SAS’s secret

There was no piano player. I expected a piano player.

The story goes that someone is permanently employed to tickle the ivories at the Cary, N.C. headquarters of the SAS Institute. This is just one of many perks which have led people over the years to describe the enterprise software company

as the best working environment in the industry. Flexible hours, generous compensation and a respect for its employees were some of the others.

I didn’t see any Baby Grands when I arrived Tuesday morning at the firm’s Canadian headquarters on Toronto’s Bay Street for a breakfast meeting with its new president, Carl Farrell. But I did meet some SAS execs who gave me some insight into how the company has managed a very low turnover rate — about five per cent of its employees — in such a notoriously volatile field.

Marianna Suciu, the vice-president of corporate strategy, is a perfect example. She’s been with the company for 17 years — apart from a brief stint about a year ago with a public company, which she didn’t name. I asked her how it was different from SAS, which is the industry’s largest privately-held software firm.

“”The drive for results — it came from a different place,”” she said. “”With SAS, because it’s private, you’re not pushing hard to close a whole bunch of deals by the end of a quarter, where it’s like, ‘Get me that CFO on the phone!’ The athletics of the selling was different.””

Indeed, there is something almost old-fashioned in the easygoing way SAS employees conduct themselves. When the breakfast was over, Farrell and others went up to speak at two podiums on either side of the table, even though there were only about six guests in the room. Execs with any other company — say, Oracle or Compaq — would have remained seated in order to create a (sometimes false) sense of comraderie. That’s what gives the impression SAS is not really used to this kind of thing, and the formality seemed charming. Even the name of its founder, Dr. Jim Goodnight, carries a sense of gentility.

Charm, however, will only take you so far, as SAS has learned. Though it has about 545 Canadian customers and 1,369 installed sites here, it has struggled for years to define itself and raise its profile. This is important for two reasons. First, the company is trying to bring its customer base beyond the data warehousing space into what it calls e-intelligence — a concept that hardly anyone properly understands (think of it as a more advanced way of managing data). Second, it faces competition from Ottawa-based Cognos and Oracle — both of whom possess twice the marketing prowess SAS has ever had. People don’t talk about SAS or pepper their presentations at industry conferences with references to their products, as they do Oracle’s e-business suite, for example.

During the dot-com boom, SAS had pledged to get its act together and start behaving like other mainstream players. It was going to drop the “”Institute”” from its name, which had many people thinking they were dealing with some kind of school. Its was going to launch e-intelligence TV commercials. An initial public offering was in the works.

Two years later, little has changed. The “”Institute”” is still there, and the IPO has been quietly shelved. It’s possible SAS is riding out the downturn, but more likely it is too preoccupied with creating new products. The company is known for investing a third of its revenues back into R&D, and Goodnight’s office is reportedly inside the engineer’s area. Suciu and Farrell spoke at length this morning about the fact that its software does not merely report enterprise data the way Cognos and Oracle apps do; it can actually analyze it and predict future changes.

This kind of differentiator could be valuable to enterprise customers, and even advance the industry, but not unless the company can learn how to leave its Shangri-La comfort zone behind. SAS executives need to make the rounds at trade shows, or start its own user conference. It has to translate its market share into mind share, which will be critical as corporations make strategic spending decisions about their business intelligence strategy. SAS may be one of the best-kept secrets in IT, but secrets only become interesting once other people find out.

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