Spotlight

Aztec: innovating for growth

With its expertise in product development, Aztec aims to diversify into the wireless and embedded areas, finds Vinutha V

Aztec Software was founded in 1995 with the intention of developing software products in the area of application servers at a time when the application server as a technology was new.

Its first product was JPACT—Java Powered Access Technology—which was a high performance and scalable server with many re-usable components. However, since the product business is a high-risk, high-return business, the future of the company to a great extent depends on the success of the product.

"We moved on to the services model as we realised that we did not have the resources to market server-class products in the vastly competitive US market" - V Chandrasekaran Ceo & MD Aztec Software & Technology Services

Aztec realised that developing a product is different from selling it. Says V Chandrasekaran, Chief Executive Officer and Managing Director, Aztec Software and Technology Services, “In 1996-97 we moved on to the services model as we realised that we did not have the resources to market server-class products in the vastly competitive US market. At that time, IBM, Oracle and others had also commenced work on application server technologies and we did not find ourselves equipped enough to fight a long-drawn battle to sell our product.”

But Aztec did sell the product to a few customers. In hindsight, this decision turned out to be wise because the application server market is dispersed, commoditised and low-value in terms of revenue.

Aztec decided to convert the company’s technology into middleware and data management. The development of a server-class product is complex. But marketing such a product in a highly competitive market is even more difficult and resource-intensive. This is precisely why there are few product companies.

An array of services

Aztec had the technology and ability to develop services—Java, J2EE and middleware. Soon it became a one-stop-shop for product companies. Presently, the company has presence in both the products as well as services market. It plans to leverage on its expertise in core database technologies, data warehousing technologies, infrastructure technologies, XML technologies and Java technologies, and to provide e-engineering solutions.

The company provides a suite of services for software companies; the services include product engineering, application development and integration, migration, testing & quality assurance, professional services, maintenance and support. Its speciality is software product development services that accelerate the creation of software products, reduce time-to-market, and help make schedules predictable in order to better manage resources, predict costs, and reduce market and technology risks. Aztec’s customers include Cadence Design Systems, Embarcadero Technologies, Jamcracker, Bottomline Technologies, JD Edwards and Novell.

Aztec focussed on providing more value to its customers, and helpin g them move on to emerging business models in the ISV market. The company even changed its customer mix. This move helped generate more revenue. “We now have a healthy mix of clients from large, medium and start-up businesses. Since we are in the technology space, we are able to attract people. Although attracting talent is a challenge in the current demand-and-supply gap scenario, we don’t see it as a problem,” states Chandrasekaran.

In order to strengthen its software-testing capability, Aztec acquired Disha Technologies in September 2004. Testing is a high-growth area where substantial revenues can be generated. It has become a pre-requisite for a quick go-to-market given the speed at which software products are being launched with new releases every quarter.

Outsourcing is here to stay

As far as its revenue break-up is concerned, the company derives around 40 percent from large businesses while the rest is equally shared between medium and start-up or small companies. Geographically, most of the revenue comes from the US.

“The business from our large customers is predictable and sustainable, and we serve them with some models if not a range of services. We largely serve our medium customers with development and testing capabilities, and most of our start-up customers can use all our services from the stable,” informs Chandrasekaran.

Speaking on the outsourcing trend, he believes that software as a service model will pick up, especially in countries like India where cost is an advantage. Many Fortune-1,000 companies have set up their operations here, but even companies which are not present in the country are in need of the service. “This is where we want to unearth the potential. In a global economy, if you don’t take care of outsourcing you will be run over. Outsourcing and offshoring are going to be standard formats in the time to come,” he adds.

Even though the potential lies in outsourcing and offshoring, the Indian educational institutions are not yet getting their students equipped with product engineering services. To fill this gap, Aztec is planning to tie up with educational institutions. It currently has a tie-up with Mysore University, where the experts from the company teach.

On the lookout for acquisitions

Aztec plans to add new technologies in the wireless and embedded areas; it’s also looking for acquisitions in these fields. The company aims to grow its customer base, especially by winning the customers of its existing customers. “We are looking for acquisitions in the embedded and wireless areas as we already have development and testing capabilities. We also see evolving standards in the wireless technology domain. With our existing testing expertise, we can tap the embedded space. The growing cell-phone testing and PDA testing markets are a big opportunity for us,” adds Chandrasekaran.

The company is based in Bangalore and has operations in Pune and Hyderabad in India, while its overseas operations are in Santa Clara, California, Bellevue and Washington in the US. The company has a global employee strength of 2,000, and is now aiming to double the headcount within the next 3-4 years.

The company recently expanded its operations in Hyderabad, and an additional investment of Rs 50 crore has been planned for the city operations over the next 3-4 years. From the current 250 employees, Aztec plans to have 1,500 people in Hyderabad by 2010.

The company recorded revenues of $22.43 million for the financial year 2004-05, registering an increase of 137 percent over the $9.04 million recorded in the previous financial year.

vinutha@expresscomputeronline.com