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Q: I suspect that many Information Today readers are familiar with Teltech but not Sopheon. Can you give us a capsule description of what the company does and why merging the companies makes a good fit?
A: Sopheon was originally a research-based organization funded by the European Union to conduct research on linguistic-based software. They were one of the first to research the applications for XML [eXtensible Markup Language]. They are experts in such areas as computational linguistics and language management. Sopheon uses its specialized software for applications where interpretation and understanding of the written word is critical to an organization.
In Amsterdam, the software is running in leading academic hospitals. This “smart software” is able to present the same content in different words to different readerships (doctors, nurses, patients) based on their profiles. So, this software company is creating some very leading-edge technology to improve communications, search and retrieval, and content-management capabilities. We’re taking Sopheon’s competencies and technology to integrate them with our own to improve our clients’ information-intensive business processes.
One key trend that we have seen is the need to integrate information process and content. With this merger, we become the only company that has integrated information process and content into a single application. We are going to pre-load our software applications with content that is relevant to the business process and to each specific community—because, of course, for the chemical industry, the type of content and the terminology is dramatically different than for the pharmaceutical industry. Then, when installed, our software collects information from both internal and external sources and helps a company continue building its knowledge base. Our plan is to focus on developing software for vertical industries within the healthcare, life sciences, and high-tech areas. We believe our value proposition is increased dramatically if we focus on verticals.
Q: So, you’re taking the combination of Sopheon software and Teltech’s content, research, and consulting, and packaging it.
A: Yes, and one of the things Teltech has, that you may not know about, is a very detailed and comprehensive thesaural structure—a taxonomy. If you are familiar with Teltech.com, it is designed around 19 different vertical industries, each with its unique, comprehensive taxonomy structure and thesaural terminology. Our KM [knowledge management] consulting business has been able to extract relevant portions from our existing thesaural structure, and seed our clients’ portal applications for fast implementation. We get our client up and running with a taxonomy structure twice as fast than if the client had to create the taxonomy on their own.
Another example is a new solution we’re introducing soon. We are designing a solution specific to the productdevelopment process in partnership with the Product Development Institute [PDI]: Its working name is Stage-Gate Manager [SGM]. SGM takes PDI’s experience in helping companies improve their product-development process, integrates Teltech’s expertise in research and best practices with Sopheon’s software, and creates an automated product-development process. Our capabilities will be extremely valuable for companies with departments—such as R&D, product development, and quality management—all involved in information-intensive business processes, and having critical information sitting in a three-ring binder on a shelf not being used, perhaps not even known about. This smart software will be able to identify and present multiple sources of information and knowledge that I, as a member of one of those departments, might not be aware of, and bring it forward for my use.
Q: I think many people just associate Teltech with on-demand phone calls requesting research services, and may not know you do a lot more in consulting. With the launch of the Teltech.com portals, which enable end-user searching, are you doing less online searching for clients?
A: No. Besides the market trend of integrating process and content, the other important trend we see is the integration of people and technology. It’s going on all around us. One example is the OnStar System [an onboard navigational computer] from Cadillac and GMC. The auto industry introduced this functionality—if you’re in trouble in your car, [or if] you need a reservation or directions, you can push a button and a voice comes on over a speakerphone and says, “Can I help you?” There’s intelligence in the car so they know where you are, who you are, and your personal preferences. We see this trend in multiple industries, and I think it’s a trend that the marketplace is starting to recognize.
We first integrated our people with technology in our offering of Teltech.com in September. At Teltech, we never led with technology; we have always led with people. I believe this is important to our differentiation and our value-added service moving forward. On Teltech.com, we have integrated access to live experts and there are multiple ways to request help from our searchers—a personal analyst. It’s very important we don’t lose that value. We are challenged to take the best of our people-based services and integrate it tightly into our technology-based solutions.
