Bullet-point brief: SAS and business intelligence

Computer programming hasn’t changed much in the last 40 years, but we are only at the beginning of a revolution in the use of business analysis software, says Jim Goodnight, chief executive officer of Cary, N.C.- based SAS Institute Inc., which he co-founded in 1976.

At SAS’s Canadian headquarters in Toronto, Goodnight briefed ComputerWorld Canada Tuesday on how business intelligence can help banks and retailers, what Teradata Corp. brings to the table, the renaissance of dumb terminals, the sub-prime mortgage crisis and why SAS employees don’t have to work in cubicles.

*We are in the “early stages” right now of the next “revolution” in computing, Goodnight said. Banks have “more data than they know what to do with” but do not always have up-to-date records of all of a client’s dealings, whether that’s credit card, chequing account or insurance. “Companies are turning to these vast amounts of data that they have and using analytics to help forecast the future, predict customer behaviour,” he said. “We’ve done some really interesting work in the retail space.”

Using software that analyzes databases, companies with hundreds of stores can select the best price for each item the next day, he said.

“If you’ve got 500 stores in Canada and you price each item each day, how do you do that when you’ve got 200,000 or 300,000 different items at each store? These are some very large research problems that we’re dealing with and the retailers are now all realizing that they need to turn more to analytics to help them with the bottom line.”

*SAS continues to work with data warehouse vendor Teradata Corp., a former NCR company. Customers can now run SAS software on Teradata warehouses, and Goodnight said the next combined offering will probably be available in 18 months. Using SAS and Teradata, users can send SQL queries to individual nodes on a grid.

“We continue to work with Teradata trying to get them to loosen up on their user-defined functions or UDFs as we call them, this allows us to put our code down on their compute nodes,” Goodnight said. “Its target is distributed computing. You have a whole network of computers that you can be using at the same time. The thing that we like about Teradata more than anything else is that each of the nodes on the grid owns its own part of the database. So if you have 16 processors then your database is broken up — each sixteenth owned by each processor. So when we process data we can send some of our own computational work down to individual nodes and it can be done on the 16th of the database each time and then the results merge back together. “

*After 40 years in the IT industry, Goodnight says programming really hasn’t changed all that much, though virtualization helps companies save energy.

“Not a whole lot has changed since I first started as a programmer back in the late 60s. Programming is still pretty much the same. It’s really funny. When the first IBM displays came out — the 3270s — we busily worked on making sure our software ran interactively. The 3270s we called dumb terminals. It’s funny how we’ve come almost full circle, we’ve come from that to the desktop computing and now we’re shifting back to the dumb terminal approach, but now we’re using laptops that display a browser.”

Virtualization lets companies get more users on the same hardware, which lends itself to SAS’s efforts to be a greener company. For one thing, the Toronto headquarters uses rainwater collected at the rooftop for its toilets and urinals, a SAS Canada spokesperson said.

“We’re trying to turn towards the green shift at SAS,” Goodnight said. “We look at the cost of the green computing centre. Our biggest usage of electricity is to power all the servers and keep them cool and virtualization helps reduce the demand on the hardware.”

**Two of SAS’s products for financial services are Credit Scoring and Credit Risk Management. SAS saw more interest in the credit risk management product after the U.S. housing crisis started, though Goodnight attributes the high level of foreclosures and defaults to faulty rating systems.

“The underlying problem was these structured investment vehicles, these groups of mortgage-backed securities, were mis-rated,” Goodnight said. “Sub-prime means not credit worthy. How can you take a bundle of these bad loans and put them together and all of a sudden end up with Triple A paper?” He added companies often research only two to three years of a borrower’s history. “Nobody dug down below the surface to really understand the nature of these securities.”

**SAS places a huge emphasis on employee retention, with on-site day care centres, and giving workers their own offices. Goodnight said the company’s lower turnover rate means it spends less money on recruiting and training, and more money on perks.

“It’s my view that a company’s going to spend the same amount of money whether they have this stuff or not because if they don’t have it they’ll have to replace employees,” he said, adding if you give workers their own offices, then can concentrate better on their work. “We’re trying to minimize the cubicles, maximize the use of private offices because people need their privacy to think, especially when they’re writing or working on code or (chuckling) watching a soap opera on TV, whatever they do in their private offices.”

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Jim Love, Chief Content Officer, IT World Canada

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