balanced
Growth &
Profit
Capture What's Gain Market
Growth the Real Share
Purpose?
Drive
Efficiency
Figure 7: 2x 2 Quadrants: Enterprise Focus Areas
goals. Without a clear understanding of Growth and Profit, Gain Market Share,
these goals, product rationalization Drive Efficiency, and Capture Growth. The
activity may prove to be a regressive and enterprise may only focus on one of these
futile exercise. objectives at any given time. The product
rationalization execution should also align
The above 2x2 matrix provides four
with the organizations strategic objective,
possible strategic objectives of the
to ensure the larger objective can be met.
enterprise, namely: Drive Balanced
‘push’ revenue generating products Margin Maximization
or re-bundle existing products, and
Here, the goal is to increase profitability.
enable selling of packages / bundles for
This can be achieved by using different
increased revenue.
methods –for example, revamping
existing products, adjusting pricing or
Product Cost Reduction &
re-bundling of products.
Simplification
This means that we lower the unit cost
of the product and/or simplify the product
portfolio, driving efficiency and/or
OPEX optimization.
6
The ‘Pricing’ Dilemma
Product Mix

The next critical step is to have an

Existing Adjust
unambiguous understanding on

Existing
the pricing of the product mix. The
Do Rationalize
key question is whether to adjust or Nothing Products
retain the prices for the product mix, only

pricing
for which the 2x2 matrix alongside
provides four possible scenarios.

Adjust
Adjust Rationalize
Price only Product Mix
& Adjust
Prices

Figure 8: 2x2 Quadrants: Pricing and Product Mix

Current Product Mix and Current
Pricing
Do not change the product mix or the
pricing and do not eliminate products from
the existing product mix. In other words, it
suggests that product rationalization is not
required - do nothing.
Current Product Mix and New Pricing the process of product rationalization
and indicates that pricing adjustment is
Do not change the product mix but
out of scope.
adjust the pricing. Indicating product
rationalization is not required - adjust
New Product Mix and New Pricing
prices only.
The most difficult block, eliminate
New Product Mix and Current Pricing products from the product mix and
allow for adjustment of prices. This
Change the product mix by eliminating
could be for revenue maximization or
certain products but make no adjustment
margin maximization, depending on the
to their pricing. As a result, it clearly aids
organizational goal.

7
External Document © 2015 Infosys Limited
 Who Bells the Cat?
It is interesting to note that often
organizations commence the product
rationalization journey without realizing
who will ultimately decide on what Who Bells the Cat?
Multiple Localized Perspectives lead to Conflict of Interest & Indecisivenss
products will be eliminated from the
product mix. Consultants provide
recommendations based on logical Product
Management
reasoning, but they often do not take the Sales Pricing

activity to the finishing line, as they are

not the key decision makers. Furthermore,
sales, product management, pricing,
customer care, and IT representatives Regulation IT
have biased views; with resistance and
Legal
localized perspectives on the potential
Legal Customer
list of products that are required to be Customer
Care Care
eliminated from the product mix. This
adds to the complexity of the problem,
and as a consequence, often the product
rationalization exercise remains unfinished. Figure 9: Who Bells the Cat?

To avoid such a scenario it is a key requirement for senior management to provide commitment in identifying the right set of people
to establish a product rationalization governance cell. To ensure an unbiased perspective, the key representatives from sales, product
management, pricing, legal, customer care, and IT should all be participants in this group. By aligning themselves to the organization’s goals
and objectives, the governance cell can ensure the final decision on the elimination of products is achieved without any localization or bias.

Product Management

Legal Sales

Product Rationalization
Governance Cell

Pricing
IT

Customer Care

Figure 10 : Product Rationalization Governance Cell

8
External Document © 2015 Infosys Limited
Key Considerations of Product Rationalization
While carrying out rationalization, we often focus on the criteria to rationalize the product suite, and we think little of the consequences of
product rationalization. It is important to have a holistic perspective which assesses, analyses, and measures products, not only from the
viewpoint of the implementation of the rationalization, but also considers the impact, post the rationalization. We can logically categorize
our assessment into three perspectives: Financial, Non-Financial, and Other.