I recently gave a presentation to SLA [Special Libraries Association] in Philadelphia on re-intermediation. In recent years, there’s been this big push for technology and now humans are coming back. I think it is important for us to take a significant role in this. One of the questions from the SLA audience was, “If that’s the case, why is Teltech being acquired by a technology company?” I said that it’s because we recognize that people alone is not the most effective or efficient solution to bring to the market. But, that does not suggest that we are getting out of the people business.
Q: From what I’ve read about Teltech in your recent SEC [Securities and Exchange Commission] filing [F-4, filed August 24, 2000, and available at http://www.freeedgar.com] and elsewhere, it looked like you really needed the strong platform for delivering content that Sopheon brings you, and also that Teltech needed additional capital resources in order to grow its business.
A: We’ve been a stand-alone, privately held company since day one. We went through the initial VC [venture capital] cash investments a long time ago. We were investing in Teltech.com through our own earnings. The market is moving very fast, so yes, we needed the capital that Sopheon brings to the table. We also needed access to technology, and Sopheon brings this raw and very rich technology that we’re now blending with our services to bring high-value solutions to the market.
Q: Often companies have to merge in this way, bringing together complementary skills, resources, and capital to remain viable, because it’s just very hard to move fast enough these days.
A: Yes, we looked at over 100 companies as part of this process. Our merger with Sopheon is highly complementary—there are virtually no redundancies between the organizations. We are getting more into the implementation of software here in the U.S.; we hadn’t done much of that. Sopheon was such a great match for us—they were the leading systems integrator for Verity over in Europe. More recently, they became the leading integrator of Open Market’s IPS [Internet Publishing System]. Sopheon did the integration work for some of the largest Web sites in Europe, such as FT.com.
Q: Sopheon and Teltech were not competitors, then.
A: Teltech has worked with a number of software companies—through our consulting practice. We were introduced to Sopheon by a common client. Sopheon was just coming over to gain a presence in the U.S. We did not compete but started to work together. We have already opened an office in London for our research services and made initial hires for a KM consulting practice in Europe as well.
Q: How do the companies compare in size and revenues, and where will the merged company headquarters be?
A: Sopheon has about 120 people, Teltech about 150. We [Teltech] have dramatically more clients and a bigger chunk of revenue than they have. The new company is headquartered out of Guilford, U.K., which is located just outside of London. I am the CEO of the merged company and will stay in Minneapolis.
Q: Let’s talk about target markets and industry segments. You have announced specializations in the life sciences, healthcare, and high-tech, I believe.
A: The high-tech area gives us a license to grow, since it covers such a broad range. We are taking a significant stance in the life sciences areas, including pharmaceuticals and biotechnology. The healthcare specialization we now have is in Europe, due to their particular market demands. We are evaluating expansion possibilities into the healthcare market in the U.S. Teltech has always had a strong presence in the high-tech sectors in the U.S.
Q: What about competitors in the high-tech area—companies such as NERAC? DeepCanyon (a Hewlett-Packard spin-off) offers access to market-research reports and research on demand. None of them seems to offer the level of product and service integration that you do, though.
A: We get this question a lot—“Who are your competitors?” I turn it around and say, “Tell me who is integrating content, people, and process?” NERAC doesn’t. DeepCanyon is modeling what we have done in Teltech.com. With the direction that we are moving, with our investments and capital, they won’t be on our radar screen. There are some large consulting companies that are doing heavy integration of applications that are specific to a client. However, software suppliers tend to go for the shrink-wrapped products. Businesses need to capture, shape, and share information in order to compete in today’s fast-changing marketplace. To solve their information, or knowledge management, problems, we knew we needed to provide them with more than just software alone or just research and consulting. By integrating the software, the experts, and the content, we can give them a true solution to the knowledge management problem.
Q: Dialog (now owned by Thomson) used to own a minority share of Teltech. Do they still?
A: Thomson doesn’t anymore, but Bright Station [the new name of the former Dialog service owner] does have a minority stake.
