The SAS Institute global analyst summit Inside Intelligence 2010 was held in Steamboat Springs, Colorado where industry analysts from across the world gathered together. Everyone in the technology industry knows SAS Institute as it provides a broad range of analytic and data technology infrastructure to business and industry solutions. I was invited to this industry event to assess SAS Institute and its technologies and solutions as our firm has not historically covered SAS in any great depth of analysis or recommendations. This will change based on this opportunity for an in-depth assessment and interactions with its customers.
The event was kicked off by Dr. Jim Goodknight an analytics industry leader, founder and CEO of SAS, and CMO Jim Davis both of whom provided insights into the state of its business and its achievements in 2009. It was interesting, and a reminder that SAS not only was rated by Fortune magazine the #1 in place to work in 2009 but that they earn more than $2 billion in revenue and recorded a growth rate of two percent and achieved its 34th year of profitability.
SAS is truly global company with more revenue generated outside North America than here. It has a strong history of business in the financial services industry where they have 42% of revenue from that industry with government and services industry following with 15 percent and 11 percent respectively. SAS perfected the business model of licensing its software decades ago through a leasing approach and today 70 percent of its revenue is recurring. Appropriately, SAS focuses on measuring themselves from a customer and product satisfaction perspective but also from loyalty and usage. The company also has made its software available via a multitude of licensing approaches and its software is available through a SaaS model but also from value-based, grid, user based and many others. It also has leveraged partnering relationships with Accenture and Teradata to drive a significant volume of sizable transactions. Its recent strategic partnership with Accenture recently announced is significant in that it addresses IBM’s recent emphasis on analytics software and consulting services. SAS continues to grow outside its traditional customer base and in 2009 added more than 1,350 new customers ranging from Clorox to Lego. This growth reflects SAS’s focus on analytics and data issues across the enterprise and especially in industries like government, financial services, retail and manufacturing. Now SAS needs to further focus its marketing and sales efforts into line of business areas like sales, operations, contact center, finance and others who in most cases are not aware of its solutions.
SAS focused on what it calls Business Analytics, a framework of data integration, analytics, reporting and business solutions across vertical industries designed to solve specific business problems and act on opportunities. This reflects the attention SAS has placed on the science of analytics for some time and the skills it has developed in optimization, modeling, forecasting and statistics, to which it has over the last decade added improvements in the basic areas of reporting that is part of business intelligence (BI) aspects of query, analysis, alerts to dashboards and scorecards. In most organizations the use of SAS for more simple needs of BI has not been examined and is a large growth opportunity for SAS where in most cases they are brought to the table for evaluation. Now SAS has a broad reaching product portfolio of hundreds of products and is quite daunting to analyze due to its breadth and depth of its technology offerings. The SAS technology supports close to 30 languages with its analytics foundation of its core SAS 9.2 analytic infrastructure providing a platform for hundreds of tools and applications. SAS is not absent of challenges with compatibility of technologies across platforms like use of Adobe Flash on Apple based platforms but they have one of the largest research and technology development teams that I have seen grow and shape to its needs by its CTO, Keith Collins. While SAS has made it easier to adopt its technology through licensing and delivery options they have invested into partnering for business process consulting with companies like Accenture. SAS also realizes that they need to be more pragmatic in advancing its brand and perception in the market to solve the simplest of business needs. They have launched a new advertising campaign called ‘What if you could … ?” that provides perspective on what SAS can help an organizations accomplish using analytics. This level of advertising across the industry will set a new standard for how other technology vendors will need to elevate its position in the market.
At the event, SAS outlined a broad range of advances it is making in its technology and tools for analytics, BI, data integration and in-database analytics to address issues with its solutions for risk, performance management, customer relationships, supply chain and other industry areas. For 2010, one of the new offerings is a predictive modeler that can be used to model and evaluate data within Microsoft Excel but also share with more sophisticated analysts using SAS Enterprise Miner. This technology helps bridge the business analyst use of spreadsheets and BI with heavier duty analytics. SAS is no stranger to the BI world with a set of BI products including Enterprise BI Server, BI Dashboard, Enterprise Guide, Information Map Studio, Web Report Studio and Information Delivery Portal. It also supports midsized organizations with an SMB offering called Office Analytics. SAS is in many cases not considered a simple and easy to use provider of BI technologies which is a fallacy that is mostly set by its competitors than the reality.
SAS now offers a new data management platform that it leverages from the development of its wholly owned data integration and data quality technology company called Dataflux. This new set of releases brings to market a series of new technologies that address a range of data integration, data quality, data federation and data governance needs. In fact our benchmark research in data governance found a growing need for management of data and use of technology to help improve consistency and quality of data. SAS has also been expanding its interoperability and integration capabilities with a range of the database providers including Greenplum and HP Neoview in 2010 but also what they call Scoring Accelerators that will also extend to Aster Data, Netezza and Teradata. At the core the Base SAS is supported within in-database analytics with Oracle, IBM and Teradata and expanding to Aster Data, HP Neoview and Netezza. All of this technology development helps further its work to address high performance analytic computing that can interoperate across an enterprise set of providers.
