Vivek Kulkarni is no weightlifter. He is of medium height, medium build and is fast approaching middle age. Yet he preferred to carry the weight of 500 compact discs (CDs) all by himself to the US, refusing to even check them in with the airline. That was in September 2002, when he went to attend the World Kannada Conference at Detroit. Karnataka chief minister S.M. Krishna was supposed to speak there and, as the state IT secretary, Kulkarni had plenty of ground to prepare.

Kulkarni was at a crucial stage of his career. For the last four years, one of his main jobs was to carry Karnataka to non-resident Indians, companies and investors overseas, particularly in the US. He had done this job as religiously as he carried the CDs which proclaimed the state's virtues.

In Detroit, he conducted road shows, coaxed companies, preached to the Indians, and cajoled investors to come to the state. Bangalore, which had stirred itself from sleep a few years before he took the reins, became a bustling technopolis during his tenure. But now Kulkarni had to move on.

Detroit was a good place to network. The chief minister's presence had drawn a number of influential Kannadigas to the city. Krishna cancelled his trip at the last moment, leaving them all to Kulkarni. He was also supposed to travel to Washington with the chief minister for a couple of other meetings, but he preferred to stay put in Detroit. On his first day in the city, Krishna did a live video presentation from Bangalore, with Kulkarni at the backstage manoeuvring the PowerPoint slides. Kulkarni had one more presentation, and then a few days to kill.

For four years Kulkarni had been the champion of outsourcing and had carried this mantra to all countries in the world. He was particularly pleased with Bangalore's progress in the business process outsourcing (BPO) wave. Also, he was aware of the BPO opportunities as well as anyone in the world. Kulkarni started thinking about starting a BPO company, but did not make up his mind quickly.

One of the people he met at the conference was Madhukar Angur, a professor at the University of Michigan. Angur was an engineer-turned-management professor who was interested in quantitative methods in business. He had done research on analytics, the science of applying intelligence to business data. Angur had been a consultant to some companies on business analytics. He had also begun to dabble in business and was itching to start a company of his own.

Incidentally, Angur was also Kulkarni's classmate in school. Angur told him about his ideas of a company using his work in analytics. Kulkarni told him about his own idea of a BPO company. So they decided to merge the two ideas and start the company together.
Kulkarni took voluntary retirement in October and went on a vacation. Rumours were already rife in Bangalore about his plans of opening a BPO company. When Kulkarni made a formal announcement about his company in November, many people in Bangalore were incredulous. Not everyone in the city shared Kulkarni's passion for BPO. Thoroughbred IT professionals in particular viewed this sector with a certain degree of scepticism. For them BPO was a low-end business with too many contradictions and pressures. So what would a person of Kulkarni's calibre do in a BPO company?

Most BPO companies in Bangalore are still managing call centres. A typical call centre in the city looks deserted during the day. But it is teeming with activity at night, till about 7.00 in the morning. There are a few who love this lifestyle. They commute during off-peak hours and socialise in the evenings. They are mostly free souls just out of college, enjoying a comparatively high compensation for the moment. Yet this moment is transitory. This kind of a lifestyle is against biology and, thus, unsustainable. And that's why call centre managers are now grappling with a serious problem: high employee turnover.

What would a call centre professional do once the romance of nightlife wears away? This question can be asked in several other ways. How does a company, for instance, differentiate itself once BPO becomes a commodity? Or how does a company add value to its offering? It can graduate from running call centres to transaction processing, but it is still only a notch or two up the ladder. BPO companies now talk about business transformation outsourcing (BTO), but at present only few know how to get there, at least in India.

A few MNCs in the city have already begun to solve the problem. Accenture has a BPO team in Bangalore that does everything - from basic work like call centres and transaction processing to help desks, reporting and business planning. Some of the people are working on analytics.
The word 'analytics' has various meanings, but the essence of them all is this: it is the science of analysing data. Some call it data mining, some others call it business intelligence. Yet analytics has a component that simple data mining does not have. It adds perspective and draws in complex modelling to convert data into information, and information into knowledge. It is not an easy thing to do. Companies have written complex software to do data mining, but analytics demands inputs from various disciplines.

