You’re the CEO of a growing software company.  You’re successful but always under pressure: how can I grow my revenue?  How can I get new products to market faster and cheaper?  How can I get quality reference customers for my products?

Traditionally, software company growth was driven by developing new products or winning new customers.   Software commercialization presents another opportunity, and you may find that it’s a better option.

Through software commercialization, your company licenses or buys a technology developed by a Fortune 500 company originally for internal use.  The Fortune 500 company had a business problem and needed software to solve it.  Unable to find that software on the market, it developed it from within. 

This presents a great opportunity for software companies:

• License a proven technology for which you know there’s a need (after all, the company that created it acknowledged the underlying need)
• Get to market much faster and cheaper than developing in-house
• Use the original company as a reference for the value of the software
• Often times get sales leads from the Fortune 500 company’s peers

This sounds good, but isn’t all of this software not ready for primetime?  After all, it was built for internal use. 

Yes and no.  Usually there’s some work involved with “fixing up” the software and documentation.  But you may be surprised at the quality and ingenuity of these software technologies.

If you’re interested in learning about technologies developed by companies such as Northrop Grumman, SAIC, Microsoft, and Mayo Clinic, click here.

Fluid Innovation VP, Intellectual Asset Management Gloria Archuleta will present at the LES Spring Meeting and International Conference in Chicago, IL on Tuesday, May 6.  The workshop is “Content Licensing for Converging Devices”.  Gloria will speak with Tyler Lenane of RealNetworks and Joy Murray of Microsoft.

For more information, visit the conference web site.

Each week Fluid Innovation receives unsolicited inquiries from companies interested in commercializing a software technology it developed for internal use. Of course, everyone thinks what they’ve developed is the greatest thing since sliced bread. But here are two simple screener questions to determine if it’s worth exploring commercialization:

1. Why did you develop the software internally rather than buy it?

There are two common answers: a) We couldn’t find a software product on the market to solve our problem or b) it was cheaper to build it in house than buy it.

The answer we’re looking for it A. If your company had a business problem and couldn’t find an available solution, then you have likely identified a market need. Your home grown product is a solution to a problem that likely hasn’t been addressed yet.

2. How much benefit does the software provide to the company?

Consider how much it saves the company or generates in revenue. For example, a new human resources process application may cut annual overhead costs by $5 million. Although generally the higher the number the better, this isn’t always the case. Think about the total market size. If an application saves $5 million but would only be purchased by a few companies, then an application that saves $100,000 but could be purchased by 1,000 companies is better.

These are just the first two questions to answer as an initial screen. Stay tuned for more considerations when considering commercializing your software intellectual property. (Hint: note that I didn’t ask anything about patents.)

It is an interesting question, and to clarify, I am talking about the process of taking a promising idea or invention and bringing it to the commercial market (note that invention is an entirely different topic altogether – Innovation Zen has is a nice article on the difference).  Our goal at Fluid Innovation is to create a market for connecting idea creators to implementers.   The general concept is not new, ideas have been turned into innovation since the dawn of time.  What is evolving today is adding a process to the madness so that more ideas can be evaluated quicker, at lower cost and then efficiently shared with people and organizations that are best positioned to turn them into innovations.  This is not as easy as it sounds, some of the key elements that need to be integrated include:

Idea Capture-  Obviously the quality of the idea is important, the better the idea, the larger the market and the closer it is to market readiness the better.  However, we have found that when sharing ideas with implementers that quantity is also important.  Implementers like to evaluate several opportunities at the same time as it is easier to compare and contrast and they are more likely to invest focused effort on the evaluation process.

Merchandising the Idea- Quite simply, if you want someone to consider investing in an idea you need to provide the implementer with the right set of information and it must be communicated in a way that makes it easy for the implementer to quickly determine if it is a fit with their plans.  This ties into how you capture ideas, set expectations and streamline transactions. 

Evaluating the Idea for Viability and Value- The traditional model is to ask an expert.  We think Michael Mauboussin at Legg Mason/Columbia is right on with his “Expert Squeeze” concepts highlighted in his recent HBR article, especially due to the evolution of crowd wisdom and social networking fundamentals.  We launched VirtualVentures last year to begin to build a platform to collect market feedback, we still have work to do in this regard but are moving forward with creative new approaches.

