Innofactor’s Story

Innofactor's Nordic Integration Presented Challenges to Business Operations

In 2017, Innofactor focused on the integration of the Nordic companies it had previously acquired in Sweden, Denmark, and Norway. Establishing harmonized Nordic operating models and systems proved to be slower than expected. The transition period manifested itself in the second half of the year as larger-than-anticipated impacts on the management of the company's operations and, consequently, an unexpected negative EBITDA figure in the third quarter. Our net sales in 2017 were EUR 66.1 million (+10.9%) and our operating profit before depreciation and amortization was EUR 1.7 million (-64.2%).

Due to our continued strong growth, we were again included in the 2017 Deloitte Technology Fast 50 list, in 47th position (33rd in 2016). The list presents the 50 technology companies in Finland that have grown the most in the past five years. We have been featured on this list of the 50 fastest-growing companies since 2008, for ten straight years.

One example of Innofactor's successful solutions is Health Village, a virtual hospital solution developed in cooperation with the Hospital District of Helsinki and Uusimaa (HUS) that covers specialized medical care throughout Finland. In 2017, Innofactor signed a partnership agreement with HUS with the aim of marketing and selling the solution in Sweden, Denmark, and Norway. In March 2018, the solution won the international Microsoft Health Innovation Award in the Outstanding Innovation category. Innofactor also joined the CleverHealth Network in 2017 for the purpose of collaborating with HUS as well as leading research institutes and enterprises to develop healthcare solutions for the international market. Innofactor achieved ISO 13485 certification in 2017, which enables the production of the most challenging human healthcare solutions. We also recruited a Nordic industry lead for Healthcare and Welfare in 2017. The healthcare and welfare sector is an example of Innofactor's growing investment in selected industries. Other key segments included the public sector, service industry and manufacturing, which we intend to increasingly invest in during the coming years.

In 2017, Innofactor employed an average of 610 persons. The net sales in 2017 were EUR 66.1 million.

Innofactor Expanded to All of the Nordic Countries in Line with Its Strategy

The year 2016 was marked by significant progress in the implementation of our strategy. Innofactor acquired the Swedish company Cinteros AB at the start of the year and, in October, Innofactor acquired Lumagate group, which operates in Sweden, Norway, and Denmark. With these acquisitions, Innofactor realized its vision of being the leading provider of Microsoft-based solutions in the Nordic countries. Our new vision is to be the leading provider of cloud solutions and digital transformation in each of the Nordic countries (Finland, Sweden, Denmark, and Norway). Our net sales in 2016 were EUR 59.6 million (+34.1%) and our operating profit before depreciation and amortization was EUR 4.8 million (+30.4%).

Microsoft chose us again as a finalist in two of their international categories. This is an important acknowledgement for us, as no Finnish partner company has previously achieved a similar number of recognitions from Microsoft. We also won the international Quality Innovation of the Year award with our learning analytics software Innofactor Skilli. Due to continuing strong growth, Innofactor was ranked 33rd on the 2016 Deloitte Technology Fast 50 list (25th in 2015). The list presents the 50 technology companies in Finland that have grown the most in the past five years. We have been featured on this list of the 50 fastest-growing companies since 2008.

Innofactor acquired the entire share capital of the Swedish company Cinteros AB from its management on January 8, 2016. Cinteros (subsequently renamed as Innofactor AB) is one of the leading Swedish IT services companies focusing on providing Microsoft Dynamics CRM-based solutions. Cinteros' net sales for the financial year preceding the acquisition (January 1–December 31, 2015) were approximately EUR 11 million (about SEK 100 million) and its EBITDA margin was approximately 9%. The company has over 100 employees in Sweden. Cinteros and its financial information has been consolidated with the Innofactor Group as of January 1, 2016.

In October 2016, Innofactor acquired the entire share capital of the Lumagate group from its management. Lumagate is one of the leading Nordic IT service providers focused on cloud-based solutions in the Microsoft ecosystem. The Lumagate group's net sales for the previous financial year (January 1–December 31, 2015) was about EUR 8.7 million and its operating margin (EBITDA) was approximately 3% of net sales. The company has over 70 employees in multiple offices located in Sweden, Norway, and Denmark. Lumagate and its financial information has been consolidated with the Innofactor Group starting from October 1, 2016.

