Indian software product industry comes of age

A few years back, when GE had decided on an Indian connection, it sowed the seeds for a new branch—BPO—which the entire Indian software industry is today counting on as the new elixir for growth. This time around, it may be the turn of the Indian software products industry to get inspired. A little known Indian company that goes by the name of Zycus Infotech has bagged big orders from the likes of GE for its automatic catalog classification product called ‘Autoclass’. Srikanth R P has the details

We believe we have a killer product on our hands as Autoclass is one of the first products in the marketplace based on UNSPSC standards, says aatish dedhia

To know why the product ‘Autoclass,’ an automatic catalog classification product, is so important to a company like GE, consider the following facts. A company like GE, which has a finger in almost every pie of the industry ranging from aircraft engines, financial services, power generation to medical imaging and plastics, faces a nightmare in managing and controlling costs for products sourced from thousands of suppliers. For example, a simple product, like say a lead refill, could be classified under different categories by different departments and suppliers. Some departments would classify the product under office supplies, some would classify the product under writing instruments, while some would keep the product under a category called ‘mailing supplies’. The problem arose when GE wanted the ability to drill down each product category and analyse what the company was spending across different products. With the current system, as each product was placed in a different category as analysed by the supplier or department, it was extremely difficult for GE to know how much it was spending for each product. Many a times, the same product used to be purchased by different departments at different rates. But with the absence of classified data and the fact that the same product was known by different names, it was not possible for a company as big as GE to do a demand analysis on what it was spending on different products. For example, last year the company spent close to $50 billion on products and services but it still did not have a clear picture on what it was buying and from whom.

As a large conglomerate with heavy spending, GE was in need of a solution that could reduce purchasing cycle time, improve process efficiency and accountability and reduce procurement costs. And a product based on Artificial Intelligence algorithms fit GE’s needs to perfection. Autoclass, which is available in both Live connect and Batch connect modes, is a perfect solution for big corporates like GE who are looking to find answers in their chaotic reams of data. In the Batch Connect mode, Autoclass classifies historical purchase data or inventory data and provides insight not only into GE’s spending but also the total inventory purchased. In the Live Connect mode, the product classifies all catalog and non-catalog data at the source, which ensures data integrity. As the product classifies products into one or more of around 15,000 categories that conform to the UNSPSC (Universal Standard products and services classification), the content generated in e-procurement exchanges and market places is now available in a simple form, which can be fed into different applications and analysed. Additionally, the product provides a common platform for mapping disparate supplier and buyer data to the UNSPSC standards.

While the e-procurement system, Oracle’s 11i iProcurement system gave GE how much it was spending in total, it could not determine what the amount was spent on. Having no clear information on the sum it was spending on any product, it could not negotiate rates with any supplier. But with the current system, a purchase manager has to just type in the product he is looking for and the system automatically throws up the different products classified in a matter of seconds. Previously, the same task used to take GE a period ranging from days to weeks to find out information on a product.

GE is not the only high profile name on Zycus’ client list. Apart from GE, Zycus has bagged clients like P&O, a known international logistics and transport company and Covisint, a global independent e-business exchange for the automotive industry. For example, Zycus’ solution helps Covisint trading partners like Ford, GM, Daimler Chrysler and other companies to rapidly assign UNSPSC code to their supplier catalogs thus enabling expenditure analysis.

While Zycus has been bagging many big client wins today, the same was not the scenario a couple of years ago. The company started out by building software to classify content related to newspapers and magazines. Here too, the company had signed on ‘Washington Post’ but still the product did not operate in a market that was considered big. Aatish Dedhia, the CEO of the company knew that if the company wanted to be known as a successful product company, it had to operate in a market that could give it the volumes.

The big idea for developing a product related to managing e-procurement content came during a meeting in Silicon Valley. Dedhia was asked a simple unassuming question ‘Can your software manage content related to e-procurement and e-sourcing?’ This set Dedhia’s mind racing. Subsequently, after looking at the market, he realised that while there were many vendors offering catalog management software, there was no software that could manage the content and make sense out of it. Additionally, as all the e-procurement vendors did not follow a common standard for transmitting data, Dedhia knew that if Zycus could develop a software adhering to standards, which every company or supplier could follow, he would have a killer product on his hands. Dedhia zeroed in on the upcoming UNSPNC standard (a standard developed by Dun & Bradsheet in conjunction with the United Nations, which is believed to be the only truly universal coding scheme that meets all the requirements of classification) for developing Autoclass.

Zycus has also been trying to create a new category ‘Spend Data management’, which relates to how a corporate can extract meaningful information out of huge volumes of disparate data coming from sources like suppliers. The company has also been trying to push adoption of UNSPSC standards and illustrate the difference between identification of a product and classification. Explains Dedhia, "Consider that a company buys a Dell laptop computer. Now if a classification has to be done, then the code cannot put the laptop in a generic category such as ‘computer equipment’. This is because this code then would have no logical connection with codes designating a Compaq, IBM, Toshiba or any other brand of laptop computers. Such identification codes therefore do not allow for categorisation of purchases into higher and generic categories nor do they allow comparisons among different manufacturers. Therefore only a hierarchical order of names and categories can provide ‘roll up’, ‘drill down’ and comparative analysis and evaluation. This is what the UNSPSC standards do and we believe we have a killer product on our hands as our product is one of the first products in the marketplace based on these standards."

While there have been a number of successful products from India, one thing that separates Zycus from the rest is that the company is one of those rare companies which has chosen to not follow the treaded path, but has managed to create a new category called ‘Spend Analysis’. This approach is similar to Israeli companies, which always try to fill in niche markets or create their own markets by creating a new category. The timing of the product is also perfect as more and more corporates are looking to cut costs by analysing data on their spending. The success of Zycus is also a pointer towards the coming of age of Indian product players who started out by focusing on traditionally safe domains like banking and finance to create their own niche markets.