In Other Words - SAS Senior VP and CMO Jim Davis talks about business, analytics and technology

I found another interesting theme at our recent Premier Business Leadership Series event: the re-emergence of the customer. Companies that have been forced to focus on satisfying their immediate business needs are waking up and remembering that the future is all about how you deal with the customer.

Personalized, focused marketing is coming back into play, and the need to understand the nuances associated with individual customers, segments and buying patterns. It’s nothing new. We were doing it before the downturn, and now it’s coming back.

Are those customer needs different than they were prior to the downturn? I think they are. Our customers are no different than us in that their focus is sharper. They don’t want to guess what their own customers need, whether it’s B2B or B2C. They want to feel confident and market appropriately. This is where analytics comes into play.

There’s an interesting social media tie-in as well. During the downturn a lot of people looked at social media as an opportunity to go after their segments without spending a lot of money. Some did it well, but a lot didn’t and realized there is a cost to doing social media well.

At least now we’re familiar with the technology, but we need to refine it. Would a lot of companies be where they are today with social media awareness if it hadn’t been for the downturn?

There was another trend I noticed at our recent Premier Business Leadership Series event. Risk and fraud have been important areas of focus for us and our customers, and the downturn shed a lot of light on those areas. We had some great panel discussions on those topics at PBLS and SAS Media Day that have been nicely covered on the sascom Voices blog.

Plus, PBLS took place alongside the M2009 Data Mining Conference, which draws practitioners who are very focused on the application of the science to business problems, and we had a great turnout there.

As important as those areas are and will remain, people are now starting to look at what they can do to expand top line activity. Without a doubt, people are smarter. They want to understand where the organization is heading not only from a control and operational standpoint, but also where the new opportunities are.

Whether we’ll admit it or not, those opportunistic efforts may have taken a back seat for the last 12 months. The risk and fraud boys have been in the front seat, but now there’s a more sensible balance activity taking place, and that’s ultimately what we need. While risk and fraud efforts create the transparency required to run our business, our focus on the customer is certainly what will keep us alive and well.

When I first visited Tokyo for SAS in the ‘90s, it was like traveling a few years into the future. I don’t see Tokyo that way anymore. It doesn’t feel much different than going to Toronto or Chicago or New York.



Japan is experiencing a serious downturn. They’ll come back, but things will never be the same. Think about it. They used to dominate consumer electronics, but not anymore. Who dominates portable music? It’s not Sony anymore, it’s Apple, and Apple’s stuff is manufactured in China.

What are Japan’s core competencies? It’s certainly the banking center of Asia, but who knows, in our lifetimes that might go to China as well. It reminds me so much of New York: there are leaders in the financial world who are rising above the herd, but there are also a lot of stodgy old bankers trying to figure out what to do.

We’ve experienced the same shifts in North Carolina, which for decades had an economy dependent on furniture manufacturing and textiles, and that’s shifted to Asia. We were lucky that we had visionaries like Luther Hodges who understood the need to plan for the future and drove the creation of Research Triangle Park in 1959.

(As an aside, I watched a two hour special about the 40th anniversary of Woodstock recently. RTP was ten years old in 1969. It’s hard to imagine that this and this were only ten years apart.)

Just as nations have core competencies, obviously, so do businesses. At SAS our core competencies are knowledge-based, and that keeps me up at night. We have an awful lot of smart people who work here, but there are still plenty more smart people out there. Our constant challenge is to provide value for our customers beyond what they could get from a competitor or an open source solution. We continue to be successful at it, but we can never allow ourselves to become complacent. Whenever we find ourselves doing something “because that’s the way we’ve always done it,” we kill off a piece of our future.

In Good to Great, Jim Collins talks about the “hedgehog concept,” figuring out what you’re passionate about, what you can be the best at, and what drives your business. I’m constantly amazed at how few businesses actually take the time to sit down and figure this out.

How much time do you spend thinking about your core competencies, and what are you doing to protect yourself against these kinds of tectonic shifts? And what’s keeping you up at night?


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From the start of this blog, I’ve talked about the value of analytics for companies who want not only to survive the economic downturn, but come out of it stronger. Today we learned that IBM is acquiring SPSS. Not only is it further validation of the value of analytics, but it’s also sending a jolt of electricity through the industry.

I wasn’t surprised to see this announcement. But there's an important issue to keep in mind. This market is not about selling software – it’s about providing value. That was true even before the downturn and it’s even more important now. The key is value-based selling. Customers want to know that if they spend a million with you, they get back $10 million in value.

You need to show that you understand your customers’ industries and can help them solve industry-specific problems. It’s far from one size fits all. Retailers need size and price optimization. Banks need fraud detection and credit and operational risk solutions. Manufacturers need warranty analysis and supply chain optimization.

Without domain expertise, it’s all just software.

IBM’s biggest challenge will be to piece this all together and see if they can create a complete analytics solution from the disparate elements and business units. That’s no mean feat. Obviously they have a strong installed base to build on, one that may be patient while they work out the kinks.