In 2016, Innofactor employed an average of 532 persons. The net sales in 2016 were EUR 59.6 million.

Impressive Final Sprint Towards the End of 2015

The last quarter of the year was successful. In addition to good profitability, we made several new and significant customer deals. The highlight of the year was the contract to acquire Swedish Cinteros AB, which essentially strengthened our position as a Nordic company. Even though year 2015 was challenging to us, which is why our growth remained at 1.4 percent, we nearly reached the 2014 level of EBITDA at EUR 3.7 million with an impressive final sprint.

Microsoft chose us as their Partner of the Year 2015 in Finland and a finalist in two of their international categories. We also won the Finnish Quality Innovation of the Year award with our learning analytics software Innofactor Skilli. Due to continuing strong growth, Innofactor was on place 25 in the 2015 Deloitte Technology Fast 50 list (from place 19 in 2014). The list presents the 50 technology companies in Finland that have grown the most in the past five years. We have been among the 50 best since 2008.

In December 2015, we agreed to acquire all of the shares of Swedish Cinteros AB from the company's management. Cinteros is one of the leading IT service providers in Sweden, focused on offering services base on Microsoft Dynamics CRM. The company employs more than 100 professionals in Stockholm, Gothenburg, and Malmö. Cinteros and its financial information were united with the Innofactor Group as of January 1, 2016. The Cinteros acquisition was completed January 8, 2016.

In 2015, Innofactor employed an average of 427 persons. The net sales in 2015 were EUR 44.5 million.

A Year of Renewal

Innofactor continued its profitable growth in accordance with its strategy in 2014. The net sales grew by 35 percent and EBITDA reached a record of EUR 4.1 million. Due to its continuing strong growth, Innofactor was on place 19 in the 2014 Deloitte Technology Fast 50 list (moving up from place 36 in 2013).

In 2014 the business environment changed significantly. There was a major change in customers' purchasing behavior due to transfer into cloud services. As a result, Innofactor revamped its offering significantly in 2014 and made personnel changes to meet the requirements of the new situation.

At the turn of the year, the Innofactor head office moved to new premises by the Baltic Sea in Keilaniemi, Espoo, Finland and Innofactor's employees moved to shared offices in Espoo and Copenhagen. Innofactor continued to strengthen the cooperation with the customers and the partnership with Microsoft became even stronger on all levels of the organizations. Innofactor was the ' first Microsoft partner to achieve in its own market area the Cloud Platform Gold competence for Azure.

In 2014, Innofactor employed an average of 421 persons. The net sales in 2014 were EUR 44.1 million.

Most Successful Company on the Finnish Stock Exchange in 2013*

In 2013, Innofactor continued its profitable growth and internationalization, in accordance with its strategy. Net sales grew by 73.7 percent, and EBITDA was EUR 3.3 million. In June, Innofactor acquired atBusiness Ltd, and as a result almost doubled in size. The Finnish leading business publication Kauppalehti selected Innofactor as the most successful company listed on the Finnish stock exchange in 2013, based on net sales growth, profitability and the positive development of its share price.

During summer 2013, Innofactor acquired the entire share capital of the Finnish company atBusiness Ltd. atBusiness was formerly one of Finland's leading providers of Microsoft technology solutions with an excellent client base, a positive track record in rapid growth and a business strategy similar to Innofactor. atBusiness net sales in 2012 were EUR 17.4 million and EBITDA EUR 2.7 million (15.3 percent of net sales). The acquisition provides Innofactor with a better opportunity to implement its growth strategy in the Nordic countries and to offer software products and services through its own channel.

In September 2013, Innofactor acquired the Finnish Dynamic Team, consequently expanding its offering with Microsoft Dynamics AX solutions for Enterprise Resource Planning. In December of the same year, Innofactor acquired Enabling Group—a SharePoint based solution provider in Denmark—which helped in significantly growing Danish operations.

Based on Innofactor's continuous strong growth and competitiveness, the company was ranked number 36 in the Deloitte Technology Fast 50 list. The list brings together fifty Finnish IT companies, which have shown the most growth over the last five years. Innofactor has ranked on the list for the last six consecutive years.

