The SAS Institute is known for business intelligence software used by the biggest corporations around the world. It isn’t known for making bad investments.
But CEO Jim Goodnight, in Toronto this week for SAS Canada’s annual sales kick-off, admits that once in a while he lays an egg.
Like the gaming company SAS started, Southpeak Interactive, which it sold in 2000.
“It seemed like a good idea of the time,” he said in a phone interview Wednesday. According to one report, SAS started the company in 1996 after staff created a software engine it was thought could be used in the entertainment market.
Since that folly – and Goodnight didn’t detail how bad the investment went – SAS has hasn’t suffered.
Although a privately held company that doesn’t detail its finances – in 2012 it said its annual revenue was US$2.87 billion — SAS has stood among the top analytics vendors in most industry analyst lists.
Major competitors measured by revenue are Microsoft, IBM, SAP and Oracle.
Goodnight said most Canadian banks, “quite a few” telecommunications groups and insurance companies are customers “so we do quite well here.”
SAS Canada has a staff of 330.
But the point about the gaming company is the relevance to SAS products may return soon.
“Even today we’re talking to some of the new kids that have looked at our Visual Analytics product, and they want to game-ify it, put more game features into it,’ he said. “I think a lot of the new generation of kids we’re probably going to have to try to put some sort of game effects into our software to make it more appealing to them. They always want to be able to have a communications screen open in anything they’re doing so they can pass information back and forth and ask each other how things are done That’s one of the things we’ve learned from some of the game stuff out there now – you’ve got to have that communications space” in an application.
Goodnight, one of the founders of the company, comes to Canada three or four times a year. “I think we’re very strong in Canada,” he said, with sales growth “in double digits in the last couple of years.”
One vertical he would like to get into more is the energy sector.
SAS has an Office Analytics for Midsize Business suite which leverages Microsoft Office for modest-sized companies, but its main audience are enterprises.
When Goodnight talks about what his customers want, he says banks are looking for risk computation and asset liability management to forecast when mortgages are coming due; customer intelligence for digital marketing, clinical data analysis for pharmaceutical companies; warranty analysis for manufacturers and product forecasting for retailers.
He goes on about taking advantage of recent Intel Corp. server processors with 12 cores that can run applications in parallel. Chain servers together and SAS applications can use hundreds of cores to crunch numbers, he says.
Of course, organizations are hungry for number-crunching, which is why there are so many business intelligence/analytics companies on the market – Goodnight says SAS tracks 400 of them.
The size of the industry seems to baffle him, despite the constant consolidation of software companies: “A lot of them I haven’t even heard of,” he says. “It’s amazing — a little company we’ve never heard of pops up and they get $2 billion dollars.”
The acknowledged ease of creating software (compared to hardware) does mean, however, that SAS has to speed up its development cycles to release new versions of most of its software every six months.
The next version of Visual Analytics, one of SAS’s biggest sellers, is scheduled for March.
A new app coming is Visual Statistics, an add-on to Visual Analytics, which will allow users to do complex statistical computations.
Some competitors – IBM and Microsoft, for example – bundle analytics or BI pieces in with other applications customers buy, essentially giving them away for free. Asked about that, Goodnight was dismissive: “Usually there’s a reason why someone gives away stuff – it’s not very good.”
About the only criticism industry analysts have with SAS software is the price. In a recent report Forrester Research, for example, said customers its surveys complain SAS pricing isn’t transparent.
“I think our pricing is wonderful,” Goodnight replied. “We have to be competitive in our pricing. It has worked well for us over the years. We’ve had 38 years of revenue growth and profitability, so we’re continuing that. The fact is we put 25 per cent of our revenue back into R&D. That’s more than any other software company does. We’re really dedicated to improving our products. And yes that may run the price up a little bit, but a lot of our customers believe in us.”
Asked where organizations misuse analytics, he said that “if the company has large amounts of data and they’re not putting it to use to forecast demand, or what customers are interested in new products, or be able to realize customers are beginning to slip on their payments … Data is an asset and companies need to understand that.”
As for possibly going off in the wrong direction, Goodnight says that will continue at SAS, where staff are encouraged to experiment.
But, he added, they are also warned not to dig a hole too deep. “Some companies get so enamoured with an idea they’re working on the just continue down that path until it’s too late and they can’t stop,” he said.
So don’t be surprised when something like a game appears in a SAS app soon.
Sponsor: IBM Canada Ltd
Increasing Profitability with Analytics in Midsize Companies
Complete with several mini-case studies, this Nucleus Research Note dispels the misperceptions surrounding Analytics, revealing how small and midsize companies have cost-effectively implemented and deployed Analytics solutions and gained benefits.