Another challenge for SPSS, as for any of the recent acquisitions, is to remain focused and innovative. Being privately held gives SAS the ability to pump more than 20 percent of our revenue into R&D every year and keep innovation at the forefront.

It’s much harder to stay dedicated to innovation when you’re a small business unit within a big publicly-traded company.

Some acquisitions turn out well, others cause problems. We’ve heard customer rumblings from some of the previous acquisitions about maintenance issues, service plans and pricing. A new owner always brings a new focus. I wonder, for instance, if current SPSS customers will see a bigger focus on optimizing SPSS to work with DB2, at the expense of Oracle or SAP integration.

Ultimately, as always, customers will decide and vote with their IT budgets.

Writing about the acquisition in The Wall Street Journal’s Digital Daily, John Paczkowski says, “Business analytics powerhouse SAS best watch its back.” Thanks for the advice, John, but we’ll keep looking forward. You don’t get to be the largest independent vendor in this market by watching your back. You get there by focusing on your customers, understanding what’s keeping them awake at night, and helping them solve their problems and find new opportunities.

In my last post I talked about our analyst conference in Spain and what messages resonated with them. We talked about analytics and how they can help our customers in the downturn. We also talked about making those advantages more accessible through software as a service.

It's part of a larger theme I've been thinking about: what analytics are and what they are not, in terms of being able to predict the future of your business. Let's be honest, analytics is in danger of becoming an overused and abused term, in the same way that “business intelligence” got watered down as more and more companies claimed to offer it.

It's no surprise I think analytics play a key role in helping companies make better decisions, especially now, when it can make a real difference in a tough competitive environment. A lot of companies might be worried about the cost, but cloud computing makes it more affordable for companies that need it right now but can’t afford to bring it on site.

We have to recognize that our customers are at different stages of their evolution. Employing analytics in a software as a service environment lets you see if they have a positive effect on the bottom line. If so, you can go forward with a fuller installation.




I stole this “8 levels of analytics” chart from sascom magazine and use it in presentations. The first four levels, while they are legitimate and relatively commoditized at this point, don’t really show you what’s likely to happen in the future. They support reactive decision making. They’re great at benchmarking, but what about the other four types of analytics? If we think about growing our business in tough economic times, we need to be more proactive in our decision making. Steps 5 through 8 are all about the future: customers, suppliers, sales.

Again, this is where the term “analytics” has been watered down. There’s no doubt that everybody offers reactive capabilities, in spreadsheets, in OLAP cubes, in report writers. But how many people are using the proactive tools around optimization, modeling and forecasting? There’s a misconception that those capabilities are reserved for companies with massive computing power and PhD statisticians. That’s no longer true with the advent of cloud computing and software as a service.

That message appeals, not only to the analysts but to our customers.

I have a call once a week with some folks on our communications team to talk about upcoming issues and activities, and to kick around my ideas for this blog. On our call this week, two of us were in the car on our way to the office, trying to navigate around streets flooded by heavy rain. Quite a contrast to where I was a few days ago, walking on a sunny beach in Spain, where SAS was holding a European analyst briefing. I'll take the beach.

I would say it was one of the best, if not the best, analyst conferences we've ever had. Specifically, it was the first time we’ve had one of these European conferences where we showed up and felt like we had interest and respect the minute we walked in the door, which shows that the business analytics message is getting traction industry-wide.

They asked lots of good questions. We talked about the opportunities we're seeing in banking even with the downturn, including in the areas of credit risk, financial crimes and fraud. Despite what’s going on in a tough industry, analytics plays a key role. While in the recent past, banks might have been interested in using analytics to come up with new derivatives or selling to new customers, now it plays an important role in getting the industry back on track.

We also talked about retail and what a crappy season they’ve had in the last 12 months. Once again, the smart companies are positioning themselves to come out of the downturn in a better competitive position, and analytics provides a valuable tool. When you talk about price optimization and size optimization, a small uptick can mean millions in increased revenue and can make a huge difference in this economy.

The analysts were also very interested in the continuing possibilities created by the mobile handset. When you take that BlackBerry out of your pocket or out of your holster, it represents a personal computing device that gives you access to information and entertainment, and by the way, you can make a phone call. That’s a big shift from a couple of years ago when it was a phone you could use to access the Internet.

We talked to analysts about helping that industry transition to more of an entertainment and information focus. There are data privacy issues, cross sell/upsell opportunities for providers, and the need to recognize that you’re delivering all types of media and entertainment services to this small handheld device. How do you figure out the ideal mix for a given customer segment, market to them appropriately and meet their needs to create that revenue stream? The big concern in telco used to be churn: keeping current customers on their current plan. This world is growing like crazy. Do we really call it the wireless industry anymore?

Of course the big buzz in that industry is the iPhone 3GS, which is now shipping. I've used both the BlackBerry and the iPhone. I'm working on a post comparing the two from a business perspective. Stay tuned for that, and I'll alert my communications folks to expect a flame war.

Photo by Jonathan Hornby