At the end of 2013, Innofactor's new headquarters - Innofactor Campus in Espoo, Finland - brought together all the employees working in the Helsinki metropolitan area. The unique premises with its green areas, partly designed by architect
Aarne Ervi during the 1950's, provides the ideal environment to inspire Innofactor's personnel towards even greater achievements in the future.

In 2013, Innofactor employed an average of 307 persons. The net sales in 2013 were EUR 32.7 million.

* Leading Finnish business publication Kauppalehti selected Innofactor as the most successful company on the Finnish stock exchange in 2013

Fastest Growing Technology Company in NASDAQ OMX Helsinki Internationalized

In 2012, Innofactor continued its profitable growth in accordance with its strategy. The net sales grew by 9.4 percent and EBITDA was EUR 1.2 million. 88 percent of Innofactor's net sales came from Finland, 10 percent from Denmark, and the remaining 2 percent from other European countries. Innofactor was again ranked as one of EMEA's 500 fastest growing technology companies in the Deloitte Technology Fast 500 Competition.

In summer 2012, Innofactor took its first step towards internationalization of its system integration business by purchasing Bridgeconsulting A/S, the leading Microsoft-based Business Intelligence company in Denmark. The acquisition offers Innofactor an excellent platform for increasing its Microsoft technology focused business in Denmark. Towards the end of 2012, Innofactor advanced its expertise in project and portfolio management systems by purchasing a Microsoft Project focused business unit from Tietotalo Infocenter Ltd. Microsoft forecasts strong growth for project and portfolio management systems in Northern Europe. The acquisitions enhance Innofactor's goal of growing into a leading provider of Microsoft solutions to companies and organizations in the Nordic Countries.

In 2012, Innofactor employed an average of 189 persons. The net sales in 2012 were EUR 18.8 million.

The Fastest Growing IT Company in the Finnish Stock Exchange

2011 was a year of growth and renewal for Innofactor. The net sales increased by 74.5 percent to EUR 17.2 million. Innofactor's group structure was reformed in 2011 and the organizational structure was changed as from the beginning of 2012 to support the development of the chosen solution areas, growth and internationalization in a more efficient manner. During 2011, Innofactor made heavy investments in the development of cloud services for the global markets, where the Company sees significant market potential. On July 10, the Company published its new cloud services at the Worldwide Microsoft Partner Conference in Los Angeles, USA.

In June 2011, Innofactor was awarded Microsoft Country Partner of the Year, which further strengthened Innofactor's position as Microsoft's key partner. Sami Ensio, Innofactor's founder and CEO, was awarded Software Entrepreneur of the Year 2011. Innofactor was ranked in the Deloitte Technology Fast 500 EMEA 2011 Program as one of the 500 fastest growing technology companies.

In 2011, Innofactor continued deepening cooperation with its clients and partners. We concluded a cooperation agreement with e.g. ProAgria on the delivery of a comprehensive CRM and ERP solutions, and with the City of Kuopio and the Parish Union of Helsinki on the delivery of document and case management systems. The client promise was condensed to "Your Partner. Your Solution.™".

In 2011, Innofactor employed an average of 177 persons. The net sales in 2011 were EUR 17.2 million.

The long step to becoming Finland's largest software house focused on Microsoft solutions

The year 2010 was a time of intense growth and development in Innofactor. Innofactor improved its know-how by combining the solutions of two pioneers into its operation: Business Intelligence by Visual Management Oy, and the document, case and archive management of Documenta Oy. Due to the mergers, Innofactor became the Finland's largest software house focused on Microsoft solutions. At the same time, it was listed on the main list of the Helsinki exchange through the reverse acquisition of Documenta Oy's parent company Westend ICT Plc.

The shareowners of Innofactor Software Oy (former Innofactor Oy) and Westend ICT Plc signed an agreement on the merger of the companies on December 3, 2010. The prerequisites for the agreement becoming valid were fulfilled as the General Meeting of Westend ICT Plc gave its acceptance on December 27, 2010. In the arrangement, Westend ICT Plc's name was changed to Innofactor Plc. After the corporate arrangement and at the time of the financial statement, the Innofactor group consists of the subsidiary Innofactor Software Oy and its subsidiaries (former Innofactor group), and Westend ICT Plc's subsidiaries Innofactor Documenta Oy (former Documenta Oy) and Oy Soloplus Ab. The Innofactor Software subgroup consists of the subsidiaries Innofactor Customer Solutions Oy, Innofactor Visual Management Oy, and Venenum Oy.