These are not just the dimensions, or criteria of rationalization, but are the considerations that should be accounted for while we carry out
the process. Depending on the organization’s focus and the real purpose or end goal of rationalization, appropriate weightage can be given
to each of these perspectives.

Financial Perspective

• Pareto Principle: The Pareto principle

states, only 20% of products contribute
to 80% of the revenue. Assuming
the purpose of rationalization is to
maintain the revenue and reduce cost,
the Pareto principle, can be applied as
a first step to segregate the products
that contribute to maximum revenue.
It helps to create the first draft of the Identify and
Cumulative %

potential products for rationalization. Eliminate

• Value Analysis: Assists in analysis and

segregation of potential products for
elimination; by identifying those which
do not add value to the organization.
In principle, this rule should never be
compromised. Value analysis can be
effectively used to study and analyze
the existing product set to determine
which products add value by
improving the benefit-to-cost ratio of Figure 11: Value Add and Value Loss Products3
the product line, portfolio, or product
mix.

The above diagram illustrates the revenue,
profit, and cost curves for a set of ten
products. The figure shows the first six
products are only helping to move the
benefit to cost ratio upwards as they
help to increase the profits. From a value
analysis perspective we can infer that
we need to ‘push’ the highly profitable
products (first three), retain the products
that still add to profits (the next three)
even though they are not as profitable as
the first three products, and the remaining
products can be considered as potential
cases for elimination because they bring
down the value factor. There is a twofold
benefit to this approach, not only does it
suggest ways to rationalize the product
suite, but also ensures the negative
impact of rationalization is minimized. This
principle can be used as a second step after
a basic Pareto analysis has been carried
out to identify the next draft of potential
products to be rationalized. Under normal
circumstances this will help identify
30%–40% of all products or product
features which do not add value.

9
External Document © 2015 Infosys Limited
 • Revenue Loss: Relates to the amount
of revenue that would be foregone as a
result of rationalization. This dimension
or perspective is only pertinent if the
enterprise’s focus is to capture growth
or increase market share. If profitability
or driving efficiency is the main focus
for the enterprise, then this perspective
will hold less weightage. However,
value analysis also indirectly ensures
that revenue loss is minimized.
Every organization has its own threshold
level derived from its business goals
(i.e., for the purpose of product
rationalization, refer to section ‘The
Objective Dilemma’), this threshold level
can be used as a filter to identify and
Low Volume
High Margin
segregate the potential cases for product
rationalization. As an example, if an
organization wants to focus on volume
preservation then ‘only low volume - low
margin’ products are worth considering
for rationalization.
High Volume
High Margin

• Profit Margin: The contribution

to profit margin and cumulative

Margin
profit margin is also an important
perspective to consider. It is best to
combine the profit margin analysis Th
res
with volume; the existing product mix Low Volume hh High Volume
old
can be segregated into four categories: Low Margin Low Margin
High Volume High Margin
Volume
High Volume Low Margin

