Park City, Utah is home to majestic mountain views, great skiing, breath-taking hiking (literally), and bountiful wild game. It hosted the 2002 Winter Olympics, and very recently, it hosted Zycus‘s Analyst Day retreat, only the second in the company’s 20-plus year history. As a refresher, Zycus is a New Jersey-based provider of source-to-settle procurement solutions, and offers source-to-contract (S2C), procure-to-pay (P2P), and standalone solutions via its integrated solution suite. I had the pleasure of representing Ardent Partners at this “magical” day-and-a-half-long event, which was well presented by Zycus’s marketing team.
The night before the actual analyst day, the marketing team treated us to dinner and a show at the luxurious Waldorf Astoria Hotel in Park City. Richard Waugh, vice president of corporate development at Zycus and procurement influencer, introduced Zach Waldman, a magician, mentalist, and comedian, who kicked off the event. Zach turned sleight-of-hand card tricks and shell games into mesmerizing moments that had the usually skeptical analyst crowd suspending disbelief, setting the stage (table?) for the big news that followed the next day. More on that later.
Company Update
On the day of the event, longtime Zycus CEO, Aatish Dedhia, gave an update of the company’s performance, growth, and growth strategy. “Growth is extremely important” to Zycus, he said, noting that the company had experienced 22% year-over-year revenue growth and continues to build its employee rolls. Aatish stated that Zycus has invested 40% of the company’s resources into research and development (R&D), making it, in his view, the highest investment in R&D in the industry. He went on to say that the company wants to ensure that it out-invests any other company in terms of products, and that this is “always going to be a core strategy.”
Zycus leadership is also focused on sales and marketing in a dual effort to realize the highest return on their investments. As of now, the company’s global footprint is split roughly 80% between the U.S. and 20% across the globe, although Aatish expects that the company will shift to 70%-30% or perhaps 65%-35% as more sales shift to Europe and Asia-Pacific. Zycus also continues to work with global partners as well as regional partners on software installation / implementation.
High-Level Product Updates (In Development)
Aatish and his team spent a significant amount of time reviewing recent or forthcoming product updates and innovations covering the full gamut of Zycus’s products and solutions. At a high level, Zycus is taking a “forward looking approach to meet future needs.” These include:
- an enhanced P2P product that will offer deeper configurations, with more than 500 business rules, 70+ pre-packaged workflows, and 20+ transactional touchpoints across requisitions, POs, invoices and receipts;
- improved requisition-to-order capability for contingent workforce management and complex services procurement.
- Zycus’s Contract Lifecycle Management tool will integrate with Salesforce, enable users to segment by data, role, and documents; provide users with quick contract request forms, the ability to conduct reviews in parallel, and mobile/eSignature support.
- Zycus’s mobile application, which will offer users access to nearly every Zycus solution in its suite; according to Aatish, the app is getting good feedback from customers now and will be generally available in three to four months.
- iLogix, a logistics management program in a trial run with Heineken;
- Insight Studio, a transactional analytics tool that will deliver real-time or near-real time insights across Zycus products;
- enhanced support for direct materials procurement, like integration with ERP and PLM systems;
- Services Sourcing Optimazation, which is under development with some of Zycus’s largest customers;
- RM 2.0, which is meant to provide “predictability, planning, and preparation” to Zycus customers.
An additional update from Zycus is “DewDrops,” its new, uniform user interface (UI) for all of its applications in the Zycus solution suite. Company officials say it will offer customers an “agile” front-end replacement for the existing UI, along with support for customer-specific branding, customer-led designs, and customer-centric innovations, like a self-help tool, language management tool, a customer notification center, and customer support center. DewDrops will also come with diagnostic and usage-tracking tools. Zycus has invested heavily in DewDrops and expects to release it to all customers in sometime in 2019, although Zycus officials are reportedly “in the throes” of unveiling it to customers now.
Magic Merlin: AI for Source-to-Settle
The biggest news of the day came with the unveiling of Merlin AI Studio, Zycus’s forthcoming family of intelligent bots for its entire source-to-settle solution suite. According to Aatish, Zycus’s artificial (or augmented) intelligence capabilities have grown with the groundswell of recent technological advancements, like machine learning and deep learning. Thus, Merlin AI Studio is the company’s answer to providing autonomous procurement up and down the source-to-settle process. Merlin bots will focus on high-risk activities across source-to-contract and P2P where there is a high risk for human error and processes that are highly transactional.
The two use cases presented to analysts were invoice extraction and contract management, which do require some initial manual uploading and interfacing, although with time the system will learn, according to Aatish. He said that the company has been and continues to look at use cases for AI — for the technology to significantly reduce the time spent on roles and reduce the effort. Expected improvements include reductions in full-time equivalent labor and turnaround time, improvements in quality, and other role-based process enhancements. Aatish conceded that the company does not yet have proof points from existing customers, which have been trialing the bots.
Zycus leadership intends to go to market with Merlin AI Studios by the end of 2019 — to existing customers as well as to non-Zycus customers that can buy each bot as plug-ins and use them via APIs. Indeed, the company is in the process of taking the entire Zycus product suite and running each product through its API economy.
While Zycus is confident in Merlin AI Studio (so confident that Zycus leadership is willing to out-invest any other company in the field), Aatish stated that the company will continue to invest in its legacy systems. Leaders will focus on core P2P and ensuring that they expand to more organizations.
Company Outlook
On a higher level, Aatish believes that the market for end-to-end solutions tops $1 billion within the Fortune 500 alone. And when IBM “sunsets” Emptoris at the end of 2019, there will be even more opportunities for Zycus to win market share. To that end, Zycus officials are investing in legacy products and next-generation technologies, like Merlin AI Studio, to support their existing customer base and capitalize on these market opportunities. In fact, customers that I spoke to at the event are excited for Merlin, and for DewDrops, and expect that each will greatly improve their experience and drive further efficiencies for them. Zycus is betting big on AI for procurement, and working to realize the “magic” of Merlin AI Studios.
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