The #MondayMusings Industrial Transformation blog series provides insight and analysis for executives from recent briefings, events, and publications @LNSResearch.

Some software vendor customer conferences are routine, incremental improvements of what transpired the year before.  Others are step-change events representing a major milestone in the evolution of a company and its presence in the market. The Sphera Inspire 2017 conference held recently in Austin, Texas, (and the week following in Brussels, Belgium) marked such as milestone.

Sphera is the environment, health, and safety (EHS) and sustainability software vendor formed last year from the carve-out of assets from the Operational Excellence and Risk Management software business unit of IHS Markit.  At the conference, the company announced its long-term strategy and product roadmap.  In so doing, Sphera took a big and much-needed step forward by painting a clear vision of what the future holds for customers, prospects and partners.  The event provided an opportunity for Sphera to re-engage with and reassure its inherited customer base and answered major questions concerning the path forward after the acquisition of ORM software vendor Rivo earlier this year.

Sphera Commits to the Cloud

The highlight of the event was a sequence of keynote presentations by CEO Paul Marushka and Chief Product Officer Mike Zamis.  Marushka laid out the vision and strategy, and Zamis provided details on the product roadmap and development plans to realize it.  The main announcement was the SpheraCloud platform and how the company will deliver it to customers.

Sphera’s current software offerings consist mostly of a diverse portfolio of mature on-premise applications stemming from IHS’ roll-up strategy.  Most of Sphera’s installed base customers are running one or more of these core products such as Essential Suite, IMPACT, and Stature, which have specific strengths like air emissions, incident management, and product safety.  The other key part of the portfolio is the cloud-based Rivo operational risk management solution acquired earlier this year.

The strategy Sphera announced is bold, and a big undertaking.  It will continue to maintain and enhance all core products. In parallel, the company will deliver the SpheraCloud platform of the future.  They envision SpheraCloud as a comprehensive EHS and sustainability software platform spanning operational risk management, environmental performance, and product safety.  SpheraCloud will leverage Rivo's multi-tenant SaaS architecture while incorporating intellectual property from Sphera legacy products.   A key component of the technology strategy is the SpheraCloud connectors.  They will provide a means for customers to incrementally leverage data in core products as a cloud-based solution with mobile capabilities.

Supporting an Operational Excellence Approach

The SpheraCloud strategy strikes as sound from a business solution perspective. LNS Research has long believed that Operational Excellence requires a cross-functional platform that includes integrated EHS management. Sphera’s solution footprint is among the broadest in the EHS software space, encompassing environmental performance, operational risk, and product stewardship capabilities, as well as regulatory content.

The plan is to continue this comprehensive solution approach with the product roadmap showing not only enhanced EHS management capabilities but also extending into adjacent operational areas such as quality management and supply chain.  Given that EHS risk and compliance issues are pervasive across the value chain, we agree with the plan to deliver a broader, integrated business solution and support for a unified risk management process.

In the near term, the main choice for existing customers and prospects will be using one or more of the separate core products or the Rivo solution rather than an integrated suite. This will start changing with the initial SpheraCloud release coming in Q1 2018, with basic functionality including incident management, risk assessment, and platform tools, then extending over time.

Leveraging New Tech

Sphera took an outside-in, strategic approach in developing its vision and plan.  It listened to customers to discover needs and expectations and tapped the expertise of Silicon Valley gurus to identify the potential to apply cutting-edge technology.  The process seems to have worked because SpheraCloud checks all the major technology boxes as an integrated solution platform.

It will leverage the cost and agility benefits of modular, Cloud-based software with mobile capabilities. It's designed for the user, with the user experience developed in Sphera's Silicon Valley R&D center.  SpheraCloud will emphasize advanced analytics, including predictive and prescriptive, with the ability to leverage sensor-generated Industrial Internet of Things (IIot) data.

This vision is admirable, and something of a model for what an EHS software platform should be.  But this is both a blessing and a curse.  On the one hand, Sphera took a greenfield approach and said, “What’s the ideal solution for the market and the user?”  On the other, it must consider how to incorporate its current disparate portfolio into the mix.  The “as-is” starting point is complex, and transitioning to the “to be” will be too.

LNS Research Take-Aways

While the SpheraCloud vision and plan are sound, now comes the hard part: execution.  The company has an aggressive plan that will require significant long-term resource commitments. Current customers can take comfort in the fact that Sphera will continue to maintain and enhance the core products they are running today.  Most of the customers we spoke with at the conference are running a single core product, and in many cases for a specific application, e.g., air emissions management, incident management, etc.

These customers will need to develop a plan to transition to SpheraCloud. The reality is that most will likely be in a hybrid mode with a combination of on-premise applications, while starting to selectively take advantage of new Cloud and mobile capabilities as the company rolls them out.

New customers will have a wide variety of options, including implementing one of the core products, the Rivo solution, or the new SpheraCloud solution. In any case, all customers will need to fully understand the SpheraCloud roadmap as it relates to their current and projected business priorities and requirements. For those whose near-term requirements can be met now, the idea of eventually running SpheraCloud as an integrated platform could be attractive.

With the announced strategy, Sphera has signaled that it is serious about delivering, and is in it for the long term.  If realized, SpheraCloud will be competitively differentiated with new and innovative technology. In the meantime, the challenge will be to move fast enough to keep current customers committed to a SpheraCloud future, and not let them defect to another vendor. For new customers, the challenge will be to sell the future vision against competitors with a more mature cloud-based EHS platform solution today. Many market participants will be watching the progress closely over time and looking for consistent results.