SAS Institute treads  lightly towards SMB success

Software market surveys place SAS Institute among the top-five vendors of business intelligence tools. The Cary, N.C.-based company raked in more than $679 million in revenues last year pulling in at second place only to Business Object, according to a study by consultancy firm IDC.

Sometime last year, SAS also began moving its products through the reseller channel in the United States. At the SAS Premier Business Leadership Series conference, held recently in Las Vegas, CEO Jim Goodnight and Jim Davis, senior vice-president and chief marketing officer, discussed with ITBusiness.ca their company’s SMB strategy as well as how they view market consolidation and the increasing presence of Microsoft in their arena.

ITBusiness.ca: It’s been a year since SAS entered the reseller market in the U.S. What are you expectations from this effort? So far, what lessons have you learned in your foray into the SMB space?

Jim Goodnight: We’re counting on our efforts to bring in about 15 per cent of our revenues within the next six years. Well I don’t think we’ve been in it long enough to have picked up any lessons.

Jim Davis: I think we’re continuing to learn a lot of what it takes to deal with the reseller market.

Everything we’ve done up until now has been with the direct channel. And, if we had our way, we’d like to do everything thru the direct channel because you can build long lasting relationships with the customers.

However, with the growth of the SMB space you have two choices: One is to go out and hire 2,001 new sales people – and that has a high cost associated with it; and the other is to attempt to leverage an already existing reseller network.

ITB: What challenges do you foresee in the SMB space?

JD: The challenge is one of what can the reseller handle in terms of complexity of applications and packages. I think the BI tools that are doing well in the area are the smaller packages.

Our Analytics Pro and visualization application have done very well. But, when you start moving up to our really strong value proposition and complex applications such as our supply chain management tools, I think these don’t lend themselves to the SMB market.

(Our SMB strategy) is something we’ll continue to fine tune. But we continue our work with the direct channel. You can’t under estimate the relationship aspect, this is very important with us. You can’t bring in the resellers in there because you’ll end up with a middleman.

ITB: Do you see the development of new products to serve the SMB sector?

JD: We’re wide open to it. It all comes down to what’s it gonna cost. We have a reseller council that gives us feedback on how our products are being received.

We’re finding that some organizations want forecasting tools, others want modeling applications. But we don’t want to provide the resellers with everything we’ve got. We don’t want to take a shotgun approach.

SAS is a strong brand and we don’t want to risk the value of that brand. We’ll continue with presenting customers with the products they need. But you want to package a product so it’s reputable and when it’s reputable it’s profitable.

ITB: You’ve recently unveiled products for the marketing industry, how is this effort coming along?

JG: A lot of companies are running huge and multiple marketing campaigns and they can’t get a handle on all these campaigns happening simultaneously. They want transparency of activity on matters such as the total cost and performance of ad campaigns, print ads, and online campaigns.

Our marketing tools come under customer intelligence products and we expect to see about 50 per cent growth within the next three years in this area.

ITB: How do you see consolidation in the BI space such as Oracle’s acquisition of Hyperion affecting SAS?

JG: I’ve never really thought of Hyperion as much of a BI vendor…They bought a product called Brio years back but that was pretty much a dog.

ITB: Do you see SAS collaborating with other BI vendors?

JG: We try to collaborate with anybody that we can collaborate with. We collaborate with the integrators…a lot of the hardware vendors.

ITB: With about $480 million in revenues, Microsoft currently ranks number five among BI vendors. Does the entrance of Microsoft into the BI market pose any threat to SAS?

JG: We continue to see Microsoft as it has always been. What innovative things has Microsoft ever done? Everything they’ve done has been copied from Apple. They didn’t invent spreadsheets, they didn’t invent word processing…I think they will be mentioned as a BI vendor.

JD: I think pure BI players such Cognos might be concerned. But SAS is not a pure BI player when you start taking about things such as fraud detection and optimization.

In fact, if Microsoft decides to give that thing away as something you can have on your desktop just as it did with Internet Explorer, they can easily become the defacto standard. That’s a good thing for SAS because more people are dependent on data. But how good will that data be to them? There has to be something pretty robust under the covers to deal with that data.

If there’s something in Microsoft that can provide access to our products, that’s a good thing. Internet Explorer is an interface into our products; Google interfaces have been very good for SAS products.

Comment: edit@itworldcanada.com

Share on LinkedIn Share with Google+