Studies on Innovation management are often focused on large companies and organizations. On the other side, small companies or VSE (Very Small Entities), constitute a significant part of the entrepreneurial landscape, and contribute - in a great extent - to the economic outputs of society and to the creation of employment. This is also valid for the system and software engineering business areas. Larger systems being built and deployed across Europe are usually built with the participation of small enterprises or research centers whose contributions have a key role in the resulting systems. Although these companies are sensitive to the importance of systematic innovation, most of the innovation models are targeted to large or medium enterprises and do not consider the specific characteristics of the system and software engineering industries. In this particular business area, innovation must consider two separate dimensions: a) the opportunities to innovate that system and software development companies may offer to their customers and prospects, and b) the application of techniques to innovate in the software development processes, to achieve better performance and leverage process capabilities and company productivity. Both dimensions require a systematic integration of the innovation management processes with the managerial and engineering processes of the organizations. This paper proposes an extension of the process model described in the ISO/IEC 29110 standard to enable innovation management processes and activities addressed to VSE. The innovation activities and tools incorporated into the resulting model are based on existing innovation models and have been selected through interviews and surveys completed on different software development companies. SPEM (System and Software Process Engineering Metamodel) has been used as a process design framework to encode the resulting model and formally integrate innovation, managerial and engineering processes for VSE.
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