Catching up with Zycus

A few weeks back, I had the chance to catch up with Zycus, a provider that has quietly realized significant growth in the past few quarters, even after SAP dumped them as an informal partner to buy their own spend data classification, cleansing and enrichment capabilities. While spend analysis remains Zycus' flagship product, they've not sat still from a product development perspective, opting to begin building out a broader supply management suite which at this point also includes an e-sourcing module. Since launching this product earlier in 2008, they've welcomed 5 customers aboard. This suggests that early traction is ramping, albeit slower than the overall company which saw 17 deals and 10 new customers in the most recent quarter.

Overall, Zycus is one of the larger Spend Management vendors today from a growth and headcount perspective. As of the most recent quarter ending June 2008, the company had between 260-65 employees. Perhaps more interestingly, they are realizing success worldwide with a decentralized geographic concentration. From Asia to Europe to North America, Zycus not only won a number of deals in recent months, they beat out the competition without the luxury of home turf advantage.

I asked Zycus what has made their solutions more attractive than the competition given that the market for e-sourcing, especially, is about as crowded as the subways were in Beijing during the Olympics. They responded that with Zycus, "customers are prioritizing nimble solutions, flexibility of deployment, and most important, ease of use." This last point is the critical one. Zycus' e-sourcing product is one of the most elegant and simple executions I've seen of the concept in my ten years of playing around with reverse auction tools. It lacks a few of the more advanced optimization capabilities of an Emptoris, Ariba or Iasta, but I would suspect that where Zycus has already beaten out the competition, advanced capabilities have played second fiddle compared with the need to drive adoption.

From a product standpoint, Zycus' sourcing product and spend analysis products are now available in over 22 languages including Japanese, Chinese and Korean. They also introduced a new marketSCAN service in the last quarter that provides custom supply markets research and support to customers on a project-by-project basis. Digging into this services offering, it feels very similar to what other providers such as The Smart Cube are also doing. But by closely integrating it with their e-sourcing product, it's possible to provide what amounts to a highly custom and implementable set of recommendations and supplier insight delivered on the same platform that a customer is using. Moreover, Zycus is offering this at low price points relative to what traditional consulting firms would charge for similar research and analysis (although at market with the going rate for such work in India).

- Jason Busch

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