Innofactor's business operations focused in Finland and about 96% of the net sales were generated in Finland. The rest, about 4% of the net sales, was derived from emissions trading solutions for EU member states, and from services provided to certain Swedish parishes and to some Finnish companies for their foreign operations.

In 2010, Innofactor reformed its strategy. A central part of the new strategy is implementing globally competitive services for Microsoft cloud.

In 2010, Innofactor employed an average of 108 persons. The net sales in 2010 were EUR 9.9 million.

Stronger than Ever, Spurred by Strategic Partnerships

In 2009, Innofactor became one of the major IT operators in Finland. Thanks to its full order book and agile strategy, Innofactor survived the recession that was heavily felt in a several IT companies. The organization was renewed to meet the challenges created by the growth by setting up a new products and services department. During the year, the company also invested in updating its strategy and obtaining an ISO 9001 quality system certification. Version 5.0 of the INNOFACTOR® Prime™ software was developed with, among other things, a completely new desktop publishing system and calendars. During the year, a number of major deals were struck. The most publicized of these was the Citizen's account ordered by the State Treasury for the entire public administration. The construction office of the City of Helsinki ordered the implementation of the modern parking monitoring system "Pasi". Other new customer projects included the implementation of the extensive online services of the administration of internal affairs, the implementation of interpretation service relay system for Kela, the online services of Ensto, the ERP of Elker, the implementation of the VIA Lead software for VIA Group, swimming hall access control for the City of Espoo, CRM solutions for Helsingin Energia and the Finnish Nurses Association, the organizational solutions for HNMKY and the Equestrian Federation of Finland, the online solution for student exchange association CIMO, the consulting projects for Kouvola Innovation and the facility booking solution for the City of Rovaniemi.

In autumn 2009, Innofactor acquired the entire share capital of Software Innovation Finland. The corporate acquisition brought Innofactor some of the best CRM skills in Finland as well as a number of new customers, such as Iittala, Koskisen, Lindell, Lindorff, MTV3, Restel, Rudus and several telephone companies under Finnet, as well as a bunch of excellent employees in Turku.

In 2009, Innofactor had an average of 66 employees and a turnover of EUR 6.9 million.

Profitable Growth Despite Recession

In 2008, the economic boom took a turn toward global recession, instigated by the lax principles of granting high-risk subprime mortgages in the USA. This, however, did not affect the growth rate of Innofactor which continued according to plan. During the year, the company decided to focus more clearly on software implemented in the Microsoft environment. In the summer, the Innofactor headquarters moved to new facilities in Keilaniemi. In 2008, the company particularly focused on the development of customer service solutions. In addition to the customer service solution project launched the previous year for the City of Helsinki, new major customers included the Social Insurance Institution Kela and the Finnish Communications Regulatory Authority. Other major customers included Finn Church Aid, a brand management portal for Metso, the Finnish Medicines Agency (today known as Fimea), renewing the websites of the MDC Group, Espoonkruunu and the Association of Finnish Pharmacies, implementing the website of the Finnish National Agency for Education, the intranet of Kaleva and the EMOS project run by the Council of Oulu Region for implementing an application system for EU funding. The Vantaa federation of parishes became a new, major parish customer. In addition, Innofactor concluded cooperation agreements with Calecta regarding hosting services and with Suomen Järjestötalo on the resale of Innofactor software to smaller associations.

In 2008, Innofactor had an average of 48 employees and a turnover of EUR 5.5 million.

Partnership Promoting Technological Development

Strong growth was seen again in 2007. In March, Innofactor acquired the electronic business solutions of Enfo. The acquisition brought customers such as: Aberdeen Property Investors, Avara, Finnvera, Enfo, Luja, Valio, the telephone companies under Finnet and a number of hospital districts. The business acquisition also resulted in a new Innofactor office in Kuopio as well as 14 new employees. The year saw the implementation of online services for Paulig, Pohjolan Liikenne and Transpointin as well as the intranet services of the City of Tampere, Central Ostrobothnia University of Applied Sciences and the Helsinki Metropolitan Area Council (today known as the Helsinki Regional Transport Authority). An extensive ERP system project was also started for the regional development company for Kotka-Hamina Cursor. TIEKE deployed an organizational solution. Save the Children became a new organizational customer. At the end of the year, an extensive ERP and customer service project was started for the City of Helsinki in cooperation with Microsoft. In 2007, Innofactor reached the highest Microsoft partnership level, the "Gold Certified Partner". At the same time, SharePoint was included more strongly in the solution selection of Innofactor.

