With data analytics, Aviso aims to better predict quarterly revenue by Andrew Nusca @FortuneMagazine April 30, 2014, 11:05 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons K.V. Rao has a small obsession with fixing how companies manage their finances.Six years ago, Rao founded with two partners the billing and commerce company Zuora, which is poised to make a public offering this year. Now, he wants to solve revenue — specifically, how companies predict it for the coming quarters.When Rao first looked into the practice, he was shocked at how low-tech it was. “I got frustrated,” he admits. “I was appalled. Looking at this I asked, ‘Is this what the state-of-the-art is?’ “Despite years of investment in enterprise information systems, CFOs across the United States were still missing revenue projections — “flying blind,” as Rao puts it, and relying on “armies of analysts and spreadsheets,” even at the Fortune 50 level. With the availability of new ways to assemble data from different sources and formidable computing power once reserved for supercomputers, Rao thought that tools could be developed to help executives better predict revenue. (Some $50 billion in market capitalization was lost last quarter due to revenue surprises, according to the investment research firm Zacks.)MORE: For crowdsourced security startup, a carrot and a hackSo he partnered with Andrew Abrahams, a former senior risk management executive at JPMorgan Chase who led the development of mathematical and computational models that the firm used for derivatives, credit activities, economic capital, and risk analysis. “Can you use machine learning and portfolio management techniques to do this?” Rao asks. “We’ve been working on this for two years. We wanted to do it smarter and better.”On Wednesday, Rao and Abrahams revealed the name of their company, Aviso. The pair also announced an $8 million Series A financing round led by Shasta Ventures and including First Round Capital, Cowboy Ventures, and Bloomberg Beta, along with backing from WebEx founder and CEO Subrah Iyar, Informix and Vantive founder and CEO Roger Sippl, Jive Software founding CEO Dave Hersh, and NetSuite CFO Ron Gill.“We were actually trying to take a little bit less,” Rao says. “We decided we needed roughly $6 million. But interest from senior executives — they wanted the association. It was less about the money and more about the validation.”Aviso has been working with several public companies — RingCentral RNG , Saba Software SABA , FireEye FEYE , Damballa, Replicon, and of course Zuora — to test its “Total Revenue Intelligence” software-as-a-service offering. The web app promises billions of computations, forecasting, scores and alerts and is priced on a subscription basis based on a company’s size and volume of data.MORE: From two employees to 220, in only six yearsAviso’s technology is as much about quantifying risk as it is predicting revenue, Rao says.“Today’s tools in the enterprise don’t really have the notion of risk,” he says. “There may be rules, but the best way to measure risk is using machine learning and sophisticated techniques. You can’t really do that in spreadsheets or database information systems that don’t have the analytical frameworks. You can’t do it in CRM or ERP systems — those reporting and dashboard tools don’t have the foundations either, just a pretty face. So that’s what we’re bringing to the table.”With two years of development behind the company, Rao says Aviso plans to use the new funds to reinforce its sales and marketing teams — and perhaps reassure CFOs that its software does not aim to replace them.“What we are doing is giving them more confidence to run their business better and not rely solely on gut and intuition,” Rao says. “The best companies do well because they have high-caliber people. But there are also the facts. ‘Oh, we overlooked something’ — that’s what data can do. We’re giving them data and they can layer their experience over it.”The market opportunity is massive, Rao insists, partly because the company’s greatest competition is the spreadsheet.“We anticipate that any investment bank worth its salt today must do a quantitative analysis,” Rao says. “I would say less than two percent do that today. Our vision is that five years from now, no major enterprise will do so without conducting one.” Using Aviso’s software, of course.