Q: You still provide access to content from Dialog and from Northern Light on Teltech.com. You also provide access to a Table of Contents service from Information Express. Will these arrangements continue, and do you plan to add more content resources?
A: Yes, we’re continuing this access, and we are indeed looking for more resources. We’re in discussions with at least three content providers. When we finalize some of these arrangements, I’ll be able to share the news.
Q: What kind of proprietary content are you producing and making available to your clients, as opposed to content licensed from others?
A: For the experts that we have in our network, we create their bios. They create content, including training curriculum, software, white papers, best-practices documents, etc. We work with them to get this content into our domain for resale purposes. One example is our Live Events: discussions of hot issues in a particular vertical industry. You can sign up to participate in a session, submit questions in advance to the experts, then there’s an hour-long online session. The discussion is then archived in print and made available to our clients.
The taxonomies we have are content created by our analysts that we reuse over and over again. We use these in our consulting practice, for example, when we build e-business sites for clients.
Another example of proprietary content relates to my earlier mention of the hospitals in Amsterdam. We put a joint venture together with three Dutch organizations. The [doctors] of the hospitals have created thousands of standard operating procedures [SOP] and guidelines that these hospitals must follow. Sopheon has taken an equity position in that content, and we are reselling and re-marketing [it].
Q: When so many aggregators of content are pushing it out to so many outlets, a service that is looking to differentiate itself needs to package its content and services in a way that directly meets the needs of how a company works, enabling the processes of how it does business. We’re beginning to see companies embrace this, even among the traditional information providers.
A: Going back to my earlier example of Stage-Gate Manager, while we’ve always helped our clients enable their product-development process, which is very information-intensive, now we’ve evaluated and re-engineered that process. Another area where we own content is supplier directories. We’ve created taxonomies, audited the supplier sites, and matched them to the vertical industries we serve. When this content is integrated into the product-development process, there’s higher value, and utilization will go up directly.
We’ve often seen that internal yellow pages directories or lists of a company’s internal experts don’t get used, even if there’s an icon on an intranet. However, if that information is integrated into the search-and-retrieval process, it can provide content related to a search question that people wouldn’t think to seek out. This is something Teltech calls the Integrated Source Map. We own a patent on this search-and-retrieval design. Northern Light owns a patent on their folder organization. Northern Light and Teltech have agreed to cross-license these patents.
Q: Your clients are mostly very large corporate customers with deep pockets, correct?
A: Our traditional business that we’ve been discussing is targeted at the high end of the market—second- and third-tier companies. We also have a significant strategy that we will be announcing in the next month or so for the small and medium end of the market. It will be an Internet-based service.
Q: Is there a particular technology or trend that you are watching that you feel could have a lot of impact in the near future?
A: Of the 50 exhibitors at the KM World Conference this year, only about four were there last year. There are many new players. We are watching very closely the enabling technologies that focus on content management. We expect a growing number of these suppliers to introduce people-based features to their offerings, as well as content.
Q: So, knowledge management is not dead?
A: I believe the “buzz” around the term KM will soon be passé. That said, I asked a recent audience at KM World how many were attending their first KM conference—85 percent responded. We had 2,000 people register for this event last month. So, the subject of KM is clearly not dead. It’s no good, however, to focus on knowledge management for knowledge management’s sake. I tell people, don’t lose sight of the business purpose. We will use knowledge management methodology but we won’t necessarily promote it as KM. The market continues to be very confused with the definition of KM. To have impact, KM needs to be attached to a critical business process.
[For more information, visit http://www.teltech.com
or http://www.sopheon.com,
and see the news story on page 31. For more on
the KM World Conference, look for Rebecca Jones’ report in next month’s
issue.]
Paula J. Hane, co-editor with Barbara Quint for NewsBreaks,
is contributing editor of Information Today, a former reference
librarian, and a longtime online searcher. Her e-mail address is phane@infotoday.com.
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