Applied Intelligence Solutions LLC tech startup of the month.

INITIAL LIGHTBULB

When Jeff Gilb took the reins of Boulder-based Parascript LLC, an international leader in pattern-recognition software, in 2000, he pushed to adapt the company's technology for new verticals. After a few years of internal incubation, the company spun off a startup in Applied Intelligence Solutions to provide "intelligent decision support" to large retailers, said AIS President and CEO Jim Dixon.

"We're a wholly owned subsidiary of Parascript," he noted. "AIS's charter is to take their technology and extend it into other markets."

AIS is an attempt to push the envelope of Parascript's technology. As Parascript emerged from one of the first joint ventures between Russian and U.S. companies, "We wanted to get back to the roots of the company, the old Russian Academy of Sciences days," Dixon said. "We wanted to challenge the R&D team."

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IN A NUTSHELL

Launched in 2004, AIS's first product was AllocationXpert. "It's software that can learn to make business decisions ... and help guide users down the path of making best-practice decisions," explained Dixon. "We've got the ability to have software learn from people like allocators, look at the kind of data they're presented with, and then monitor their behavior. Said differently, the software can learn the decision-making practices of top performers."

New this year is MarkdownXpert, a similar product designed to let pricing analysts sidestep "a bloodbath markdown at the end of a season," said Dixon. "Instead, they can do it in a way that makes sense to their business."

Ultimately, both products offer a unique form of knowledge management in high-turnover areas of retail personnel. Dixon said allocators are typically trained and promoted just after they master the intricacies of the job. "The business benefit is pretty obvious," Dixon said. "You can train the engine to work as well as the top 10 percent of the people. That 80/20, 90/10 rule--the Pareto Principle--lives everyplace and it certainly lives in retail."

Dixon declined to reveal the number of AIS employees or the exact pricing of its products, but noted that the pricing is significantly lower than the recent market norm, which is often "well north of a million dollars per implementation."

THE MARKET

Noting that Sears Roebuck uses AllocationXpert, Dixon said AIS is focused on retailers with around $100 million or more in annual sales. This market typically spends about 1 to 2 percent of its revenue on technology, he added.

Michael Barrett, retail research director at Boston-based AMR Research, was bullish on the potential of the intelligent decision support space.

"The market is continuing to expand. In the last year, we've seen renewed interest because the fear of the black-box nature of the science has dissipated," Barrett said, referring to the math-heavy nature of the software. In retail, Barrett said, AIS is "not fighting against the majority of the players" who aim most of their software products at grocers.

FINANCING

To date, Parascript has been AIS's sole source of funding, but Dixon would not discount the possibility of pursuing outside capital. "Nothing chews through cash like growth," he said.

WHERE: BOULDER WWW.AISLLC.COM FOUNDED: 2004 (SPUN OFF FROM BOULDER'S PARASCRIPT)