Building a Smarter Planet. A Smarter Planet Blog.

Sometimes, when Volodymyr Pigrukh, CEO of Profitero, wants to grab the attention of a retailer he sees as a potential customer, he shows them just how well his pricing analysis software works with a shocking demonstration. He runs an analysis of the retailer’s prices compared to the most aggressive of its competitors, grabs a screen shot of the comparison and sends it to the company’s executives via e-mail. Those retailers whose prices stack up poorly against the competition understand viscerally the value that Profitero’s software can bring them. “I hope nobody got fired in the process,” he says.

Profitero has only 13 employees–divided between Ireland and Belarus–but that didn’t stop the one-year-old startup from winning the IBM Entrepreneur of the Year award last night in San Francisco. The company bested eight other young outfits from around the world who competed in the finals of the annual IBM SmartCamp competition–a program targeting companies whose products and services align with the Smarter Planet strategy. The finalists were the winners of nine regional contests held in Barcelona, New York, Austin, Shanghai, Bangalore, London, Tel Aviv, Rio de Janeiro and Istanbul.

Almost all of the finalists offer analytics software or services–demonstrating that there’s a role for startups in the huge and fast growing global analytics software market.

Profitero got its start after Kanstantsin Chernysh, later one one of the co-founders, ran into difficulty running a handful of e-commerce Web sites he owned in Belarus. Because his sites addressed global markets, he was essentially competing with every other online retailer in the world who carried the same products, so he had to be price competitive with them. But, how could he find out efficiently what so many others were charging? To solve this problem, Chernysh wrote a software program that roamed the Web in search of comparative pricing information and presented the results in an easy to interpret interface. Because Chernysh owned several Web sites, he designed the software from the get-go to manage a lot of data from a lot of sites.

Meanwhile, Pirgukh and Dmitry Vysotski, the other co-founder, were working for multinational high-tech firms in Ireland. Chernysh knew Vysotski from childhood.  and approached him about turning the prototype into a product. A short time later, the three decided to launch a company.

Early on, they planned on targeting small retailers. They figured that the giants wouldn’t want to deal with a startup. But they quickly found that large retailers had large problems with online pricing–and they were happy to get help from anybody who could provide it. Profitero has landed impressive clients including Tesco, the UK retailing giant, and Auchan, a large supermarket chain in France. They also have a partnership with A.C. Nielsen, the global information measurement company.

Profitero sells a cloud-based service for retailers and consumer packaged goods manufacturers that gathers pricing from more than 2,800 online retailers. Customers use insights from the the service for pricing strategy, forecasting, ongoing price management, merchandising planning and product promotions. One of Profitero’s advantages is their use of natural language processing to track not just brand name merchandize but private label items as well.

Ultimately, Profitero’s leaders plan on developing a consumer service that helps people shop for their best prices on the Web.

It’s a company whose data makes retailers uncomfortable, but is too valuable to ignore.