Low Volume High Margin

Figure 12: Margin Volume Quadrant
Low Volume Low Margin

10
External Document © 2015 Infosys Limited
Non-Financial Perspective
The non-financial perspectives are much
more strategic in nature and difficult
to assess, because they are not purely
data-driven. These perspectives are of
high importance and relevance to the
business as they increase the boundary of
product rationalization analysis from mere
product level analysis (which is internal)
to regulatory, legal, competitor, strategic
fitment, differentiation, and complexity
analysis (often with an external focus).
• Alignment to Product Strategy: ideally
the products which are not aligned
to the future product strategy should
be rationalized irrespective of their
financial performance. After we have
identified and shortlisted the potential
products for rationalization we can
then extend the filter test to identify
which ones do not align to the product
strategy.
• Customer Base, Segmentation, and
Customer Preferences: The customer
base, the segment they fall in, and
their preferences are an important
dimension to look at when planning
and assessing the impact of product
rationalization. Often customers have
a firm choice, or a preference towards,
a particular product or product
feature. In such cases if the financial
analysis falls into the bucket of ‘to-
be-rationalized products’, then either
the product needs to be revamped
to make it financially viable or an
informed choice needs to be made to
retain it ‘as is’. Otherwise, a plan needs
to be in place to mitigate the impact
of a decision to eliminate the product.
This perspective also provides a vital
input for possible product migration
and change management.
• Differentiation: Certain products, Systems Complexity: Multiple
even though financially ineffective, product catalogues, pricing
offer either competitive advantage tools, discount tools, etc., and
or possess high ‘esteem’ value; an interactions with multiple IT
attribute that is particularly hard systems that cater to multiple
to quantify. These products help products, increase the complexity
enterprises differentiate themselves of the system landscape.
amongst their competitors.
Consideration should be given to this
• Regulatory / Legal Compliance And
Contractual Obligations: Certain
perspective so that informed choices
products cannot be discontinued
are made while carrying out product
because of regulatory or legal
rationalization.
obligations and compliances. Generally
• Product Complexity: Growing demand they are ‘grandfathered’ (available
for personalized product offerings, only to legacy customers) and not
the need to offer bundled products eliminated from the product mix.
for faster time to market, the desire It is important to carry out the
to differentiate, and sophisticated legal / regulatory and contractual
segmentation results in widening checks before a decision is made on
the product mix. It also increases the rationalization.
complexity of the products, systems,
and processes. The snowball effect is
• Stage of Product Lifecycle: this is
one perspective which if not assessed
that higher product complexity leads
to higher sales complexity, lower
diligently may cause negative impact
to the product mix. Don’t compare
customer experience, higher OPEX, and
apples with oranges, it is important to
higher IT costs.
logically segregate the products based
Process Complexity: Often on their stage in the product life cycle
shortcuts or new tactical before we compare them.
processes are introduced in order
Since there are multiple financial and
to minimize time-to-market for
non-financial considerations for product
new offers. Different products are
rationalization, in order to have a clear
managed on different processes.
methodology on how to carry out
At times different scenarios on
rationalization, it is important to define a
the same product have different
framework-driven approach to carry out
processes, for example, ordering
product rationalization.
a new product and modifying the
same product may require totally
different systems and processes.
11
External Document © 2015 Infosys Limited
 Business Metric and Value-driven Product Rationalization Framework
A holistic product rationalization
framework provides an insight into a
number of key business areas, including:
• Key business process areas that are
directly impacted because of product
rationalization
• Key business metrics that can be
leveraged upon to measure and
analyze the financial performance
• The operational and strategic levers Rather than re-inventing the wheel, the
that help to create the business value below framework re-uses the business
process and some of the business metrics
The below framework has been structured
from existing TM Forum Business Process
based on the assumption that the
Frameworks and Gartner’s Business Value
enterprise’s strategic goal is to increase its
Model. This ensures better acceptance,
overall revenue and profit. The business
reusability, and standardization of the
metrics and operational levers have been
identified accordingly, and as such they
product rationalization framework.
directly enable strategic value creation.

What Process Areas are How How and Where Where Value
Impacted We Measure We Add Value will be Created

Business Process Areas Business Metrics Operational Levers Value Levers

At Individual Product level At Individual Product level At Product Portfolio Level Strategic Level

Improve Average Revenue of the

Strategy & Commit Revenue / Product Product Portfolio
• Market Strategy & Policy
• Analyze the linkage of
market segments and Product Portfolio Improve Product Portfolio
products Index Index
• Product and Offer
Portfolio Planning Increase
• Analyze Product
Revenue and
Growth Rate / Profit
Portfolio Strategy

IMPROVED FREE CASH FLOW (FCF)

