Looking to further capitalize on the recent trend in manufacturing toward greater product innovation, Sopheon Corp. today announced that it would buy Alignent Software, Inc., which markets software for product and technology roadmapping, for $5.5 million.
With the acquisition, Sopheon gets technology that complements its own Accolade product, which helps manufacturers manage products as they move through the pipeline, as well as gauge the impact those product will have once they reach the market.
The Accolade software is used by companies that already have identified areas where they want to innovate and created product strategies within those areas. Accolade helps organize all the projects that will help drive the strategy, and lets the user company rank and manage those projects. The software then tracks the performance across a product's lifecycle.
Alignent's flagship product, Vision Strategist, precedes this process, helping a manufacturer decide which areas of technology will be most profitable in the coming years. By dissecting external trends, such as market demand; other emerging technologies; and regulatory developments, Vision Strategist creates a five- to 10-year roadmap that tells the manufacturer where the opportunities lie. Boeing Co., for instance, may be interested in what kind of fighter jet it should build in the next decade. The roadmap produced by Vision Strategist helps paint the strategic landscape across that period, leaving Boeing to select the technologies that it wants to invest in based on the map.
For most product companies, managing the portfolio is the last step in the process. Determining which technologies to pursue comes first, and this is a difficult step for many, according to Jim Brown, vice president and service director of global product innovation and engineering at Aberdeen Group.
"What really gets challenging is understanding where research and development should be focusing" in the first place, he told Managing Automation today. Questions that must be addressed include, "What are the underlying technologies and capabilities that the company needs to develop, even before they're ready to consider commercializing them into any particular product?"
The product roadmapping technology that supports this decision-making process "is not a very common packaged application," Brown said. Most companies manage this part of product development through a mix of manual data gathering and gut feelings, he said.
Prior to its acquisition of Alignent, Sopheon, which made Managing Automation's 2006 list of Companies to Watch, has been largely missing this technology. As late as last fall, Sopheon was in the process of developing the functionality organically, but after evaluating the prospects, decided that it could realize success much more quickly by buying it, Andy Michuda, Sopheon's CEO, told Managing Automation.
The technologies are complementary, but touch many of the same functions within an organization, Michuda said. "We're both operating in business processes that are dependent on cross-functional information gathering," he explained.
In Vision Strategist, the data sources for that information are marketing, R&D, and regulatory quality groups, which forecast regulatory trends to come. In Accolade, interdepartmental cooperation is similarly important, as marketing, manufacturing, finance, and R&D personnel must work together to bring the product to market and manage its lifecycle.
Michuda said the two products would continue to be sold separately. He noted that Sopheon will announce that it plans to integrate into Vision Strategist the product management functionality that underlies Accolade.
With the deal, Sopheon buys itself some space in the competitive landscape, according to Brown. As the larger PLM vendors such as UGS, PTC, and Dassault move to acquire or develop the portfolio management capabilities inherent in Accolade, Sopheon has created new differentiation with the addition of the Vision Strategist capabilities.
"This allows Sopheon to continue to move in a strategic way that does not conflict with the footprint of the larger PLM vendors," Brown said.
Michuda echoed that assessment, calling Alignent's IP portfolio and product application "a big step forward."
Like the products themselves, the respective customers of Sopheon and Alignent are distinct but complementary. Sopheon has been successful selling the Accolade product into the chemicals and consumer package goods markets, and claims approximately 100 accounts. Alignent has made its name among large aerospace and defense and high-tech companies, including Boeing, Lockheed Martin, medical device maker Medtronic, and Motorola. Alignent's roster includes 40 active clients.
Michuda estimated the number of shared customers at just one or two, which suggests a plethora of cross-selling opportunities for Accolade and Vision Strategist. Michuda said Sopheon would conduct more research to determine whether Accolade should be "dumbed down" to suit the less intense nature of product development in process industries, such as chemicals. The company's research indicates that Accolade is well-suited to the transition to heavy discrete markets, such as aerospace and defense.
Sopheon will retain most of Alignent's sales, pre-sales, and customer service personnel. Michuda will maintain the CEO role of the integrated company. Dennis Clerke, Alignent's CEO, will leave the company. Sopheon expects the deal to close within the next two weeks.