sascom voices - The sascom magazine blog

One of my favorite opportunities at business conferences hosted by SAS, like The Premier Business Leadership Series, is when I get to take a break from the crowds and spend some one-on-one time with a customer.

We escape into a quiet room to discuss, on video, their trials and tribulations with applying business analytics to address challenges in their organizations. Whether they're trying to find better ways to retain their best customers, improve their marketing campaign results or prevent fraud, each customer has a unique story to tell.

For Glenn Snyder of Visa, the story is all about profitability--how to apply analytic models to help identify the cost drivers that impact Visa's bottom line. He also spent some time with us at a focus group where we discussed ideas about networking and how to take advantage of media opportunities that SAS brings their way.

Snyder was a real pro in front of the camera, he's obviously very passionate about profitability--a good thing for Visa. His story will appear later this year on the SAS success stories site.

Malcolm Gladwell, author of Outliers and Blink, and Tom Davenport, Babson College professor and author of Competing on Analytics, engaged this morning in a debate on a live Webcast onsite at The Premier Business Leadership Series at Caesars Palace, Las Vegas. The theme of the debate is analytics vs. instinct: which works best for strategic decision-making.

I’ll share a few highlights here, captured from our position among the production crew in the control room. (You can view the archive here):
Gladwell’s worry with analytics, though he does value them, is that there is a tendency for people to use them in areas where they don’t belong, and often say that there’s no room for gut instinct. But that doesn’t mean he’s squarely in the “gut instinct” camp. Gladwell says that intuition is most useful in the context of a great deal of expertise, and that expertise is most often grounded in data.

Davenport still countered, however, by stating that analytical decisions have been proven in academic studies as more likely to be correct. Davenport elaborated on the types of decisions or situations that are appropriate for an analytic approach:

1. When the time demand of the decision at hand is appropriate: you have to have time to gather data, which you can’t do in a rapid-fire situation.
   
2. For particularly important problems. It’s overkill to use analytics to decide what flavor of ice cream you want to buy.
   
3. When you think the past is a good guide to the future. If for some reason you think it isn’t, analytics are not a very good tool.
   
4. If you have to repeat a decision frequently, as in insurance underwriting, you can get accuracy and speed by automating your approach.

Even so, Gladwell challenges that there are applications where analytics simply should not be the exclusive approach. Davenport believes that analytics support better answers to problems. But in the final round, Gladwell offers a one-two punch: Financial. Crisis. Gladwell says that if ever there was an industry in the throes of analytics it was Wall Street last year, where analytics permitted a level of confidence that wasn’t warranted. It was a situation that could have benefitted from someone with some common sense who may have observed that something was very wrong, and they need to depart from what the models were saying.

All in all, a fair fight. But this writer lands in Gladwell’s corner, because how many times has a pediatrician told a mother, when faced with those “mystery” symptoms, to trust herself to know when her child is really sick.

Is it all about the data? What does your gut tell you?

At The Premier Business Leadership Series in Las Vegas, Jim Davis, SAS Chief Marketing Officer, opened his presentation with an opportunistic spin: "A good crisis is a terrible thing to waste. Necessity might be the mother of invention, but recession is the mother of innovation."

In November of this year, Peter Drucker would have turned 100, yet his timeless advice still rings true:

Now more than ever, executives must focus concurrently on 3 time horizons:

1. Make the present business effective.
2. Identify and realize the potential of the business.
3. Make the present business into a different business for a different future.

Davis pulls back the covers for the audience to discuss SAS' experience with change and reinvention. "SAS has seen more change in the past 12-24 months than last 30 years. We're in the third phase of this evolution. In our first phase, we were focused on tools and products. From 1976-1995 we were all about creating tools for data access, data mining, operations research. We developed about 200 prods. If we continued along that path, we wouldn’t be here today. In 1995 we recognized the future is in solving business problems so we moved into developing horizontal solutions for CRM, human capital management and IT performance management. Then in 2000, we said this isn't going to last either—this isn't good enough. People need to more fully understand the value of their solutions, which meant going to industry solutions. It took three times longer and a lot more money than we thought, but we did it. So the question becomes: Are you asking yourself whether what you’re doing today is going to take you forward to the next five years?"

That’s where the importance of data and, specifically, business analytics comes into play. Davis harkens back to the conference theme, Innovate and Optimize: "It's not just about best practices, it's about creating new practices, and dealing with the disruption. Business analytics can help create transparency around your risk, and help you minimize it. Many people say optimization is all about cost cutting and reallocating resources. But it’s also about focusing on core competencies." Davis cautions the audience, however, that balance is important:

"Too much optimization may challenge your long-term viability. Don’t strip yourselves down to the point that you can’t sustain your operations or resource the innovation. It's important to maintain a balance between innovation and optimization."