Product
Adjust Pricing
(Based on OPEX / Customer)
Gross Margin /
Product
Product Life cycle
Management
• Product and Offer
Development and
Retirement Per Unit Cost Reduce Average
• Assess Performance of Product Cost
existing Products
• Manage Product Exit % of Reusable Simplify Product
Product Offerings Structure
Decrease Cost
No. of Offerings / Reduce Average
Operations Support Product Time-to-Market
and Readiness
• Manage Product Offering
Reduce Product
Inventory Mean Time to Deliver
Delivery Time Improve
Operational
% Revenue could not Reduce Revenue Efficiency
be billed Leakage

OPEX / Revenue Reduce Operating

Expense Ratio

LEGEND
Positive Indicator Reused from TM Forum Business Process and Business Metrics Frameworks

Negative Indicator Reused from Gartner’s Business Value Frameworks

Product Portfolio Index* identifies and validates current and projected customer needs in existing and targeted markets. This metric
shows the product portfolio by size and margin contribution. Product Portfolio Index = Sum {Revenue of products where [(g > G/2) AND
(m > M/2)]} / Sum {Revenue of all products} Where: G = product with highest growth rate, g = growth rate of each individual product, M =
product with highest gross margin and m = gross margin of each individual product.

12
External Document © 2015 Infosys Limited
An important consideration is that the
above framework is not a ‘one-size-fits-
all’ solution. If the strategic goal of the
enterprise is different from increasing
revenue and profit (for example: the goal
could be to ‘Gain Market Share’) then the
relevant business metrics and operational
levers should be selected accordingly
to create the appropriate product
rationalization framework.
With a deep understanding of the
organizations strategic goals, the
operational levers are easily identified
and can then be used as the basis of
product rationalization. In addition, the
business metrics can be used to measure
the performance of the products and the
portfolio in order to make more informed
decisions. This ensures the outcome and
consequence of product rationalization has
an undisputed linkage to operational and
strategic goals.
One other aspect to note is that the above
framework only suggests the key business
processes at the product layer; it does not
deal with business processes at the service
or resource layers. In cases where a product
is removed it is also possible that the
processes at the service and resource levels
will also be impacted. For the purpose of
simplicity and unambiguity, the scope of
the product rationalization framework has
been confined to the product layer.

Conclusion
In the midst of notable changes taking place in the telecommunications sector (such as a declining top line, increasing cost pressures,
requirements for rapid launch of new products and services, and a strong focus on increasing customer experience) product rationalization
can be leveraged as a strategic initiative to drive efficiency, capture growth, and help gain market share. It is essential that the product
rationalization activity is sponsored by the top level management and implementation is carried out without compromising business goals.

There is however no ‘magic formula’ to carry out product rationalization in a defined one-fit-for-all way. A detailed understanding of specific
business goals and drivers supported by financial and non-financial impact analysis is needed to establish and customize the product
rationalization framework as per the organization’s needs and objectives.

The establishment of a product rationalization governance cell is the first critical step in this process. Post formation of the governance
cell a business metric and framework-driven approach needs to be employed to carry out product rationalization and realise measurable
outcomes aligned to overall strategic goals.

References
1. The Paradox of Choice: Why More
Is Less. Barry Schwartz. Ecco /
HarperCollins Publishers, 2004.
2. Choices, Values, and Frames. Daniel
Kahneman and Amos Tverskyin,
American Psychologist, Vol. 39, pages
341–350; April 1984
3. SKU Rationalization, Whitepaper, 2011,
Beroe-inc.com
4. Product Experience: Leveraging
Enterprise Product Management to
Enhance Customer Experience: Sigma
Whitepaper
5. www.tmforum.org
6. Standard Key Performance
Indicators by Gartner http://www.
aicpa.org/InterestAreas/FRC/
AccountingFinancialReporting/
EnhancedBusinessReporting/
DownloadableDocuments/
Industry%20Key%20Performance%20
Indicators.pdf

13
External Document © 2015 Infosys Limited
 Appendix: Case-let of Product Rationalization
Business Scenario: ABC Corporation wishes to optimize the entire suite of its enterprise products. The primary focus of the product
management group is to increase the overall revenue and profitability of the portfolio. The group doesn’t want to adjust the prices of the
existing products due to legal constraints. However, management is open to a revamp of the products if required. The management also
requires the decision-making body to account for the customer’s feedback. A product rationalization governance cell is formed to make
decisions in case of conflict of interests. The decision makers need a metric- and framework-driven approach in order to rationalize the
product suite.