In 2007, Innofactor had an average of 40 employees and a turnover of EUR 4.2 million.

Pioneer Solutions and Victories in Europe

In 2006, growth continued, but only organically. Version 4.0 of the INNOFACTOR® Prime™ software was developed with many technical, functional and user-friendly reforms, a web-based IMAP e-mail client and integrations for cash management and access control. At the same time, social work software based on INNOFACTOR® Prime™ was implemented for parishes.

New customers of the INNOFACTOR® Prime™ included the Oulu federation of parishes and the parish of Jyväskylä. The first VETUMA payment service in Finland was implemented for the tennis court reservation service of the City of Helsinki, a visitor system project for the Finnish Parliament was started and the Finnish Federation for Recreational Fishing deployed an organizational solution. The year was busy for emission trading operations. New customers included Cyprus, Denmark and Italy. At the end of 2006, Innofactor was pleased to learn that it had been selected as the administrator of the European Commission's central emission trading registry.

In 2006, Innofactor had an average of 27 employees and a turnover of EUR 2.1 million.

Leaping Forward

The year 2005 was again a time of strong growth at Innofactor. Some of the growth came from the parish business operations acquired from TietoEnator the previous year. Over the course of the year, the acquired business operations were combined with the other operations of Innofactor, achieving a leading position as a software supplier of parishes in Finland. Burial operations software was implemented in INNOFACTOR® Prime™ for parish customers. The Espoo federation of parishes became a new, major parish customer. Innofactor also considerably strengthened its status as a solution supplier of companies, municipalities and cities, organizations and public administration. An electricity price comparison system supplied to the Energy Market Authority was one of the most important deliveries of the year. Innofactor developed a personal assessment system for MPS Enterprises, an Eden House webshop to Great Britain, websites for the City of Jyväskylä, JAMK University of Applied Sciences and the municipality of Kirkkonummi and an organization solution for Suomen Omakotiliitto. The growth was significantly increased by the expanding emission trading operations, thanks to the additional orders of the Energy Market Authority as well as new operations in Estonia and Latvia.

In 2005, Innofactor had an average of 20 employees and a turnover of EUR 1.7 million.

Opening the Doors to Emissions Trading

In 2004, Innofactor implemented a localization of the emission trading registry for the Energy Market Authority which led to major business operations for Innofactor, including the long-term and still ongoing customer relationship with the Energy Market Authority, the administration of the emission trading registry of the European Commission and the administration of the emission trading systems of a number of EU countries. The joint application system for commercial fields, implemented for the Helsinki School of Economics and other universities in the commercial field, was a new type of opportunity for the company, as were the interactive website for the children's shows of Yleisradio and the allergy portal of the Helsinki Allergy and Asthma Association. In addition, the City of Rauma and the Tampere federation of parishes were among the new customers of INNOFACTOR® Prime™. At the end of the year, Innofactor acquired the parish business operations of TietoEnator. The transaction resulted in a new office in Lahti and four new employees.

In 2004, Innofactor had an average of 17 employees and a turnover of EUR 0.9 million.

Major Customers and Product Development Defeating Recession

The year 2003 was a challenge for Innofactor. The general economic recession had not yet passed, which impacted demand, while on the other hand, considerable investments were required for the company's own product development. However, hard work paid off. Innofactor renewed the website of the Finnish Business School Graduates, one of the oldest and most significant customers in the company's history. It was simultaneously decided to unite INNOFACTOR® Prime™ with the then-separate desktop publishing product Site Manager, enabling the company to focus on the development of a single technical product. This was a turning point in software development. Version 3.0 of the INNOFACTOR® Prime™ software was implemented and "iYhdistys" also became part of INNOFACTOR® Prime™.

