With global giants like Ford Motor Co., General Electric, and Procter & Gamble upping the emphasis on innovation, Sopheon plc, a little-known European company, is pioneering an emerging class of enterprise software designed to automate key product development processes and help manufacturers manage and mitigate risk.
Sopheon's Accolade system automates the Stage-Gate methodology, a widely used but highly manual series of business processes governing new product introductions and all related development activities. The Accolade system performs two very important roles: It promises to improve program management around new product initiatives by injecting real-time visibility into projects in the pipeline, and it serves up decision-support tools and dashboards to help reduce the risk of failed product introductions by letting manufacturers zero in on the right mix of new products prior to kicking off the actual development process.
It's with the latter capability that Sopheon has struck a chord. Although companies have escalated innovation efforts in recent years, the success rates of new product introductions (NPIs) haven't exactly followed suit. In fact, 46% of product development resources are spent on products that fail commercially or never make it to market, notes Robert G. Cooper, creator of the Staged Gate process, in his book, Product Leadership: Creating and Launching Superior New Products.
With manufacturers facing that kind of sobering statistic, Sopheon is betting that they are ripe for an overhaul of their NPI practices -- especially if they've prioritized best-in-class innovation as a core strategy. "All the activity over the last five years has been focused on the cost side of the equation, and that's been played out," notes Andy Michuda, CEO of Sopheon, whose U.S. headquarters are in Minneapolis. "Now, the energy is on how to go after top-line growth, and the 'innovation' buzzword is getting major play today. That helps our cause by bringing credibility to the priority of improving innovation."
That's where Sopheon claims its Accolade platform comes in. While many players in the product lifecycle management (PLM) and development tool space talk up innovation in relation to their products, the scope is radically different from what Accolade delivers. "We're not about managing the technology in R&D, we're about managing the business risk," Michuda explains, drawing a distinction between Accolade and PDM systems, for example, which serve as repositories for all product and engineering-related data. "The change we facilitate is we can affect time-to-market, bring new efficiencies to the NPI process, improve throughput, and improve a company's overall success rate."
A system like Accolade can facilitate those objectives by helping manufacturers deal with various innovation uncertainties. "If you are going to manage innovation, you're going to have to have some measures and technology that help you deal with uncertainty and risk," says Vasco Drecun, a partner and director of PLM research at Collaborative Product Development Associates of Stamford, CT. "As early as you can recognize signs of trouble and react to them, the better able you are to actually steer towards better results."
Accolade does this through a traditional on-premises enterprise application that supports most of the major databases, including Oracle and SQL Server. Accolade can be integrated with existing systems, including PLM and Microsoft Project and Office, to get the data and documents that it uses to build a knowledgebase.
Most of the existing PLM offerings stop short of this capability. "They look at it more from an engineering point of view," Drecun explains. "They don't question whether a product is innovative or not, they just help you deliver the deliverables."
Vendors such as SAP AG and Dassault Systemes (via its acquisition of MatrixOne Inc.) are starting to broaden their PLM portfolios with some comparable functionality, but for the most part, the category is quite young, with Sopheon, Integrated Development Enterprise, and a handful of small, niche software vendors making a play. Sopheon will have to deal with this influx of competition and educate the market on how its product provides complementary, but different capabilities vis-à-vis traditional PLM. In addition, Drecun says Sopheon faces an uphill battle convincing global manufacturers -- many of whom have already invested in innovation and/or program management platforms -- that there's value in adding yet another enterprise system.
As companies begin to bite, however, Drecun sees the category heating up and Sopheon well positioned to take the lead. "This market will mature to the point where it will become required by most manufacturers to do innovation management properly," he says. "At that moment of maturity, Sopheon will be the leader of this space, and that is the point at which they should be acquired."