Matching and Sharing- As more ideas filter into the system is becomes increasingly more important to effectively match the right ideas to the right implementers.  This is where a combination of technology and relationships begins to play a key role in the process.  A new version of FluidInnovation.com is due out next month and will be a first step to integrate our patent pending matching technology into this part of the process while making it easy to search, view and connect available technologies to qualified implementers.

Streamlining Evaluation- If successful in capturing the right information at the Idea Capture stage this leads to consistent and complete merchandising of the opportunities.  When you combine this with community feedback and networking, hopefully the right information will be presented to the potential implementer that enables them to quickly determine fit and interest.

Expectations- Now here is where it all comes together, it is imperative that proper expectations for deal type, time-lines, value and process are clearly established for both the buyer and seller to improve the likelihood that a successful transfer of an idea to innovation to evolve.

So, how to scale it?  All that is necessary is to tie all these moving parts together into a simple, easy to use system…..we have learned a lot so far but still have work to do - so any ideas you may have on helping us build this vision into reality are appreciated.

Rather, licensing or otherwise monetizing internally developed software solutions is like finding money in your sofa. Sometime ago you would have earned those hidden sofa assets so it really isn’t a windfall, but your money certainly wasn’t doing anything for you while trapped in your sofa.

Likewise, companies spend millions every year on internally developed software in their IT and Research organizations. Much of what they develop is market leading and has great commercial viability beyond the corporate walls and even outside their industry. So, think of a company like a giant sofa - and the technical folks are holding your technology assets. The best part is that since the assets were developed under an R&D or business unit budget , it’s sunk cost - any revenue that you bring in is a windfall! The question is; how do we beat the metaphorical sofa cushions to generate more technology disclosures?

The key is to educate and generate awareness so that overtime you can develop an IP culture where your employees know how to recognize commercialization opportunities and bring these opportunities to you on their own. In the meantime, this is where promotional campaigns can help. Promotional activities are great because they are highly effective and cost little to nothing to implement. There are several things you can do, such as, email campaigns, contests, disclosure workshops, creating a newsletter, recognition events or even implementing an incentive program that rewards developers for their innovative contributions.

The quickest and easiest approach is email. Determine which group(s) you want to target and send out a well crafted memo which tells about your IP group, your objectives and how they fit in. TIP: To maximize results from email, I suggest that you first get buy-in from the division heads and then have them filter your message down the ranks. Your email will have more traction if it is endorsed by your CTO and will be more likely read if it comes from their boss.

Contests are another great way to generate awareness. Everyone loves to win a prize! There are many things you can do, when I was building the IP group at Cingular one of the first things I did was hold a contest to name our incentive program. We ran the announcement in the company newsletter - the prize was $100. OMG! I had so many entries, it was unbelievable. Of course, I had to read them all - careful what you wish for - but it was a good problem to have. We harvested several disclosures and moreover, we made our presence known in the organization. And the winner? A technician, Sam, came up with “What’s the Big Idea?” - and so our program was born.

Another great thing about contests is that you can have one for almost any reason and the prizes can be of nominal value; a mug, t-shirt, coupon book for Seattle’s Best or Chick-fil-a (whatever’s close to the office). TIP: As tempting as it is to scrounge for leftovers from corporate events, do spend the cash to brand your give-aways with your group name, e.g., ”ACME Intellectual Property.” Let the cap, tee, or coffee mug continue the publicity long after the contest has passed.

I recently helped one of our clients, SAIC to put together a contest. Our objective was two-fold. First, to generate technology disclosures, and second to promote VirtualVentures.com. We did this by asking employees to identify which technologies posted in the Virtual Ventures marketplace belonged to SAIC. The 1st prize is a Microsoft Zune and for 2nd prize, a Slide-Rule!  The contest is still in play, but if the contest entries are any indication our mission will be successful! Stay tuned for more on promotional campaigns in my future postings…