How to go about rationalizing this product portfolio?

The first step is to align the objective of the product rationalization exercise with the strategic goals. The following inference can be derived:

• Identify the Business Goal: The case-let above for ABC Corporation clearly describes that the end business goal is to increase overall
revenue and profit. It suggests that all recommendations should be such that overall profitability is increased and that there is no
significant revenue loss to the product portfolio.

• Identify and Assess the Flexibility to Change: Medium (business is open to revamp or re-bundle the products)

• Identify the Business Constraints: No change to pricing.

• Identify the Scope of Possible Outcomes: Retire, remove, revamp / re-bundle, retain. Do not offer to new customers; however maintain
for existing customers (mark them as ‘grandfather’).

Step 1 Revenue earned Top 80% product- Business

Product
One of the key considerations is the (MUSD) wise revenue Outcome
financial performance of the products. Product 1 50 ?

• List each product along with

Product 2
Product 3
39
385 385
?
Retain
revenue (note, if profits can be
calculated by accounting for Product 4 195 ?
respective operational cost per Product 5 596 596 Retain
product, then use the calculated Product 6 82 ?
profit instead of revenue). Product 7 105 ?
Product 8 399 399 Retain
• Apply the Pareto Rule by retaining
Product 9 373 373 Retain
those products which contribute to
Product 10 123 ?
the top 80% of revenues.

Total 2347 1753

In the above example, 80% of total revenue is US$1877.6 million. From the table we can see that products 3, 5, 8, and 9 contribute close to
80% of the revenue, so they should be retained. Our next step would be to evaluate the remaining products. While the financial decision is a
straight-forward one, the non-financial ones in the subsequent steps require extensive business insight and strategic considerations.

14
External Document © 2015 Infosys Limited
Step 2
Regulatory requirement is a qualification
criterion and can now be applied on the
Product Regulatory need? Business Outcome
remaining products. The nature of legal Product 1 Yes Mark as Grandfather
rules could include existing contractual
obligations with the customer, a mandate Product 2 No ?
of certain products (features) in a particular
country, etc. In cases such as these, a
product tied to a legal requirement cannot Product 4 No ?
be eliminated from the portfolio; but
subject to the nature of the requirement
can be chosen not to be offered to new Product 6 No ?
customers. For example, if there is a
five-year customer contract for a product Product 7 No ?
and the rationalization is being done in
an earlier timeframe, the product cannot
be removed for the existing customer,
but we may choose not to offer it to new
customers. Such products are then termed Product 10 No ?
as ‘grandfather’ products.

Step 3
Alignment to the overall product roadmap
and whether the product is a core product
or a new product can also influence the
decision to retain, remove, or revamp.
Additionally, certain products can be a
clear differentiator and help to provide
a competitive edge - even if they have a
low contribution to the overall revenue.
This can occur in cases of new products
that are yet to mature; in such cases the
decision makers can take a call to retain it.
It is important to compare products in the
same life cycle stage, whether they are in
initiation, growing, mature, or a declining
phase. Without like-for-like comparison
the final assessment would be erroneous.
Step 4
Complexity of processes and IT systems,
the flexibility to remove and revamp a
product, and the impact of removal needs
to be evaluated. Products classified as
“low-hanging fruits” (easily replaced), may
be chosen and identified.

