Numerator to sell Factorial this month

PUNE, INDIA: Numerator LLC, a supplier of cost reducing software, claims to have approached the formidable problem of PDF conversion and beat it, twice. It is all bullish to take a lead in the multi-billion dollar market for PDF and ASCII conversion.

It is about to announce a global launch today and Principal, CEO for Numerator, Steve Lander is all upbeat to have pulled out this source code in a unique model for application by others from the company’s hat.

“Each of our PDF conversion solutions, Factorial and FrogForm, converts broad suites of PDFs to XLS with high accuracy. Factorial’s code will be sold to spur anticipated growth in FrogForm, and will bring data integrity and cost control to its new owner. We expect interest to be abundant,” he explains

“It’s rare for a firm to sell its smarts to a would-be competitor but this must be seen in a broader context.” Lander continues. “We’ll take the lead developing the multi billion dollar market for PDF and ASCII conversion. The new owner of Factorial – be it a business process outsourcer, an IT firm or a multinational – may join us in building awareness that there are more cost-effective methods to obtain data than to rekey and use a grab bag of technologies.”

In an exclusive chat with CIOL, Lander shared that he expects due diligence of Factorial will be performed by more than 30 per cent of Indian BPOs converting over 250,000 PDFs per year.

“For them, due diligence is a virtually-free exercise to see how the pervasive problem of PDF / ASCII conversion can be better solved. Other parties (OCRs, Multinationals, software providers) are cited considering informal interest from several for due diligence during June 2009.”

As to the possibilities of this platform, he answered that at month-end, he expects a dozen major firms to bid for Factorial. “And within three months, the platform’s new owner will have successfully altered the competitive landscape.”

Commenting on the strategic fit of this sale with the firm’s own strategy, he said, “Factorial’s source code is most useful, well built and valuable. We don’t need it, as we own another PDF/ASCII solution that is an even better candidate for our future investment.”

As to the potential revenues in about one year of ownership, he cites an internal analysis that bears out buying Factorial has potential to widen BPOs profit margins from less than five per cent to over 40 per cent.

“And that purchase should offer less than two years’ payback which is highly attractive for a major issue solved. Secondary benefits are faster throughput, higher accuracy and more aggressive pricing in BPO space. The last benefit (aggressive pricing) would be for larger volumes and (all-importantly) much desired economies of scale.”

Numerator is announcing today that its Factorial solution will be sold in July 2009. Factorial converts PDF or ASCII documents to XLS with high first pass accuracy and interest is growing in data extraction tools as demand increases for cost savings, says a company statement.

Talking about the relevance part, Lander explains that Factorial should attract five types of bidders.

“BPOs, because the business process outsourcing (BPO) industry is growing without profit. Annual revenues and growth exceed $100b and 15 per cent respectively. But participants suffer from industry fragmentation and labor cost inflation. Access to data is at the core of a BPO; improvements in IT magnify its earnings.”

He says another potential bidder would be investors. “Google Book Search is pushing new data loads on to the consumer; data extraction is next. Demand for, and valuation of, data extraction software should grow as the global downturn intensifies,” he adds.

He also cited IT firms, MNCs and OCRs (Optical Character Recognition firms) as another interest league.

“Rolling out a high volume, transaction-based PDF extraction service to BPOs, OCRs and multinationals can be done at low cost. Data extraction tools are ideal for software firms building relevance to high-volume customers. Providers of optical character recognition (OCR) require extension into BPO business (paper through to database). Clever data extraction tools pave the way for this extension.”

“Factorial’s application is available through a web service, and can be trialled now. Its source code can be studied anytime until it is sold. Factorial is the first chance to purchase game changing PDF extraction code since Xinhua Finance purchased Praedea in mid 2006,” he adds.

Since 2003, Numerator has been operationally funded, privately owned and based in New York. Both its solutions – FrogForm for conversion; nuFed for bank forecasts – are owned and operated by Numerator, and address large and expensive issues for major firms.

Factorial is also owned and operated by Numerator LLC. The code base is tightly integrated and generously commented (4,500 of 15,000 lines).

It converts PDF or ASCII documents, across a broad range of structures and languages. It identifies extracts and renders tables to XLS or HTML. It employs standard Microsoft components; maintains a tiny footprint. It converts a 1.5MB input file each second, on a standard PC. And it can selectively extract tables based on keyword search,” adds the company.