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The Need for Investment in Enterprise Innovation: Part Two

Written By: Predrag Jakovljevic
Published On: August 8 2013

Sopheon – Where Innovation Means Business (and Vice Versa)
Last week I talked about enterprise innovation management (EIM)/innovation performance management (IPM) in a blog post about how wise decisions regarding innovation investments can make a huge difference to a company’s success down the line. There are many practices and technologies that come together to improve the success of product innovation, with product lifecycle management (PLM) providing an important foundation. One solution offering such a combination of capabilities in the marketplace today is Sopheon’s Accolade suite, With its Accolade solution, Sopheon offers support for the most important processes of EIM, including strategic innovation planning, ideation, product development process execution, and product portfolio management (PPM) across the entire product lifecycle. In this blogpost we’ll look at the company’s history, the development of its product offering, its benefits and functionality support, and its customers and global presence. We’ll also provide a broad examination of where Sopheon sits in the EIM marketplace, including who Accolade’s competitors are and how the product offerings compare.

The company was originally founded in 1993 as PolyDoc, then focused knowledge management (KM) software. It acquired software integrator (SI) AppliedNet in late 1999 (and changed its name to Sopheon), and also acquired Teltech Resource Network Corporation in late 2000, both acquisitions to effect a KM and research services expansion.

The company eventually realized that the Internet would cannibalize the KM and research/expert network business and thus changed direction with the release of the Accolade EIM/IPM suite in 2001. In 2007, Sopheon acquired a vendor of collaborative roadmapping software solutions Alignent, which is the basis for its current Accolade Vision Strategist (AVS) product (see Part 1 for more details on the EIM facets). This product planning solution’s primary markets are aerospace & defense (A&D), automotive, construction, energy, heavy engineering, high-tech, medical devices, and telecommunications. These verticals’ common characteristics are multiple roadmap layers and medium- to long-term time horizons as well as the need for multiple teams to collaborate on a common strategy. The AVS module automates the strategic roadmapping process, allowing users to visualize and forecast the future of products, markets, and technologies (see Figure 1 below).


Figure 1 – Strategic Roadmapping. © Sopheon

On the product front, 2011 was a milestone year for Sopheon, as the vendor completed a full refresh of the technology platform upon which its core software offerings are built, and as a result, these are now wholly based on the current Microsoft .NET software framework. This achievement was the culmination of a multi-year effort that was conducted in tandem with a new Agile development methodology. The latter should allow Sopheon to systematically introduce multiple product releases during the course of a year, rather than larger releases separated by long intervals of time.

Sopheon Accolade Solutions

Release 8.0 in early 2012 was the public release of the new Accolade platform with major functionality updates. Release 8.2 in early 2013 brought Accolade Portfolio Center (APC) to market as a deeper/broader product, along with Accolade Innovation Planner (AIP) (see Figure 2), Accolade Idea Lab (AIL), and Accolade Process Manager (APM).

With the release of APC and AIP, Sopheon feels confident about catering to all of the facets of EIM, although the future will still bring more focus on industry specificity and a continuing expansion of the suite’s breadth and depth. Microsoft SQL Server is the underlying database, while ‘big data’ analytics come through Sopheon’s patented contextual search technology that embeds leading analytics and visualization tools by a renowned business intelligence (BI) vendor (whose name Sopheon chooses not to disclose publicly).

Users’ interest in social tools is primarily in the idea and concept development area (AIL) where Sopheon already has built-in social capabilities and plans to add integration to social networks within the next several months. For many of its customers, ‘social’ is their Microsoft SharePoint corporate intranet. Sopheon offers a SharePoint connector to provide visibility into Accolade from SharePoint. Intellectual property (IP) protection and sensitivity trump social requirements for now.

Sopheon offers cloud hosting with single tenancy and separate secure databases. Most of its customers are still reticent to consider multi-tenant public cloud because of IP concerns. In addition, data location is a concern for some companies who don’t want their IP on a US property. There is an increasing interest in mobile capabilities and Sopheon already offers a mobile app for access to project documentation, status, key data fields, watchlists (important items for a user) and project news. Apple’s iPhone and iPad devices are currently supported, and the plan is to expand mobile capabilities and support more devices later this year.


Figure 2 – Sopheon Accolade 8.2 Footprint. © Sopheon

The winning value prop for Sopheon is its integrated end-to-end innovation lifecycle solution set, whereby users can purchase implementation flexibility to start wherever the need is the most pressing and then move into other areas as processes mature. APM is still the best seller and the core Accolade module, with increasing interest in APC since it was launched in January 2013. Sopheon is lately seeing an increase in buying interest from more areas—in the early days the customers were primarily R&D departments, but now the interest comes from every area involved in innovation/NPD&I processes, including brand managers, product managers, innovation officers, marketing, scientists, process managers, etc. The vendor is also seeing C-level executives driving the need for EIM/IPM solutions—e.g. Indra Nooyi, CEO at Pepsico, defined the need for enterprise innovation management, which drove the decision to purchase Accolade.

Sopheon Customers
Sopheon sells its software primarily to companies with a heavy emphasis on R&D. An ideal customer profile would be a company with more than $300 million in annual revenues, and with a major dependency and/or commitment to bring new and/or revised products to market to grow revenues, increase profits, and remain viable in their marketspace. Sopheon’s more than 200 clients (with 60,000-plus individual users in over 50 countries) come from the automotive, high-tech manufacturing, chemical, food and beverage, and healthcare industries, and include many large players in these areas, including BASF, Parker Hannifin, Bayer, Owens Corning, Land O'Lakes, and Wendy’s.