In the context of the economic climate, Davis shares McKinsey research that indicates that businesses are feeling more optimistic in their future planning.

SAS and MIT Sloan share a similar mission when it comes to the topic of sustainability: To explore and share lessons on how sustainability challenges are transforming 21st century organizations. While we at SAS continue to refine our own practices in corporate social responsibility, we’re helping our customers measure, manage and report on the triple bottom line for their own organizations. At the same time, MIT Sloan is contributing research to the world through its Sustainability Initiative and its Beyond Green blog – and approached us about participating in some of that research.

In his first visit to SAS’ world headquarters, Michael S. Hopkins, editor of MIT Sloan Management Review, took a few moments to talk about his journey thus far through the wild and (organic, humanely harvested) wooly world of sustainability research.

Talk a little about what you mean by “Beyond Green.”We see sustainability as more than environmental concerns—typically you hear that sustainability has three legs: environmental, economic and social. But we’d add another: personal. There is a lot of interesting research about the degrees to which how we work has become unsustainable as individuals. (Note: I’m thinking Hopkins is referring to this concept that we can’t be a sustainable society if we are burned out, overworked, and constantly driven to acquire material wealth.)

Is there a particular story that stands out in your mind as an innovative environmental corporate initiative?
I conducted an interview with a top exec at a giant South Korean manufacturing firm. We talked about the organizational capabilities that will be needed to compete—what do they need to do differently. He got very excited about his answer, and he said one thing we need to do in this culture is to get people to work less. There are too many incentives to appear overwhelmed and busy. As a consequence, he loses the most important parts of their ability to contribute: their creativity and imagination. He said, ‘If we get people to be less overwhelmed, we’d have the ability to innovate over all of our competitors.’ So he wants to know how to create the right systems to encourage people to think about their jobs differently.

Here’s another example: Many people describe sustainability as a shift from short- to long-term thinking. The COO at a large UK oil company, made the point to me that if that’s true, then we have to completely rethink individual compensation. We need to think in terms of a 10-year horizon, but when people are compensated by month or by year, how do you get people to think long-term?

What maturity level are most of your interviewees when it comes to putting sustainability programs into action?

At last week's SAS Global Forum, I sat down for a few minutes with Stephan Chase, Vice President of Customer Knowledge at Marriott Hotels. Chase's team provides the analytics and predictive modeling to the marketing team within the Marriott Rewards business unit. I asked him to elaborate on an earlier comment he had made about the cultural impact of becoming an analytics-driven department within an organization.

You made a comment earlier, which I'll paraphrase, about how mandating the use of predictive modeling within a department can be a bit unsettling for staff--how so?

When you change the way people are used to working, you can send an unspoken message that there was something wrong with the way they were doing things before. And it's not so much that the previous approach was wrong--but that it could be better.

Giving yourself over to an analytic approach can be uncomfortable at first, because it can feel like you're surrendering control to an analytic process. If you lived in the world of qualitative focus groups, and now you're being asked to put yourself into the quantitatively measured world, it can be very frightening. But once the marketing analysts saw that both they themselves and their marketing counterparts are both incorporating this more measured approach as a team, the anxiety went away.

How did you get started incorporating predictive modeling into the Marriott Rewards team?

Within three months of moving to the Marriott Rewards team, I wrote a white paper on how we should incorporate predictive analytics and hired a consultant to help create a roadmap.

What presented an interesting challenge was that I was accountable for developing this new analytical process and getting people on board, when many of the people whose buy-in I needed didn't even report to me. But achieving that made it even more valuable--like organic implementation, people are more committed that way.

How do you then go on to build credibility and awareness for an analytical approach, especially within an organization to which this would be new?

You have to live it for awhile. People respond to truth and sincerity but when it becomes political, the demand evaporates. You have to stick to your metrics and this takes a while. You need to mean what you say and admit when something you try didn't work.

Marriott wasn't entirely new to predictive modeling--we had been doing it in the pricing area for a while. But I was new to the hospitality industry. People in marketing were curious about predictive modeling and they were impressed by the analytics, but thought it was an obscure process. So we started small, testing our own modeling, and hit it big with a huge success. Showing the incremental success is important because it builds excitement.

People want to do meaningful work, and when you can show analytic results in an objective way, there will be demand for it. Sure, not everything we do succeeds--especially if the process becomes the focus instead of the campaign being the focus. If the campaign is the focus, it objectifies the process and makes it less personal.

I can't overstate the value of incremental success, similar to what [SAS CMO] Jim Davis said in his Business Analytics approach. He said you can start with small wins in data integration, analytics and reporting, then grow from there.

Are you by nature a very analytical person?

For working in an analytical field, I actually test very high as intuitive in Myers Briggs, I'm very theoretical. I even code that way. Sometimes we've proven something with a small group of customers but we need to test ourselves to determine if we've found a real trend or just a blip, a distraction. We work very hard to test ourselves. We ask ourselves constantly, Is this as good as we can get to approximate the truth?

