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Summary

Innovation management technology is a fledgling market, but one that is likely to attract significantly more interest as many organizations focus more effort on innovation performance management (IPM). Ventana Research believes disruptive innovation is on the way for the innovation management technology market as segment leaders emerge and industry giants begin to enter the market.

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Ventana Research's IPM practice began with the recognition of an innovation value chain supported by an innovation business process. The value chain delivers ideas, deliverables, and intellectual capital. The business process that supports this value chain is concerned with generating, converting, and realizing innovation. The innovation management technology market supplies software tools and applications that support the innovation value chain and business process.

Overall, there is no leader in the innovation management technology market. This is because there is no one-product category that spans the innovation business process. For example, there is no innovation resource planning (IRP) product that compares with ERP or CRM. Consequently, there is also no significant representation in this market by industry leaders such as IBM, Microsoft, Oracle, or SAP.

Ventana Research proposes the innovation management technology market will not be dominated by a current insider fueled by organic growth/acquisition, but by either Microsoft or SAP, who will take different approaches to achieve this domination. The Microsoft approach will emanate from an information worker/Office technology perspective, whereas the SAP approach will be to incorporate innovation management into its existing enterprise suite of mySAP applications and the new SAP NetWeaver application platform.

Microsoft already has tools and applications that can be used to underpin a viable innovation resource planning (IRP) type of application, assuming an information worker perspective. These tools include the SharePoint portal, OneNote, and MSN Alerts. SAP, on the other hand, already has parts of the innovation process covered in its new xApps focus on collaborative product development and projects and ideation offerings from partners. Microsoft could attack this market from the information worker — or bottom up — in contrast to SAP who will approach it from the business process — top-down.

The market is classically fragmented into point solution "silos," partly because the innovation value chain and business process is not yet widely recognized and accepted. Many vendors are small, the applications and tools inexpensive and immature, and there is little or no recognition of a value chain or process orientation because few applications bridge these silos, even in terms of importing and exporting data.

What is clear is that there are two high value "aggregation" points in the innovation management technology market and both are in what Ventana Research calls the innovation conversion activities of the innovation process. Currently the two most mature and high value types of applications (relative to acquisition/implementation cost) are ideation and PLM. Both are potentially enterprise level applications in terms of licensing value and both convert innovation into potential revenue.

Ventana Research believes the first attempts to break out of this silo mentality will come from ideation and PLM vendors who will look to enhance and extend their offerings as follows:

Ventana Research does not believe the current generation of ideation vendors are sufficiently funded or positioned to move up the chain to build or buy PLM functionality. Ventana Research believes takeover opportunities are particularly obvious in the innovation generation and innovation realization sectors of the market — the former by ideation vendors, the latter by PLM vendors.

Assessment

Ventana Research believes the innovation technology management market is about to undergo some disruptive innovation of its own as it begins to mature and break out of its current fragmented silo-orientation. Disruptive change will be driven by ideation vendors building or buying innovation awareness/creativity functionality and by PLM vendors building or buying ideation functionality and/or IP and brand management functionality.

Ventana Research believes innovation management technology will not develop like the CRM market, where a new player rapidly became the market leader. Instead, the market will become the latest battleground between Microsoft and SAP. Microsoft could play well in the innovation awareness, creativity, and ideation spaces by judiciously combining and developing existing Office application assets, plus an acquisition or two. SAP could play well in the IP/Brand management, ideation, and PLM spaces.

Once innovation management is embraced by Microsoft and/or SAP, a feeding frenzy could result as IBM and other ERP vendors (e.g. Oracle) strive to compete. This in turn will trigger a race to create an end-to-end process management application or to consolidate this functionality into existing enterprise applications. Existing Ideation and PLM vendors in particular will become takeover targets and "low-end" or "low-maturity" vendors servicing the innovation awareness and creativity or brand management spaces could simply be driven out of business.

Stewart McKie is European Analyst Director at Ventana Research.