Reggie Beehner
virtulytix
(from left) Edward Crowley, CEO of Virtulytix, and Scott Hornbuckle, president of Virtulytix, at the company's office in downtown Lexington.
The “internet of things” is no mere buzzword around the offices of the Lexington consulting firm Virtulytix.
The phrase, which refers to the use of smart sensors in everyday things, encapsulates an idea that the company predicts will help usher in the next era of innovation—that data, and its smart deployment, can make just about anything better and more efficient.
While businesses have long acknowledged the importance information plays in their operations, there’s still a wide chasm to cross before all that data is put to productive use.
And that’s where Virtulytix enters the equation. With its staff of data scientists and engineers, the company has created its own niche helping others make the leap across the data divide.
“A lot of companies try to add value by offering services or digitally enabling their products,” said Edward Crowley, Virtulytix’s CEO. “But when it comes down to it, they’re not using a lot of the data. They’re not changing how they operate, how efficient they are or how much money they’re making.”
Virtulytix first ventured into the world of predictive analytics about three years ago. Back then, the company was operating under a different name, the Photizo Group, and working out of Midway, Kentucky, where they were a major player in the managed print services field, helping large printer manufacturers and leasing companies.
The MPS industry was in a slow free fall, largely owing to the steady migration of businesses from paper to digital, and the Photizo Group realized it was at an impasse. With their industry contracting and less business to go around, the only way to increase revenues was to improve efficiencies.
Staring necessity in the face, the company opted for invention. It partnered with IBM, leasing its analytics platform, and came up with a sensor-model that more accurately predicted when toner cartridges would need to be replenished. Working with a client, PrintFleet, a large-scale print management company, they found that their modeling program helped reduce toner waste by 15 to 20 percent and saved the company some $5 to $10 per printer annually.
“That may not sound like much,” Crowley said. “But when you translate it across 100 million devices, it’s a $750-million-a-year industry problem.”
Emboldened by their early success, the company soon branched out to other fields.
For example, Photizo was tapped by a young, up-and-coming semiconductor company (Virtulytix officials said they weren’t at liberty to disclose the company’s name for proprietary reasons) to improve its assembly processes.
Photizo built a predictive model using sensor and temperature readings that helped identify potentially defective components earlier in the manufacturing stages. That gave the semiconductor company a larger window in which to recoup salvageable parts and resulted in significant gains to their yield, said Scott Hornbuckle, who was Photizo’s director of analytics and now serves as Virtulytix’s president. Once the model was up, the company trained the semiconductor’s IT staff how to use it and turned it over to be run in-house.
It wasn’t long before Photizo saw the writing on the wall: Its predictive analytics business was growing fast and would soon outpace its work in managed print services.
So the company made another bet: this time that predictive analytics was its future. It worked with its principal venture capital investor, Meritus Ventures, to shutter Photizo, restructure its debt and relaunch the company under its new name, Virtulytix, this past August.
The change was more than a symbolic one, Crowley said. He wanted the company to start fresh, free of any “legacy baggage” that might pigeonhole them in their former role as strictly a managed print services firm. In addition, they opted to move the company from their offices in Midway to downtown Lexington, where they maintain a suite on Main Street.
“We’re hiring a lot of younger staffers, and the downtown, urban setting helps us attract the folks we need in this business.” —Edward Crowley, CEO of Virtulytix
“That was a strategic thing,” Crowley said. “We’re hiring a lot of younger staffers, and the downtown, urban setting helps us attract the folks we need in this business.”
Virtulytix retains a hand in the managed print services industry—it still accounts for roughly half the company’s revenues—but it represents a smaller portion each year, Crowley said.
The company’s pivot to predictive analytics was a “natural evolution,” Hornbuckle said. And the company is well-positioned to discover opportunities in a host of new fields, he added.
While a variety of industries stand to benefit from predictive analytics models, Crowley said two in particular stand out. The first are those with high-cost “critical assets,” he said, such as jet engines or nuclear power plants, that can’t afford to fail. Other utilities, such as energy or transportation, likewise fall into this group.
The second are industries with large-scale fleets, such as trucking companies or industries with large numbers of printers, cell phones and other devices. While the individual failure costs for these assets may not be as high, the aggregate costs are often substantial, Crowley said.
Virtulytix is also considering opening an office abroad. Already, more than half of the company’s analytics revenues come from outside North America, with a third of that coming from Japan.
“Regardless of what industry you talk about, everybody’s trying to be more efficient and to do more with less,” Hornbuckle said. “It’s pretty crazy actually—the people you meet, where they’re at and the niches they’ve carved out for themselves. It’s really the Wild West but in the best way possible.” B