When home-grown IT goes to market

With nearly 300 brand-name products sold around the world, Procter & Gamble is renowned for its innovation. Throughout its 169-year history, the consumer products giant has applied its technological know-how to everything from super-absorbent nappies to structured paper towels.

Now P&G is applying its innovation prowess -- and marketing muscle -- to IT. By marketing some of its internally developed IT, P&G is gaining additional revenue while improving its own in-house IT products and services.

The roots of P&G's IT commercialization efforts go back to the late 1990s, when former chairman, CEO and president Durk Jager began preaching about innovation. His plans, which have since been continued by current CEO AG Lafley, included adopting great ideas from P&G's business partners and remarketing some of its own intellectual property (IP).

Case in point: P&G has remarketed Power Factor, a set of technologies and work processes designed to improve an organization's manufacturing throughput. P&G has been using these systems internally since the early 1990s and began licensing them to other companies in 2000, says Jack Ridge, director of external business development (EBD).

In 1999, P&G created the EBD group to identify internally developed IP -such as technologies and business processes - that could be repackaged and licensed to other companies.

P&G isn't the first company that has successfully marketed some of its internally developed IT. For example, The Men's Wearhouse Inc developed software several years ago that stores a customer's sizes to make it easier for spouses to shop for their husbands, says Cathy Hotka, senior vice president of technology and business development at the Retail Industry Leaders Association in the US. The software was eventually sold to Retek, which has since been acquired by Oracle.

While other companies have sold home-grown technologies and IT capabilities, most have been one-off deals, says Howard Rubin, an analyst at Gartner.

"That's a tough business model for most IT organizations to sustain," he adds.

In contrast, in February 2005, P&G dedicated a division to focusing exclusively on reselling internally developed IT-related IP. It's a one-person shop run by Bill Metz, a 15-year IT veteran of the company. Metz is constantly beating the bushes looking for technologies P&G can remarket and customers who might be interested in them. But he's not entirely alone. As manager of IT EBD, he works closely with P&G's legal and public relations staffs.

The technologies in question are not necessarily what one would associate with a consumer packaged goods manufacturer. For instance, a colleague at P&G's IT organization in Spain recently contacted Metz about a PC-based diagnostic system that the company developed. Physicians can use the software to quickly diagnose osteoporosis by viewing X-rays on a computer screen. As part of P&G's efforts to establish business relationships with healthcare providers, the system is being used without charge by a group of doctors at 230 hospitals in Europe, says Edwin Erckens, an IT manager for P&G's pharmaceutical business in Barcelona. Metz is exploring opportunities to distribute the technology to doctors worldwide.

Robert Scott, vice president of innovation and architecture in P&G's global business services division, declined to share the dollar amount of the IT EBD group's first-year revenue, saying only that its targets are modest, since it's just beginning to mature.

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