In the realm of customer and marketing analytics, SAS is furthering its marketing optimizations work across campaign and cross channel interaction analysis areas they call Customer Intelligence. In most industry areas of review the value and reality of what SAS can provide in applying analytics to the business to consumer market area is not understood. Much of what was discussed here is in the area of social media analytics; in April SAS will announce a range of tools and systems to address this evolving consumer collaboration channel. This focus on social media analytics will bring SAS to the forefront of social media industry where they can apply its text analytics capabilities to understand the measurable impact of consumers and customers interacting on the Internet. SAS is also advancing performance management for the office of finance and human resources departments with new releases that they call SAS Financial Intelligence which enables what I call financial performance management and SAS Human Capital Intelligence in the area I call workforce performance management. SAS has solutions in this area but has not been aggressive in its competitive positioning and dedicated selling. SAS has also been advancing into what we define as IT performance management and has taken an approach that simplifies how IT can assess the use and performance of its IT resources to the capacity and potential of them. These offerings across line-of-business areas address issues business desperately need to examine and SAS clearly has the potential to gain further market share growth among its existing customers and with new ones.
SAS also continues to expand its role in key vertical industries including financial services, retail and manufacturing. In financial services it offers a range of products addressing enterprise risk and fraud that have become even more essential from the recent economic calamities we all witnessed in 2009. My colleague has written about important issues in enterprise risk management (See: “Why Enterprise Risk Management Is Important“) that SAS has been able to capitalize on especially in financial services. SAS is not always considered in the variety of financial, operations and IT areas of governance, risk and compliance (GRC) but clearly they have addressed many of these needs with others that can be met through applying its analytics technologies. The strong analytic foundation of these solutions has helped SAS outpace most of the major technology vendors approaches to these difficult and challenging data and analytics issues. In the retail industry, SAS has continued to advance its industry solutions to meet a range of optimization needs across merchandising, pricing, packaging and even space management. SAS has addressed the difficult business issues with turbulent and changing consumer environment that even JDA and Oracle have yet to take on with offerings on its common analytic platform and toolset. In manufacturing SAS has found many areas where it can differentiate itself through solutions for examining suspect claims or fraudulent submissions to warranty and service parts optimization. But SAS has also been focused on perfecting its demand forecasting offering insights to balancing inventory and demand cycles. These vertical industry efforts have been a large investment for SAS that forms part of the basis of its leadership in the analytics industry.
While SAS did not have the time to review every solution in its portfolio, they have been advancing the use of its analytics and performance management into what is called sustainability management (See:” Sustainability Management for Business and IT”) that has begun to be a market where finance, operations and IT can find a smarter and more cost effective way to manage and operate the business. In this segment SAS is joined by other providers like Actuate, IBM and SAP who also have been advancing its technology through applications for business. This could be one of those markets that while being slow to start will pick and grow dramatically in the next couple of years.
The question is now what SAS can do to grow its business into new markets or get organizations that are not currently part of the 70 percent of its recurring business to evaluate its products directly or through its growing channel of partnerships. SAS has continued to find innovative ways to expand the use of analytics but clearly has not solved or yet have technology for everything. There are plenty of areas they can expand into from getting more integrated into multi-channel contact centers with speech analytics as providers like Aurix, CallMiner, Nexidia and Utopy who can bring a better understanding of the actual voice in what my colleague challenges organizations to think about(See: “Does Your Customer Voice Matter”). Utilizing this channel of interaction was found to be growing in our benchmark research on agent performance management where operating in real time or post analysis on the agent to customer interactions can help drive improvements to customer satisfaction. In addition applying analytics across events that operate at the business and network level are part of what I call Operational Intelligence (See: “Operational Intelligence Requires Complex Event Processing (CEP)”). This technology approach enables organizations to analyze the realm of events across an enterprise and Internet and correlate them with other analytics to determine if action must be taken more rapidly than waiting for the close of a days or weeks business. In fact our benchmark research on Operational Intelligence and CEP found that the integration and utilization of events and data is a top priority in organizations for 2010 and beyond. These two examples are not to point out gaps of SAS but to highlight the expansion growth and opportunity for SAS that could easily help them grow from being a leader in the industry with two plus billion dollar in revenue to be even significantly larger.
SAS does not operate without fierce competition from the likes of IBM, Oracle, SAP and many others who they also interoperate with from a platform and data perspective. These three large technology vendors have also been investing significantly into analytics and business intelligence technologies to introduce new applications for line of business and vertical industry efforts. They have done this mostly through acquisition to catch up and gain customer and market share but also a technology set they can expand and grow within its own portfolio. SAS challenge is to continue to insert themselves into these strategic CIO conversations while simultaneously advancing its solutions and relationships into the line of business who has been regaining ground and ownership of its analytic needs for managing and operating business processes. Each line of business area has dozens of smaller solution providers that are taking advantage of this transition which has helped introduced new innovations in capability and simplicity. This year, 2010, clearly begins an interesting turn for the industry and for SAS who has witnessed just about all the ups and downs of the software industry in 34 years, and now will help shape the industry focus on analytics. I will beginning a round of new research coverage on SAS across business and technology areas as the due diligence at this event from company, products and customers was very insightful to not just its success but commitment to the industry. If you want to read more of the real time detailed analysis that I did during the SAS Inside Intelligence, just look at my tweets on Twitter at @marksmithvr on the #sassb hashtag.
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