POC is a test conducted prior to prototype development to prove the feasibility and usefulness of a new theory or idea. Nowadays, an increasing number of companies conduct POC before developing new systems.
However, many people may not know the details of what POC actually is. In this article, we will explain the overview of POC, why it is needed, and its advantages and disadvantages.
Simply put, what is POC (Proof of Concept)?
POC is translated into Japanese as “proof of concept” and has almost the same meaning as proof of concept test. POC refers to the verification and demonstration of a new theory, concept, principle, or idea in the pre-prototype development stage for the purpose of proving its feasibility and usefulness.
POC is attracting attention in the IT industry
POC is attracting attention in the
IT
industry because the use of IT in companies is expanding from “corporate IT” for improving operational efficiency to “business IT” that directly contributes to business growth and sales. is.
Originally, POC was carried out in the manufacturing, pharmaceutical, and film industries where large-scale investments and technological innovations are made, but in the IT industry, a simplified version is created when considering the development of services and products. , test in a real production environment. This is to minimize costs by clarifying the probability of business success before moving on to full-scale development.
In addition, with the remarkable evolution of digital technology in recent years, new services and business models are being born in various industries, and the POC process is essential to survive the competition.
POC (Proof of Concept) and other differences
Here, we will explain the differences between POC and others.
Let’s look at each in turn.
prototype
First, there is a prototype, which is similar to a POC. A prototype is a trial product that is used to refine a product or service and bring it closer to a finished product. In POC, verification is performed to confirm feasibility before creating a finished product.
On the other hand, prototypes are created based on completed products that meet certain requirements and are determined to be feasible. In other words, it is good to understand that a prototype is created after conducting a POC and verifying feasibility.
Demonstration experiment
POC is translated as proof of concept, but it is also called proof of concept. There is no clear line between proof of concept and proof of concept, so it is difficult to tell them apart. However, POC is a test to verify the achievement of objectives by deploying a service or product, and its purpose is different from a proof-of-concept test to verify problems.
In other words, proof-of-concept testing is a process for discovering issues and problems when developing new products. Therefore, since issues and problems are discovered during the POC process, they can be considered synonymous. These two words are often used interchangeably.
MVP
MVP (Minimum Viable Product) is a product that has the minimum functionality required by customers and is intended for actual use.
Have your target customers use your MVP product and collect data for production based on their reactions and impressions. Since it is necessary to introduce the product to the market and see the reaction, this measure is carried out after confirming the feasibility of the product in advance.
POV
“POV=Proof of Value” means “proof of value” in Japanese, and refers to verifying whether the products and services that your company is trying to provide meet the needs and value of users. Masu.
Even if POC verifies that the product or service is feasible, profitability cannot be expected if users do not want it.
Therefore, the next step after POC is POV. POV allows you to verify the “value created by products and services” that cannot be determined with POC.
P.O.B.
“POB = Proof of Business” means business effectiveness in Japanese, and refers to verifying whether the business your company is planning to conduct is viable as a business in terms of profitability and costs.
Even if you conduct a POC or POV and determine that there is user need and value for the product or service that your company is considering providing, it cannot be determined whether it can be established as a long-term business. Even if there is a need and value from users, there are many cases where the further the business progresses, the more the business ends up in the red.
Therefore, the next measure we will take is POB. By incorporating the POB verification phase, ambiguous areas such as “Will the project be viable as a business?” will be clarified. Based on a solid strategic concept and management strategy, we verify the effectiveness of the business while checking cost effectiveness and break-even point.
Why POC (Proof of Concept) is necessary in business
The reason POC verification is necessary is because many companies value the POC process. Examples include the medical and scientific industries. Developing new drugs and conducting new research and development requires a huge amount of budget.
Therefore, it is difficult to allocate a budget to a random idea, and a process must be established. It is important to obtain appropriate evaluation by conducting POC and establish a system to prioritize progress.
POC is essential for DX promotion
In recent years, the promotion of DX has become an urgent issue, and the Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade and Industry are implementing various measures nationwide. This is said to be a way to prepare for the economic loss after 2025 due to the stagnation of DX, the so-called “2025 cliff.” In order to spread DX as quickly and effectively as possible, the government is working hard on agile development, which involves speedily repeating development of each function.
Therefore, POC has been attracting attention recently. Agile development, which repeats one cycle of planning, development, implementation, and testing in a short period of time, is said to be very compatible with POC. You can predict results for each cycle with a small budget, limit risks, and expect cost reductions.
For these reasons, in recent years, an increasing number of companies are incorporating POC into DX and proceeding with development.
Advantages of POC (Proof of Concept)
Here, we will explain the benefits of implementing POC. POC has the following advantages:
I will explain each in turn.
Verification results can be applied
The results of conducting and verifying POC can be used as a basis for making investment decisions. Since specific cost-effectiveness can be clarified in advance, it has the advantage of being able to calculate risk-reward when making investments.
Risk-reward is the ratio of “risk (loss)” and “reward (reward)” in a single investment. It is also called the risk reward ratio. It is a calculation method that uses risk reward to quantify the value of a single investment.
In addition, POC leads to risk management of investments such as replenishment of equipment and personnel, so you can avoid creating a wasteful environment.
Reduce the risk of new business
POC has the advantage of reducing risks when starting a new business. This is because you can verify in advance whether the project is viable, which reduces the risk of failure. In addition, you will be able to ascertain any missing technologies or information, allowing you to prepare for new business development.
Additionally, during product development projects, there is the advantage of being able to grasp user evaluations in advance by referring to the verification results and transitioning to prototype and MVP measures.
Attract attention from investors
In some cases, a stock company cannot survive as a company without cooperation and support from investors. However, since POC demonstrates the high feasibility of the product, it may be highly evaluated by investors. This will increase the likelihood that investors will buy more shares.
