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SAS Kicks It Up A Notch

With “analytics” a hot buzzword and the newest competitive differentiator in Corporate America, SAS is sitting in the catbird’s seat. With $3.1 billion in sales last year, SAS is by far the leader in analytics software and is prepared to leverage its position to compete head on with the big boys.

It was a clear after spending a day with SAS executives in Steamboat Springs, Colorado that SAS is thinking as big as the towering Rocky Mountains that surrounded our resort hotel. Specifically, SAS is focused on competing with IBM. That’s partly because IBM just acquired its nearest analytics competitor, SPSS, and is now heavily marketing its “Smart Analytics System” initiative, which enables customers to purchase a single integrated analytical solution consisting of hardware, software, tools, consulting services, and support via a single SKU and have it delivered in two weeks. (See “IBM Rediscovers Itself” August, 2009.)

To bulk up against Big Blue and its 4,000 consultants, SAS has teamed up with Accenture, who is also feeling the heat from IBM, but in  consulting services. Together, SAS and Accenture will spend $50 million initially to develop new analytics products for six industries. For its part, Accenture sees analytics as a big growth area and partnering with the top analytics software vendor makes sense. And to beef up its corporate image, SAS is building a new 280,000 foot executive briefing center with 690 offices, two auditoriums, and a full café to impress analytics prospects.

SAS has never been known for its partnering ability, but the stakes are high and both SAS and Accenture are motivated by a common, fierce competitor. In the past two years, SAS has honed its partnering skills by investing serious time and money with Teradata, the fruits of which are starting to pay dividends in six-figure sales deals. And now, SAS is aggressively partnering with a slew of upstart database vendors to move analytics into the database, even IBM DB2. This is an interesting surround strategy for SAS: wherever IBM goes, it will find SAS already embedded in the customers database of choice. Not bad!

Other highlights from the SAS Analyst Day:

- SAS executives believe social media analysis is a big potential growth area for the company, leveraging its strength in analytics as well as its 2008 acquisition of Teragram, a leader in natural language processing and advanced linguistic technology. This is a natural market for SAS to dominate, although it faces a slew of nimble startups and established players

- SAS’ data integration products, which are now housed under the DataFlux subsidiary, were the fastest growing parts of its portfolio, with more than 50 percent growth in some markets. While most of the products are not new, SAS executives say the growth comes from the fact that DataFlux provides vendor-neutral data integration products so is not tied to the SAS installed base. Plus, companies are mining ever-growing volumes of data and are recognizing the need for clean, integrated data. “More companies view fact-based decision making as a key to success and are coming to recognize that clean, integrated data is critical for delivering insights,” says Jim Davis, senior vice president and chief marketing officer.

- SAS is no longer overlooking the small- and medium-sized business (SMB) market, ramping up hosted offerings for customer intelligence and other applications that smaller companies can access. In 2009, it acquired 228 new SMB customers.

- SAS has an active hosting business for analytics customers who don’t want to provision servers in their own environment. SAS’ on demand revenues grew 30% and number of customers increased 43% from 2008 to 2009. SAS is building a huge new hosting center so expect more on demand offerings to come from SAS in the months ahead.

Posted by Wayne Eckerson on March 7, 2010


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