In addition to its broad EIM/IPM solution, Sopheon has a deep domain expertise in innovation management, and to that end its software includes best practices templates. The company prefers to partner with customers to implement innovation/NPD&I business processes, rather than just implement the mere product. Sopheon also offers solutions for managing protocols and compliance regulations. Accolade includes a role-based security model, so even within a company, one can restrict what certain classes of users can see, do, update, etc. Similarly, if a client chooses to involve external parties (trading partners) in an initiative, they can set appropriate access rights. The potential legal departments’ issues and hurdles Sopheon sees are with IP protection, rather than with Stage-Gate or other NPD&I processes per se.

The original Accolade system was specifically built to support the Stage-Gate concept long before other vendors figured it out, and has evolved with Stage-Gate development and advancement over the years. Sopheon also supports other processes and methodologies such as Agile, PACE, DoD 5000 modeling, Lean Six Sigma, phase-gate, Design For Six Sigma, etc. Within the current Accolade solution suite, Stage-Gate is primarily part of the APM module.

To be certified by Stage-Gate International (SGI, the owners of Stage-Gate), software vendors have to pass a stringent product evaluation by SGI that demonstrates support for Stage-Gate capability requirements. SGI recently updated the capability requirements to Level 3 to include additional capabilities for process optimization, benchmarking, strategy, and other areas. Sopheon was the first product certified at Level 3.

Global Coverage
While Sopheon has a global presence and 120 employees in total, the U.S. and Canada continue to be a strong market for the company, and momentum is being built in the United Kingdom (UK) and German markets. The vendor has recently made investments in its expansion into Europe, the Middle East, and Africa (EMEA). Consumer goods in general and food and beverage in particular have been very strong verticals over the past 24 months, and will likely continue to be strong going forward. Also going forward, Sopheon sees continuing and increasing opportunity due to interest from the chemicals and high-tech industries. The product has language resource files that can be translated to any language without customization. The vendor maintains English, French, and German language files and content (data, metrics, online forms, attachments, templates, charts, and reports) and also supports Danish, Dutch, Japanese, Korean, Portuguese, Simple Chinese, Spanish, and Swedish.

Sopheon has a small network of proven partners in Germany, France, the UK, Australia, New Zealand, and Korea, and this is an area of focus for development and growth going forward. Resellers only generated about 7 percent of the company’s 2012 revenues, thus one of the keys for Sopheon to increase its rate of growth is to gain more business through third-party resellers. Sopheon maintains relationships with a core group of consulting services organizations, including Arthur D. Little, Deloitte, Kalypso, and Stage-Gate International. Of note in this area is some joint project activity with Accenture, and a recently extended partner association with Microsoft— Sopheon qualified for Gold competency as an independent solution vendor (ISV).

Competitive Landscape
Sopheon might lose to its competitors when the prospect has narrow requirements for a tactical (rather than strategic) innovation solution and/or when the PPM requirements are driven by the IT department or project management office (PMO). Also it is not uncommon that a PLM and/or enterprise resource planning (ERP) incumbent vendor claims to offer similar solutions and confuses the prospect. There are also a slew of niche solution providers that focus only on a particular part of EIM, especially ideation via a number of social networking, idea gathering, and game mechanics capabilities that might be deeper than those of Sopheon’s AIL. Atizo, BrainBank, Brightidea, CogniStreamer, CorasWorks, Critflow, Crowdcity, Elguji Software, Hype Innovation, ideaPoint, Imaginatik, Induct, Innovation Factory, Innovation Cast, Inova Software, Jive Software, Kindling, Lithium, Motivation Factory, NewsGator, Spigit, and Wazoku are some of those specialist point solution providers.

Traditional PLM vendors offer some Sopheon-like IPM capabilities, but mostly in a product-centric tactical/execution context, i.e., at the more granular product/bill of material (BOM)/formula level— for example, Oracle with Primavera (and more recently buying Instantis) in the PPM segment, and Dassault Systemes’ 3DSwYm and ENOVIA, which come closest to Sopheon AIL and APM respectively, but are primarily engineering oriented,

SAP, PTC (Windchill PPMLink), Siemens, and Aras also offer solid PPM capabilities. But what most of the PLM vendors are doing is more of a bottom-up aggregation approach to PPM, rather than the top-down strategic business planning that is Sopheon’s inherent approach. Sopheon’s buyers are thus in the executive C-suite, whereas PLM buyers are primarily in engineering. In addition, PLM vendors have their eye on the ideation segment and it wouldn’t be surprising to see some acquisitions of standalone ideation vendors. This could be especially true in light of PTC recently putting a halt to the sale of Windchill SocialLink (based on SharePoint) after the product’s dismal success in the marketplace.

In any case, EIM/IPM is a nascent category that market pundits and analysts haven’t entirely figured out yet. We believe that we’re at the beginning of a period of long-term growth in this software category. Sopheon is a small company dependent on a few large deals from large companies to make its revenue numbers, and the company would benefit from expanding its value proposition and footprint into the middle market with more revenue growth from channel partners. Future product plans could also include a major revision and update to the user interface (UI), focusing on simple consumer oriented designs and an improved user experience.

Related Reading:

The Need for Investment in Enterprise Innovation: Part One (August 2013)

Social PLM and CRM – Dassault Systèmes and Netvibes (Under the Exalead Brand) (March 2012)

Filling the Holes and Breaking Down Artificial Walls in a Process PLM Solution Set – Part 1 (March 2011)
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