In addition, for small and medium-sized enterprises, by conducting a POC, the probability of obtaining a business partnership offer from a powerful company or organization increases. Therefore, if the business partnership is successful, there is hope for technological development and market development.
Cost reduction and review possible
If POC is conducted, it is possible to confirm uncertainties. In other words, if you can meet the needs of society and consumers, and if you can confirm a certain direction, you can reduce costs in the development and manufacturing process at an early stage.
In addition, since the maximum effect can be obtained at a low cost, there is an advantage that the development and manufacturing process can be confirmed by conducting POC on a small scale.
Basically, price is important when commercializing a product. Since the retail price of a product is greatly influenced by the cost, it can be said that the fate of commercialization depends on the production cost. If the price is higher than expected, there will be no sales prospects and it will not be possible to commercialize the product.
However, by conducting a POC, you can verify the cost effectiveness. Verifying cost-effectiveness before starting full-scale development has the advantage of minimizing losses. By calculating costs before commercialization, you can avoid the worst-case scenario of running into a large operating loss.
Disadvantages of POC (Proof of Concept)
The disadvantages of POC (Proof of Concept) are as follows.
Increased cost due to excessive number of verifications
In the above item “POC is essential for DX promotion”, I explained that cost reduction can be expected by incorporating POC into agile development, but no matter how much cost reduction can be expected, if the number of verifications is too high, the cost will increase. It will continue to increase.
In order to avoid repeating unnecessary verification, it is important to correctly define the purpose of the POC, carefully select the process, and perform it carefully while considering cost-effectiveness.
There is a possibility of information leakage
Once the POC yields results and the process is materialized and visualized, prototyping progresses, but there is a lurking risk of information leakage. If prototyping cannot be achieved without outsourcing some of the work, there is a possibility that information may be leaked. If information such as prototypes were to be leaked to competitors, the damage to the company would be significant.
In order to avoid such a situation, it is necessary to take great care, such as signing a solid non-disclosure agreement (NDA) with the outsourcing company.
POC fatigue and POC poverty can occur.
If you do too much POC, you may end up in a situation called “POC fatigue” or “POC poverty.”
No matter how many times you repeat the verification process, no progress is made, and you become exhausted after being at a standstill for a long period of time, which is called “POC fatigue.” In addition, a situation where POC does not produce noticeable results and costs only increase is called “POC poverty.”
It’s easy to fall into this situation because of the simplistic idea that “if you repeat it a few times, you’ll get results.” As explained in the above item “Increase in cost due to excessive number of verifications”, in order to avoid repeating unnecessary verifications, it is necessary to correctly define the purpose of POC, carefully select the process, and carefully conduct it while considering cost-effectiveness. It is important to go.
Method and flow of implementing POC (Proof of Concept)
From here, we will explain the method and flow of implementing POC.
Let’s look at each in turn.
Set goals and objectives and determine criteria for success
It is important for POC to clearly define goals and objectives. You should also establish a set of metrics or success criteria to accurately measure the feasibility of your proof of concept.
A good place to start is interviewing your clients to define success criteria for your POC process. Because client satisfaction determines whether your proof of concept is successful or not.
decide how to proceed
You need to estimate the time and effort required for your proof-of-concept pilot project. Also, decide what to do and what to measure in your POC validation project. Scoping your proof of concept is key to achieving accurate results.
Even if a POC proves to be viable, if the scope is incorrect because the project was not adequately evaluated, the proof of concept will be meaningless.
actually verify
Once the POC system is completed, we will conduct verification work. Even if it’s a small-scale deployment, it’s a good idea to test and test the system with all of your target users. By incorporating the opinions of target users, it is possible to perform objective and highly accurate verification.
evaluate
Finally, evaluate the POC results. It is important to evaluate carefully. Feasibility is determined by referring to verification data such as technical aspects and numerical values.
If we get good results, we will move on to full-scale development. However, if the evaluation is negative, it is important to utilize the identified issues in the next verification. We will take seriously the feedback we receive through verification.
Key points when implementing POC (Proof of Concept)
The following points are important when implementing POC.
Set clear rules and success criteria
As explained in the above item “Increase in cost due to excessive number of verifications”, if rules and achievement standards are not clearly defined, unnecessary verification may be repeated and “excessive number of verifications” may occur.
If you are unable to decide what needs to be achieved and how, implementing POC will become an end in itself, leading to typical “POC fatigue”.
To prevent this from happening, it is first necessary to clearly define rules and achievement standards before implementing POC.
start small
Since POC may involve a large number of verifications, the golden rule is to start small. In addition, it is necessary to go through the PDCA cycle, so we must take this cost into consideration before proceeding with verification.
If a large amount of budget is invested in a single POC and it is started on a large scale, not only will the risk of failure increase, but even just repeating the verification a few times will lead to POC fatigue and POC poverty. They may occur at the same time.
Basically, start small and try to expand as quickly as possible.
Be careful not to turn it into a theoretical theory.
In order to obtain highly accurate verification results with POC, it is necessary to conduct POC in a form that is as close to the actual environment as possible. If the actual operational situation and the POC environment are too different, not only will there be errors in the verification results, but the verification results may also come out as theoretical. To avoid such a result, try to make the POC environment as close as possible to the actual environment.
At the same time, the usefulness of POC will further increase if cooperation is obtained from users. By checking with users each time and receiving their feedback in an environment that simulates a real-world situation, we are able to derive highly accurate verification results.
summary
In this article, we explained the overview of POC, why it is needed, and its advantages and disadvantages. When implementing a POC, it is important to first firmly determine the objectives and success criteria. Let’s take a close look at the process while considering cost-effectiveness and approach POC in an appropriate manner.