SAP teams up with InnoCentive; Software IP questions abound

Updated: SAP is partnering with InnoCentive, an "open innovation market place," to link so called "seekers," or companies looking to solve a business problem, with "solvers," developers that can save the day. For instance, SAP is looking for someone to create novel uses of social networking in enterprise applications.

The partnership, announced by Zia Yusuf, SAP's executive vice president of global ecosystems and partner group, kicks off with three challenges and offer three prizes.  Yusuf made the announcement at SAP TechEd in Las Vegas on Tuesday.

SAP's InnoCentive partnership is a sign that the software giant is probing the enterprise 2.0 concept a lot more.

The first SAP challenge is the easiest. Create a video for $5,000 that will be "aimed at energizing the recruitment, educating on "how to" engage in the community, and showing the vibrant activity and value of existing and new SAP Community members. "

Sounds easy enough and you have a Dec. 8 deadline. The other two have more ROI attached to them.

The other challenge, for $10,000, covers "Unified Web Service Error Handling." SAP is looking for "a method that simplifies unified web service error handling by consuming applications in multi-vendor Service-Oriented Architecture (SOA) environments."

And finally is the most interesting one--social networking for enterprise applications. The prize here is $10,000. The deadline for both the Web service error handling issue and social networking is Oct. 8.

Update: David Ritter, CTO of InnoCentive, said in a press conference that the company has been facilitating IP transfer for 7 years and has added software in the last year. Procter & Gamble has been the leading proponent of these idea exchanges as has pharmaceutical research firms. SAP is a big win for InnoCentive and there's an equity investment involved.

InnoCentive in May raised a B round of venture funding worth $6.5 million from Spencer Trask Ventures, a New York-based firm.

When asked about intellectual property challenges, Yusuf said SAP would rely on InnoCentive's ability to facilitate transfers. Ritter added that there are many models used between solvers and seekers and challenges can be tailored to what a company is comfortable with. Yusuf added that SAP has been facilitating idea exchanges on its open developer network for years.

The companies have also released a statement.

Update 2:  Ritter had a Q&A with fellow Enterprise Irregulars including Dennis Howlett and Michael Krigsman. Some key themes:

• We came back to intellectual property questions repeatedly. Ritter argued that InnoCentive's model worked for pharma and consumer goods because the R&D model was broken. Costs were going up with little return. After all, you can't create all the good ideas. "SAP saw that potential (for software)," said Ritter. "It may take time but it could represent in the long term a fundamental shift."
• Mark Yolton, senior vice president of the SAP Community Network, said the company will be "careful about the challenges we put out" so it doesn't give away competitive edge. Yolton said it will use InnoCentive as "an extension of products." Yolton added that it's day one and SAP is focused on using InnoCentive for things around the edges. Translation: SAP won't be posting NetWeaver challenges. When asked about whether SAP was taking full advantage of InnoCentive Yolton said the plan is to start out cautiously. Ritter said that approach is common to the adoption curve.
• Challenges can be run anonymously by SAP if there are sensitive items. Yolton added that InnoCentive will be adopted more and more culturally. SAP can also turn its developer community on to InnoCentive. And anyone can be a solver for SAP--including an Oracle employee.
• Yolton said that SAP won't get involved in IP transfer and crafting challenges and the prizes. InnoCentive will run things in the background. Key theme for the transaction is that InnoCentive requires a solver names his or her employer and signs a waiver giving up claims to the intellectual property. For instance, an SAP employee couldn't be a solver since there may be proprietary information divulged.
• Yolton added that SAP will have a clean room to make sure that it doesn't acquire "contaminated IP" that may lead to legal trouble down the line.

Ritter added that the InnoCentive-SAP partnership is a learning experience and both parties have "eyes wide open."