That year, the product development investments covered the new, modern electronic medical record system INNOFACTOR® Medinet™ which, at that time, was not able to find a sufficient customer base. Some of the new major customer projects in 2003 included the ERP system for Psycon, the crisis management system for the Ministry for Foreign Affairs of Finland, the ERP system for the recreation services of the City of Pori and the new construction environmental classification tool for RAKLI. Innofactor also kicked off its international operations when the parish of Ronneby in Sweden became the first foreign customer of the company. In 2003, Innofactor also gained a new, long-term Chair of the Board, Ilpo Santala, who continued in the position until the General Meeting of 2011 when Pyry Lautsuo was elected Chair.

In 2003, Innofactor had an average of 15 employees and a turnover of EUR 0.7 million, a decrease of EUR 0.1 million from the previous year. It was the only year without growth in Innofactor's history.

Expanding Operations and Service Selection

In 2002, Innofactor started to implement the comprehensive Motiivi software for schools for children with multiple disabilities operating under the Finnish National Agency for Education. The software is still used in the schools of Ruskeasuo, Mäntykangas and Lohipato. In its parish services, Innofactor concluded agreements with several parish customers, welcoming the Lahti federation of parishes as well as that of Turku and Kaarina, for example, as its new customers. The Association of Finnish Lawyers was one of the major new organizational customers.

Version 2.0 of the INNOFACTOR® Prime™ software was developed. Innofactor concluded a cooperation agreement with TietoEnator to have the latter sell Innofactor's parish software solutions in Finland and the Nordic Countries. In 2002, the company developed its support services, such as training, deployment support, installation, administration and user support. The headquarters moved to the recently constructed, impressive facilities in Innopoli 2. The year 2002 also saw the establishment of a new office in Oulu.

In 2002, Innofactor had an average of 15 employees and a turnover of EUR 0.8 million.

Solid Foundation for Growth from Customer-Driven Projects

In 2001, Innofactor won the largest deal of its history up to then and, at the beginning of 2001, started to build the "Waraus" ERP system for the Helsinki federation of parishes which later led to the company's position as the leading software supplier of parishes in Finland and the creation of the first version of the INNOFACTOR® Prime™ software. The software was developed with the Beta version of Microsoft .NET, which demonstrated the open-minded attitude of both Innofactor and the customer.

The same year, Innofactor was tasked with implementing the online services of the Centre for Metrology and Accreditation MIKES. In addition, Innofactor delivered websites and campaigns for corporate customers such as Pharmacia (today known as Pfizer), Lancôme and Onninen. In 2001, the company also implemented the Venture Cup service, an online business planning competition of the Venture Cup foundation. The productization operations focused on ERP and desktop publishing systems and the course management software implemented in cooperation with Helsinki University of Technology. In 2001, Innofactor acquired the rest of Venenum, combining the operations of the two companies.

In 2001, Innofactor had an average of 11 employees and a turnover of EUR 0.6 million, an increase of 600% compared to the previous year.

From Death Valley to Victory

The operations of Innofactor in their current form were launched on 1 January 2000. The first year proved to be a year of major changes in the business environment. At the beginning of the year, the IT industry was still in its upswing and people were optimistic. The first office of Innofactor was a 10 m2 room situated in Innopoli, Espoo, and its only employee was Sami Ensio, CEO. In the spring, however, the office expanded within Innopoli as SSH Communications Security moved to a new facility in the center of Helsinki and Innofactor took over its office space.

At the beginning of the year 2000, Innofactor was still finding its feet. Among its early development projects were the SMS-based taxi ordering system called "iTaxi" (that never made it into production) and the first version of the organization solution called "iYhdistys". The company's first customer accounts, including the ERP system of Omnitele and the web portal of Detection Technology, were also created during that time. Innofactor also carried out its first business acquisition by obtaining the software development operations of Mendez (previously owned by Bitwit). Innofactor still has several good customer relationships from that time; for example, Kalevala Koru and the Finnish Business School Graduates. In 2000, Innofactor also purchased a 56% share of Venenum, later formed into a subsidiary and software development department 100% owned by Innofactor.

At the end of the year 2000, the IT bubble burst and all further funding dried up. The company was forced to quickly transition from product development to immediate customer projects. The timing was not right, and the company would have fallen without the strong commitment of its employees through which a considerable number of the employees are currently shareholders of Innofactor.

In 2000, Innofactor had an average of 3 employees and a turnover of EUR 0.1 million.