The team loves this, which is why I love working for Marriott. It's a great company. Our IT group has been around for a long time, we know each other well and we respect and understand each other--and I bring them interesting work to do. We're both highly functioning teams. Now the IT people are evangelizing the value of our marketing analytics tools.

Do you feel like an analytics evangelist?

Absolutely, and predictive modeling has kind of become my thing at Marriott. Not too long ago, I was in a meeting with my boss and the entire Marriott Rewards team. Before I knew it, and without me even saying anything, the marketing team was asking how they could use predictive analytics in some new ways they hadn't thought of before. It was the most gratifying conversation I've had in a long time because I felt like we had really gained some mind share.

Two thoughts from here in London to follow on the two recent posts by my colleagues Alyssa and Peter. I’ll try to complement their thorough, thoughtful comments with a few brief, random ones from my work room that overlooks the amazing pitch of Wembley Stadium.

First, related to Tapscott and collaboration: I just now finished up a discussion with a customer who works for TMN, a Portuguese mobile provider. He did a presentation earlier about “Shared Business Intelligence as a Competitive Advantage,” in which he applied the new models of Web 2.0 — user-generated content and active participation – to the company’s use of analytics. In fact, I think he coined a new term: Participatory analytics. It’s not a new message for BI. We’ve been talking for some time about the democratization of data, but I hadn’t heard it positioned in this context before: giving access to data and analysis to more than 100 internal clients so they can produce their own analyses. As the business users’ knowledge levels increase, they can have more meaningful conversations about the shape and direction of their analytical efforts.

Before that conversation I also had the pleasure of sitting down with Andrew Winston for a few minutes, author of Green to Gold and one of today’s presenters on sustainability. I asked him how companies looking to integrate green practices can get started. Here are a few of his answers:

• Start with a good old SWOT analysis (he calls it AUDIO: Aspects, Upstream, Downstream, Issues, and Opportunities)
• Analyze your stakeholders’ wants and needs (internally and externally)
• Start the culture change by getting people involved in something like a green team.
• Little things mean a lot: UPS saved 28 million miles & 3 million gallons of gas by reducing left turns and the idling they cause.

This is along the lines of the energy savings promised with the switch from incandescent to fluorescent bulbs. (Did you know that the US is mandating the elimination of incandescent bulbs in seven years?)

Oh, and one thing Alyssa didn’t mention: during the press conference where we launched our sustainability solution, Alyssa was interrupted mid-sentence as she responded to a question from a journalist. A deep, booming British voice echoed out over the stadium intercom: PAGING MR. GREEN, PAGING MR. GREEN. It's apparently a code-phrase for potential upcoming evacuation of the stadium (which didn’t happen), but those of us attending the briefing got a chuckle out of what felt like a ringing endorsement from the heavens.

Not to belabor the topic of SAS Global Forum, but it is still on the minds -- and feet, judging from my blisters -- of many of us who attended last week. What I find most invigorating about the experience is the opportunity to put faces and voices with the otherwise enigmatic customers that we work to support (mostly virtually) throughout the year.

One such customer lingers in my mind, and my inbox, as we've continued our conversation via e-mail this week. His name is Van Rhodes, he works with Spiegel Brands and Newport News, and is a longtime, loyal customer of SAS for CRM and campaign management. I first met Van in 1998 when he graciously agreed to appear on the cover of one of our magazines, patient with our kitschy design idea to photograph him peering through a mailbox (get it?). This year, he was again gracious to participate in a focus group we held to learn more about how our customers are getting their information on the Internet, as SAS continues to find its place in the world of Web 2.0. Are our customers using RSS feeds? Reading blogs? Participating in online communities? (Stay tuned, we'll share the results with you in a future post.)

What I didn't expect was a lesson in far-out, way-cool technologies to come out of it for me. In the focus group session, Van casually mentioned he visits sites like CNet to research new things like surface computing -- a term that was new to me, but now, wow! the "ubiquitous computing" concept of Web 4.0 finally makes sense.

Here's a recap of my e-mail exchange with Van after I watched a video about surface computing.

+++++++++++++
me: Too cool! Very futuristic, I'm glad you mentioned it.

Van: Three others that I’m watching now:
Augmented reality – eg: your car’s windshield being a giant GPS map, like Garvin can do now on a tiny screen. Military has been doing things like this for years, now showing up in consumer area. Someone is testing contact lenses that have chips embedded and can do a heads up display such as one sees in the Terminator movies.

