SAS pushes into mainstream BI

For many years, Jim Goodnight has liked to keep some distance between his company and others in the business intelligence (BI) software sector.

The fact that SAS is privately held (Goodnight owns 90% plus of the company) has always been one factor. But the true difference, historically, has been product focus: SAS has built its renown in software through deep analysis capabilities; companies such as Cognos and Business Objects are, according to Goodnight, providing "just very basic query and reporting tools." He unsuccessfully struggles to hide his disdain: "That business intelligence is certainly one of the further stretches of the imagination."

Those tools may help turn a query into SQL, he says, fish data out of the database and bring back the results. "Somehow they have been able to label that as BI and tell people that is what they need," says Goodnight.

In contrast, he argues, SAS products are designed for conducting "incredible amounts of analytics", often across very large volumes of data.

"We'll help you develop models for forecasting, find which customer the organisation might be about to lose or which ones you can cross-sell or upsell to, which customers you want to lend money to, which ones to take a credit card purchase from and which ones to say no to because it looks like they are committing a fraud," says Goodnight. "We also [think] modelling of customer behaviour should be considered part of BI. These other companies are more about looking backwards, and slicing and dicing the cube [of historical data]."

That feeling of antipathy runs both ways. Ask executives at Cognos or Business Objects or Hyperion or MicroStrategy if SAS is a strong competitor and the putdown is consistent. "We never see SAS in the market. They are more about statistical analysis," say SAS's rivals, a reference to the 29-year-old North Carolina-based company's roots.

Now, though, as if the current war of words was not enough, SAS has chosen 2005 as the year it will aggressively expand into the home territory of the query and reporting tools vendors.

In early April, the company announced it has started shipping an enhanced version of the SAS Enterprise BI Server. This includes reporting, query and analysis, OLAP, integrated analytics, visualisation and Microsoft Office integration – all built around a consistent metadata base. In particular, the BI Server will bundle the SAS OLAP Server and new OLAP clients at no extra cost, making SAS the "first and only" BI provider to deliver OLAP storage packaged with a BI tool offering.

"This is SAS's foray into mainstream business intelligence," says Cindi Howson, president of ASK, a BI consultancy. SAS has always impressed analysts. But they have historically categorised the company primarily as a BI platform vendor. It is only with the recent product shipment, and especially its new Web Report Studio product for query and reporting, that IT advisor Gartner has even considered positioning SAS in the ‘Magic Quadrant' it produces to map put the competitive landscape of the enterprise BI suite arena.

But SAS will be there soon. "We are going to be extremely head-to-head with the likes of Cognos with the new release of our web reporting software," says Goodnight. "Ask them this time next year about whether they still ‘don't see us in the marketplace' and see what they say. We only got into the [query and reporting] space last January and we'll easily do $100 million this year."

That will still only represent a thin slice of the company's overall revenues, which grew by a solid 15% to $1.53 billion in 2004 (although the fact that 54% of revenues come from outside the Americas region meant that figures were inflated by the weakening of the dollar against other currencies over the year).

Throughout 2004, several trends moved positively in SAS's direction, especially the uptake of analytic applications in areas such as customer management, fraud detection, money laundering, compliance and supply chain optimisation. Specifically, its risk management software revenues increased 65% during the year and its customer analytics business grew by a massive 70%.

But for Goodnight, SAS is still more about BI tools than applications. "We are still 80% tools and will always have a large percentage of tools revenues because we believe in maintaining and extending and empowering our platform." Its latest iteration of the SAS9 platform includes support for 64-bit computing and multithreading to enable customers to handle ever-larger analyses.

The company has also seen a major uplift in demand for data management technologies. A year ago it added new software for data extraction, transformation and loading (ETL). And, based on its June 2000 acquisition of a specialist in data quality, DataFlux, it has seen a rise of about 50% in revenues from what previously was a stagnant and niche segment of the business.

"Data quality has become a very important thing," says Goodnight – in data warehousing, in money laundering, in compliance. "If you have six different spellings of a fraudster's or money launderer's name in your database, you need some help rationalising that down to one person," he says.

Goodnight puts that ability to take advantage of emerging areas of demand down to the company's large R&D spend. Because it is privately held, he can pump 26% of revenues into R&D without shareholders wincing.

And as the company approaches its 30th birthday, he thinks the only people who will be wincing are competitors who have been blind to SAS's presence on their radar screens.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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