Insight, Impact, Innovation
HomeNewsroomWhere data meets decision-making

Where data meets decision-making

Mar 01, 2015


Published By : The Smart CEO

T.A. Associates-backed Fractal Analytics, among the first movers in the Indian analytics space, is on an aggressive growth path. Following the acquisition of Mobius Innovations, it is betting on more IP-driven acquisitions, with a focus to touch revenues of US $100 million in two years

In the year 2000, when Pranay Agarwal, Nirmal Palaparthi, Srikanth Velamakanni and two other co-founders approached their first client with an analytics solution to help companies take quicker decisions, they were asked the one question that led them to rise to the challenge of building a successful company. “Over 100 PhDs are doing the same thing you do, how can you be any better when you have a team of just six employees?” And, their response was reflected in the way they carefully built every process in the company, which expects to record US $100 million in revenues by FY17.

Every day, companies take a lot of decisions around how to get closer to customers and how to scale their business further. With every decision, they can either drive it through the lens of data or they can rely on experiential or gut feeling. Our pitch to clients was, if every decision could be made better by a few basis points with the help of data, it can have a significant impact on their profitability.

“We started Fractal Analytics at a time when the industry was at a very nascent stage. We saw every company churn a lot of data and we realised that math would be used to help them make better decisions. That was our premise,” states Velamakanni. Thus, the IIM Ahmedabad graduates put their heads together and built a model that primarily focused on problem solving. “Every day, companies take a lot of decisions around how to get closer to customers and how to scale their business further. With every decision, they can either drive it through the lens of data or they can rely on experiential or gut feeling. Our pitch to clients was, if every decision could be made better by a few basis points with the help of data, it can have a significant impact on their profitability,” he explains. That, according to them, was their competitive advantage.

Business model evolution

With the analytics industry slated to be one of the fastest growing segments in the IT enabled services space (according to a 2012 Gartner Report), the founding team realised that their business model needs to evolve from a traditional consulting business to one that is inexplicably linked with technology. “That’s when we developed solutions such as Customer Genomics and Concordia, which essentially deliver a non-linear pricing advantage,” adds Velamakanni. While Customer Genomics acts as a personalized marketing platform, which addresses various aspects such as customer acquisition, loyalty and attrition, Concordia leverages a scalable data harmonization platform to solve complex, high volume data.

Typically, Fractal Analytics’ strength lies in delivering analytics solutions for consumer-facing industries such as packaged goods, finance and insurance, for the simple reason that it began operations with a focus on these sectors. However, Velamakanni indicates that the company is gradually penetrating into the healthcare and lifestyle space as well. “Currently, our focus markets are the U.S., the U.K., Europe and Australia. And, our client acquisition strategy is driven towards long-term gains. We don’t want to be everything to everybody,” he points out.

Setting a steady pace of growth

2013 was a year of highs for the company. First one being the US $25 million fund-raise from Boston headquartered private equity firm T.A. Associates.  “The funds left us with sufficient cushion to setup operations in Bengaluru and build it, to invest in improving our client solutions and to invest in acquisitions,” shares Velamakanni. In January 2015, Fractal Analytics acquired Singapore-based Mobius Innovations to strengthen its personalised marketing solutions business. Mobius, which was founded by Nirmal Palaparthi, an ex-co-founder of Fractal Analytics, offers mobile-based solutions for brands to deliver personalised content and promotions to their customers. “Mobius filled a gap that Customer Genomics was trying to offer. We are also exploring other acquisitions, either products with IP related to analytics products or companies in the analytics space itself which can help us scale faster,” he indicates.

A second milestone for the company was in the official launch of the People Principle, a culture which places trust and freedom among employees to function as they best perceive suitable. The Principle includes aspects such as the freedom for employees to choose the role, projects or manager they would like to pursue and work with, self-regulation in issues pertaining to work timings, vacation, expense claims, dress code and more. “We strongly believe that if the employees are happy, they will take care of our clients. That’s why we place extreme trust in the people we hire and give them the freedom to pursue their interests so that even when they are tired of pursing a role, instead of quitting, they can shift to a role they are interested in,” explains Velamakanni.

While the Principle has been in place since founding days, given the rapid growth spurts (in employee base) over the years, the founding team put it on paper only in 2013. In fact, from a client satisfaction standpoint, the company recorded an annual NPS (Net Promoter Score) of 49, which is said to be among the highest in the world, only next to companies such as Netflix and Apple.

Another interesting aspect about the company’s people policy is its hiring strategy. While its Principles ensure that it doesn’t dilute its talent base, it trades smartness over experience when recruiting talent. “In an industry which is moving so fast, knowledge and learnability is more important than investing time in identifying people with the right skills. Whatever skills one may have, they become obsolete very quickly. So, we want people who are willing to learn. We prefer to hire people who want to figure things out by themselves,” opines Velamakanni. In fact, by June, the company sees its employee base touching 1,000 with close to 120 recruits being freshers hired through university recruitments.

Growing on partnerships

In August 2014, Fractal Analytics entered into a partnership with Aimai, the world’s largest loyalty management firm. “Initially, Aimai wanted to work with suppliers but they realised that this will be a much bigger partnership. Thus, we will be combining their customer data repository and our IP expertise to build customer analytics focused intellectual property,” states Velamakanni.

For him and his team, the way forward is crystal clear. “We want to touch revenues of US $100 million in two years. For this, we want to acquire clients with whom we can sign US $10 million to US $30 million deals. Of course, acquisitions will also be a key focus area for us to help the business scale quicker,” he shares, on a parting note.


WHAT NEXT?

With the acquisition of Singapore-based Mobius Innovations, improve analytics solutions offerings for clients

Explore further acquisitions (either IP or analytics services) to scale the business further

Be an elephant catcher: sign US $10 million to US $30 million deals with clients to touch revenues of US $100 million in two years

Build customer analytics focused intellectual property in partnership with Aimai


HR PRACTICES AT FRACTAL

Hiring

In a fast moving industry, Fractal Analytics places a higher importance on knowledge and learnability than on skills. Hence, it focuses on hiring employees who are willing to learn, and perceives hiring employees with the required skills as an added advantage.

By June 2015, the company sees its employee base touching 1,000 with close to 120 recruits being freshers hired through university recruitments.

Retention

People Principles, an internal culture developed by the company, places trust and freedom among employees to function as they best perceive suitable. Some of them include freedom for employees to choose the role, projects or manager they would like to pursue and work with, self-regulation in issues pertaining to work timings, vacation, expense claims, dress code (wherein the company states, dress as though you’re meeting a client) and more. The founders believe that if the employees are happy, they will take care of their clients. Hence, even when an employee is tired of a particular role, he/she can shift into a team or project that piques their interest, hence ensuring higher retention rates.

While the Principle has been in place since founding days, given the rapid growth spurts (in employee base) over the years, the founding team put it on paper only in 2013. From a client satisfaction standpoint, the company recorded an annual NPS (Net Promoter Score) of 49, which is said to be among the highest in the world, only next to companies such as Netflix and Apple.