APT provides answers to complex business questions
for Virginia Business
When companies decide to try
something new, they generally test the idea first and
then attempt to predict how the
change will affect their entire business. At best, they
could only make an educated guess — that is, until
Applied Predictive Technologies (APT) came along.
The 7-year-old, Arlington-based company
sells APT-5, a “retail optimization” program that allows
large, customer-focused companies to design, execute
and interpret potential business initiatives. Using APT-5’s
technology, a retailer, for example, can test two sales
promotions and learn which will bring in more revenue.
APT’s customer list includes Lowe’s, Sprint,
Wells Fargo, Food Lion and Staples. The company’s
revenue rose 572 percent from 2001 to 2004, making
it the fastest-growing technology company in the Fantastic
50 competition. Company revenues, which are driven
the sale of software, fees for pilot programs and consulting
fees associated with client programs, grew another
50 percent in 2005.
Jim Manzi, the CEO of APT gives all
the credit to the product, a software program that gives
banks and other consumer-focused organizations “test
and learn” capability. “Our offer makes people
a lot of money, and it’s very measurable,” he
Manzi and his partners, Anthony Bruce and Scott Setrakian,
founded APT after working as retail strategy consultants.
They recognized that a lot of their work could be better
addressed through software and automated analysis.
They provide APT-5 (currently their only product) to
customers using an application service provider model.
That means that the program resides on a server at APT
offices. Customers access it through an Internet connection
and a Web browser.
APT’s target customer has more than $1 billion
in sales and at least 100 retail outlets. APT-5, Manzi
says, allows these companies to make business decisions
with a high degree of confidence. “It’s the
value of those business decisions that is really our
offer,” Manzi says.
For example, a specialty retailer used
the program to measure the effect of a new in-store sales
kiosk on total
sales and profit. APT’s analysis determined
that the kiosks, on average, didn’t produce enough of a boost to justify
putting them in all stores. Nonetheless, the test identified some stores that
experienced tremendous gains. As a result, the company placed kiosks only in
targeted stores, a move that increased net profit by $1 million a year.
Hung LeHong, research vice president
for Gartner, an IT consulting firm, notes that APT is
growing rapidly because the firm’s software is so differentiated
in the market. “They basically have a very unique approach in the way that
they attack advanced analytics,” he says. “As an example, in situations
where there is not enough data to conduct some kind of analysis, other technologies
will try to come up with new models to simulate that data. But the test and learn
approach that APT uses requires that they actually test it in the field to get
that data. It’s almost like the old-fashioned way of performing the market
APT’s growing reputation presents it with one of its biggest challenges:
managing growth. The company has seen its revenues increase every year at a pace
of 50 to 100 percent. Thanks to a large potential market and little direct competition,
Manzi expects rapid growth to continue during the next several years. But the
company will likely impose some limits on its growth. “We want to make
sure that we are always delivering the highest possible quality,” Manzi
says. “We could grow faster, but only if we were willing to relax our standards,
and we’re not going to do that.”
That doesn’t mean that APT isn’t looking to expand. Manzi sees the
company eventually moving its APT-5 product into a number of other markets, including
health care, insurance, territory sales and direct marketing. And he expects
to add more products using the “test and learn” method. “We
really want to own the concept of test and learn over the long term,” Manzi
says. “That is our ultimate goal.”