Last week, I had a quick update call with Zycus to check in and see how things were progressing with a vendor that until recently, was known just for its data cleansing and classification capability. But my, it's amazing how sometimes things can change so quickly. In the past year, Zycus introduced what is really a revolutionary front-end analytics component to their cleansing and classification system. I previously wrote about this "actionable analytics" approach to spend analysis earlier in the year. In my original post on their novel new solution I posed the question: "Where is Zycus headed with this?"
I answered: "If you're thinking spend analysis meets bubble chart sourcing strategy development, you'd be on the right track. But Zycus is going after this vision in a largely automated manner without $2500 / day management consultants analyzing the results and developing a strategy for you ... It's slick (and not in a Clinton-esque way). If you were previously looking at Zycus as just a focused classification and enrichment and provider within an integrated spend visibility deployment, you owe it to yourself to see how far they've come on the analytical side."
Since the announcement, Zycus has been busy on the customer acquisition front. Already, Conoco Phillips has adopted the solution, processing some 15 million transactions annually covering $128 billion in spend, using both Zycus AutoClass and Actionable Analytics. And Visant, Siemens UK, and Diageo have also deployed the new front end as well, among others. But what's next for Zycus in the coming years?
Going forward, Zycus suggested to me that they want to expand out of their best-of-breed spend analysis roots and grow into a "top 3" suite provider in the sector in terms of revenue. What product directions will Zycus head in? You can bet sourcing will be a part of their strategy, as will other aspects of "supply management," as they term it. But eProcurement is out, in their words. So I'm guessing that leaves supplier performance / risk management, e-sourcing, contract management, and other related areas to delve into. I also expect we'll be hearing a lot from Zycus on the Master Data Management (MDM) front as well, but I'll save that for a different blog post.
On the global front, Zycus plans to keep a strong presence in North America, but also expand significantly into Europe and Asia/Pacific (Asia/Pacific, in particular, is a region which they see tremendous opportunity for expansion). But regardless of where they go, one thing will be for sure. And that's they'll stick to their profitable (in excess of 30% net margin) knitting.
I believe that for investors contemplating investments in private or public companies in the sector outside of North America and Europe, Zycus can serve as proof that it's possible to build a successful global solutions play, leveraging not just lower cost talent from India for development, but off-shore software development expertise as well (that can't be found elsewhere). In fact, I would suspect that we'll see many more Zycus-like vendors to emerge from India and China in the future (maybe not in the Spend Management area, but certainly elsewhere). These providers and vendors will not ride just ride the coattails of Western vendors with lower prices, but like Zycus, they'll break entirely new ground, often in existing markets, charging premium price points for innovative solutions.