15
External Document © 2015 Infosys Limited
 Step 5:
Customer preferences need to be taken
into account. A low-revenue / profit-
making product may not be selected
for removal if it is known that customers
have a strong preference for it. In such
cases we can consider retaining the
product, but may also assess the ability
to remove features that do not add value
to the product suite, and if possible
undertake further simplification of the
business processes around the product
in question. Often further detailed
analysis is required and the product
rationalization governance cell will be
asked to make a decision on the product.

Aligned to Product
Product Flexibility to Remove Customer Preference Business Outcome
Strategy?

Further analysis is
Product 2 Yes Flexible Neutral
required

Product 4 Yes Complicated Preferred Mark as Grandfather

Further analysis is
Product 6 Yes Flexible Neutral
required
Further analysis is
Product 7 No Complicated Preferred
required

Product 10 No Flexible Neutral Remove

16
External Document © 2015 Infosys Limited
Further Analysis

• For the products where further analysis

Product Time to Market Growth Rate Gross Margin Strategic Decision
is required, the product rationalization
governance cell would evaluate the
operational efficiency impact of Product 2 400 days 12% 20% Remove
each of the products, by taking the
following steps:

Calculate the ‘time to market’ of

each of the individual products
Product 6 300 days 24% 55% Retain
(T2M). Compare it with ‘average
time to market’. Product 7 220 days 4% Preferred Mark as Grandfather

Calculate the ‘growth rate’ of

each of the individual products.
Compare it with ‘average growth
rate’.
• For ABC Corporation the average • After collating the information and
time-to-market is 280 days, the average carrying out further analysis as per the
Calculate the ‘gross margin’ of the growth rate is 18%, and the average above steps, strategic decisions were taken
individual product. Compare it gross margin is 45% as outlined in the table above.
with ‘average gross margin’.

17
External Document © 2015 Infosys Limited
 Product End Result

Result Summary: Product 1 Grandfather

• Retain and continue to sell – Product 2 Remove

Products: 3, 5, 8, 9, and 6. Product 3 Retain and continue to sell

• Retain but do not sell to new Product 4 Grandfather

customers (mark them as
Product 5 Retain and continue to sell
‘grandfather’) – Products: 1, 4, and 7
Product 6 Retain and continue to sell
• Remove – Products: 2 and 10
Product 7 Grandfather
Product 8 Retain and continue to sell

Product 9 Retain and continue to sell

Product 10 Remove

18
External Document © 2015 Infosys Limited
About the Authors

Manish Juneja
Principal Consultant in Energy, Communications, and Services business unit at Infosys.

Manish comes from an engineering plus management education background and is a seasoned consultant and management
professional. With more than ten years of experience working with international organizations his career path has led to increasingly
challenging positions with demonstrated accomplishments in domain and process consulting and advisory services, business
transformation, and channel sales and marketing. He has extensive experience in the information and telecommunications industry
and has worked with multiple service providers across the globe in the areas of product consulting, product portfolio planning,
product rationalization, product catalogue solution implementation, and product life cycle management.

Manish holds a MBA in Marketing and Finance from Symbiosis Institute of Telecom Management, Pune, and a Bachelor’s Degree in
Electronics and Communication from Punjab Technical University. He is also a TM-Forum certified training practitioner on ‘Information
Modeling Framework (SID)’ and has multiple publications to his credit.

He can be reached at manish_juneja@infosys.com

Parnika Roychoudhury
Project Manager in Energy, Communications, and Services business unit at Infosys

Parnika has over ten years of experience in telecommunication consulting. She has been involved in OSS program
implementations for major service providers located across the globe and specializes in margin management, voice trading
platform, product catalogue, and has experience with multiple technologies and platforms.

Parnika holds a Bachelor’s degree in Engineering from Jadavpur University and has written white papers and presented them at
national level seminars. Her areas of interest include estimation techniques, corporate strategies and operations.

She can be reached at Parnika_R@infosys.com

19
External Document © 2015 Infosys Limited
For more information, contact askus@infosys.com

© 2015 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice. Infosys
acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted, neither this
documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording or otherwise, without the
prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.

Stay Connected