Pico Projector – tiny DLP projectors/mirrors in your cell phone to project a screen onto a wall to overcome tiny cell phone screens

Lifesize video – the new video conferencing applications from Cisco and HP. They use large screen, HDTV and their refresh rate over the web is faster than the human eye can detect. This one finally gets it right and will change everything regarding how people meet and work together. You folks at SAS probably already have one. I was talking to one of the “futurists” at your SAS Executive conference and he says he’s participated in a conference using this. Agreed that it truly is revolutionary – after 5 minutes one forgets one is talking to remote people.

me: I've heard of the windshield GPS thing! I tried explaining that one the other day and people looked at me like I had 2 heads.

Van: I get that a lot, too. Especially from my wife.
++++++++++++++++++

Supports the obvious: We have a lot to learn from our customers, especially the ones whose spouses look at them funny from time to time. And while my team and I are all about finding new ways to connect with our audiences online, nothing will ever replace the warm, friendly handshake of a longtime customer.

What new technologies are you watching/researching? How might the technologies I mentioned here influence BI products in the future?

As the buzz around the IBM acquisition of Cognos continues to spread, my colleagues here at SAS' world headquarters are engaging in their usual activities: briefing our international colleagues, reaching out to analysts and journalists, responding to interview requests. Still, the mood here is far from hectic -- we, like everyone else watching the Business Intelligence space, were not surprised by the announcement.

What journalists around the world want to know from us is, "Can an independent business intelligence vendor survive among these growing tech behemoths?" As the largest remaining independent BI vendor the spotlight is shining on SAS.

The question itself seems to fall a bit short of the point. It's not whether an independent BI provider can survive in this market, but precisely why the market needs an independent BI vendor to remain standing. And what about SAS' approach and offerings make us the logical survivor, beyond our privately held status.

Our philosophy from the beginning has been to remain hardware, operating system, and data agnostic. Why does that matter to customers? Is there any company out there who has eliminated legacy systems or is willing to bet their entire future with one IT provider? No, and probably never will. Can a model in which BI vendors are wedded to a single database/ERP/applications vendor be healthy for customers? Not likely.

Yes, we will survive. Thrive, in fact, as our peers in the industry continue to one-up each other with acquisitions and guide their customers through complex product integration efforts that may monopolize their resources for a year or more. Our emphasis continues to be on what our customers say they need: an integrated enterprise intelligence platform and powerful predictive analytics that allow them to prepare for what's coming, not just report on what's already happened, which is all you get from pure-play BI vendors like Cognos and Business Objects, the latter recently acquired by SAP.

So while the predictable acquisitions continue in the BI market consolidation frenzy -- no doubt making life difficult for organizations that invested their BI budgets in these companies -- SAS will be here. After three decades of year-over-year growth, that’s as predictable as anything in this market.

It's Day 2 of the Premier Business Leadership Series here in Vegas, which kicked off this morning with a special edition of BetterManagement TODAY. (The show is taped live in the heart of the networking area of the conference.) One of the featured guests--and a keynote speaker yesterday--was Andrew Winston, bestselling author of Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value and Build Competitive Advantage.

Winston evangelizes the idea that going "green" is not only the right thing to do for the environment, but it can actually make good business sense. His examples are compelling. Implementing waste management and energy-saving practices saved Dupont $1.9 billion -- a huge impact on their bottom line. Winston also claims that environmental commitment can drive companies to be more innovative and provide opportunities for market leadership and branding (take the Toyota Prius).

It's not easy going green, especially for large companies. I mean, I often fight an internal battle over whether I really need to walk the cereal box to the recycling bin or just reach down and toss it in the trash (I wonder what my own carbon footprint is?) -- but to invest millions? Winston's goal with the book was to give companies a starting point, a framework to get started.

It's encouraging to hear the business angle to the topic of environmental change because I wonder: unless they're required to, how many companies would really take the plunge to go green out of the goodness of their corporate hearts?

I'm writing from the freezing cold press room in a resort in sunny Orlando, Florida, where SAS is hosting its annual customer and executive conference, SAS Global Forum. Amid the buzz from journalists arranging interviews with SAS customers, executives and industry thought leaders like Guy Kawasaki and Thornton May, I find myself struck, again, by the overwhelming positive vibe of this event.

When one of our VPs commented to me that she thought this was one of our most successful conferences in the past 32 years, I asked her why. She said with exuberance, "I can't put my finger on it exactly, the users are just exceptionally happy this year!"

Usually, when someone tosses out the term "love fest," it's tinged with sarcasm and hyperbole. But this is truly a meeting of the minds--and hearts--of businesspeople determined to not only improve their own organizations, but who are sharing their ideas with colleagues and competitors alike. Citigroup and Wachovia, State Auto and Allstate, to name a few, sharing their innovations with business intelligence, analytics and performance management--all in the name of knowledge sharing.

The irony isn't lost on me that among the fairy-tale world of Mickey Mouse and Snow White, there are more than 3,700 SAS users here learning how they can better solve real-world business problems. But then, the theme of our conference this year is, after all, "innovation"--and what better place to dream big than Disney?