Accenture's analytics' team in Bangalore, for example, has people with expertise in statistics, econometrics, data warehousing and relational databases apart from those with knowledge of different domains. They do not sit in call centres or do transaction processing. They work with companies who have a large number of customers, like in the banking, retail or airline business. They look at their business data and provide critical inputs. The analytics team touches issues that are fundamental. Pankaj Vaish, Accenture India's BPO head, says: "We are trying to help companies retain and win customers and also redesign products."
Till now no Indian company has looked at BPO in this manner. But Kulkarni and Angur want to go there - and beyond.

Angur has the relaxed disposition and mild manners of an academic. Indeed, he had been researching, teaching and consulting on analytics for 14 years now. Yet the entrepreneurial streak in him is equally strong. He is constantly using his mobile phone, particularly in the evenings, talking to customers in the US. In the last 10 days, he and Kulkarni have spent four night shifts in their company, B2K, in Bangalore. "I am a marketer first and then an academic," says Angur.

He is particularly interested in using fuzzy logic to analyse business data. Conventional logic is precise. For instance, a particular object is either inside or outside a box. Fuzzy logic uses approximations. So the object can be partly inside or partly outside. Now let's suppose you want to use conventional logic to control the speed of a car. You would precisely define conditions like temperature, pressure and the thickness of snow on the road, and then formulate rules for the car to follow at specific conditions; reduce the speed to less than 45 km per hour if the temperature is less than zero degrees, the humidity more than 20% and the ice thickness 1 millimetre. Fuzzy logic does not follow precise rules like this. It will tell the car, to use the same example, to reduce the speed to less than 45 km per hour if the temperature is low, humidity high and the road icy. It is how human beings think. This may seem like insufficient information for a machine, but the amazing thing is that it works, at least in some situations. Fuzzy logic has been used to stabilise helicopters with a missing rotor blade.

Applying such theory to business applications is far from easy. Failure is common in business analytics (or business intelligence) projects. A Gartner report on business intelligence predicts that 50% of business intelligence projects will fail miserably. It also says that 50% of Global 2000 firms will use business intelligence inadequately and lose marketshare to those who use it better.

Madhukar Angur : From academics to marketing

Angur has tested some of his ideas in his consulting projects. A large US company had recently approached him to find out the reason for low sales of its new product. It believed that low advertising spending was the reason. Indeed sales were low in areas where the advertising spends were low. However, analytics showed that this view was not correct. Sales were low because repeat purchases were low everywhere. More analysis showed that the product had quality problems. Angur had applied machine intelligence techniques to analyse the company's business data. Insights such as these are beyond simple data mining.

All the 170 employees of B2K Corporation went through an analytical ability test in December. Angur selected 25 employees and has started teaching them the methods of business analytics. He has two immediate tasks in mind. One is to have a team of specialists in areas like statistics, mathematics, data warehousing and so on. The other is to raise the everybody's analytical abilities.

B2K recently merged with Virtual Source, a company where Lathika Pai, the daughter of one of Kulkarni's friends, was working as the chief operating officer (COO). Pai has now taken charge as the COO of B2K. The company also acquired the call centre business of Talisma Corporation. In the process, B2K got customers like Microsoft, Real Networks and Palm Computing.

Kulkarni is an enthusiastic proponent of high-value services. "It is not necessary for us to develop products," he says. "Adding value in services is equally important." At B2K, his main job is to ensure a differentiation and a billing rate premium by using analytics. Kulkarni himself is no stranger to the science. In an earlier stint at Crisil, he had led a team that used analytics to develop risk management models for mutual funds.

In an early project, B2K studied the product life-cycle of a customer. In any product life-cycle, there are early adopters, the early majority, late entrants and the laggards. The demographic profile of these people is valuable knowledge to the company, because it can then use it try and increase the number of early adopters (products command higher prices immediately after they are introduced). B2K provided this information using its proprietary models.

Only about 30 people work on night shifts in B2K. Kulkarni wants to keep this number to the minimum. Angur and Kulkarni think that business analytics would provide B2K with a differentiator when BPO becomes a commodity. Combined with other areas like machine intelligence and complexity science, analytics becomes a powerful tool that can command a premium. Soon, as companies like Accenture often do, B2K could judge its value in terms of revenue growth and not cost reduction.

And B2K, just in case you didn't know it, is an acronym for business to knowledge.