Finding over payments is great, but PRGX sees analytics & advisory as its future
Romil Bahl is best known for launching Infosys Consulting in 2004. Previously, he was with EDS, A.T. Kearney and Deloitte. He was also one of Consulting magazine's Top 25 Consultants in 2007. For the last two years, he's been president and CEO of Atlanta-based PRGX, a 1,600-person business analytics and information services firm in 30 countries, which offers a suite of services leading to what he's calling "Profit Discovery." The focus is improving clients' financial performance via a combination of audit, analytics and advisory services. The firm's sweet spot is retail, (its largest client is Wal-Mart, which accounts for more than 10 percent of its annual revenue) but is looking to expand into healthcare, Bahl says. He sat down with Consulting to discuss PRGX.
Consulting: So, tell me a little bit about PRGX. How do you define 'profit discovery'?
Bahl: It's a business of analyzing our clients procure-to-pay data, everything from contract information, every purchase order placed, receipts and shipment information and the invoices the client receives from the suppliers, all the way through the payables—and in some cases—bank data. For many of our retail clients, we actually get point-of-sale data from the stores. That's what the core business is, getting all of these transactions and identifying areas where overpayments have been made because something was missed, some discount was missed or some rebate was missed. It's 'profit discovery'' because it really is dollars straight to the bottom line for clients.
Consulting: What was the business like when you began in January 2009? How have you changed it since you took over?
Bahl: That model I just described was in place when I got here, but the company was declining. In 2003, it was almost a half-billion dollars in revenue; it was $170 million when I got here. First, we had to strengthen our core business—accounts payable, recovery and audit. Then we looked at what some of the adjacent opportunities were and came out with a strategy at the end of 2009. What we said is that we'd double EBITDA in five years. There are some very positive early signs. Since the fourth quarter of 2009 through the end of 2010, weve managed to grow every quarter.
Consulting: What's your value proposition?
Bahl: We think we have four: The first is next generation recovery audit—simply put, profits from recovering overpayments. The second is spend optimization—profits from overspending. The third is fraud prevention and detection—profit from preventing fraud. And the fourth is profit performance—that's profit from optimizing working capital and finance operations. In each of these cases, we perform analytics on the data that our clients already trust us with. And from a pricing perspective, we are more than happy to take a percentage contingent on what we deliver to the client.
Consulting: Who are your clients?
Bahl: Well, our largest client is Wal-Mart, and we work with them in 12 different countries. On some level, every company needs our services. Now, that doesn't mean we'll find large amounts at every company in the world, but I will tell you that every company in the world needs our services. In retail, we serve about 70 percent of the Global 50. We are the largest recovery company in the world.
Healthcare is worth talking about because the country will spend $2.6 trillion dollars this year on healthcare, and we see the recovery market growing to a billion-and-a-half dollars over the next three to five years. That's an industry we'll be getting a lot more into this year. And right now, clients are more motivated than ever to find revenue, so we're having pro-active conversations with clients.
Consulting: What else can you do for them?
Bahl: We have access to a veritable gold mine of client data that's up to us to turn into information that can turn into insight to bring bottom-line profit to clients. Here's where we hit the crux of our future role. When I started out, I was thinking that we're doing an awful lot to get at one thing—overpayments. What else can we do with all of this data that clients are giving us? And the clients themselves were asking for it.
They were saying, 'you have more of our data than any single supplier we work with, what are you doing with it?' So, while we're looking for needles in a haystack, we might be brushing aside diamonds and gems because we're too busy looking for needles. How do we built a smarter data warehouse that allows us to extract different subsets of data for clients that can then be manipulated and analyzed further to produce actionable insights.
An overpayment is an actionable insight, but we want to to be able to extract other actionable insights about how they are spending, how they can improve capital, cash liquidity, fraud, and where they can prevent fraud.
Consulting: Tell me about PRGX's fraud protection business?
Bahl: If you have over $1 billion of revenue, you're probably losing $25 million in fraud. In these times, that amount can no longer be taken with a grain of salt. We can run over 100 tests to the data designed to detect and prevent fraud.
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