APT provides answers to complex business questions

by Heather B. Hayes
for Virginia Business
May 2006

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 by 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 large retailers, banks and other consumer-focused organizations “test and learn” capability. “Our offer makes people a lot of money, and it’s very measurable,” he says.

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 test.”

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.”