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The just-concluded SAS Institute analyst summit (Twitter: #SASSB) provided the annual update on the company’s performance, strategy, products and customers. My analysis of last year’s event talked about its continuation of its product roadmap to new customer acquisition and the broadening of its underlying platform, applications and vertical solutions. SAS is no small-time mover and shaker when it comes to the analytics industry; it extends from technology to tools and applications across industries, which adds up to $2.4 billion in revenue. SAS’s growth was worldwide, with Canada and Asia-Pacific delivering the largest percentage revenue growth and Europe, Middle East and Africa representing the largest revenue for the company at more than $1 billion in revenue; U.S. revenue came in slightly lower.

Just as important for this software giant is its success in advancing new sales, which were up 20 percent, a sign that it has been able to reach beyond its core customers that have been leasing SAS for decades. The largest part of SAS’s revenue (42%) comes from the financial services industry, followed by government with 15% and services industries representing 11%. But many do not realize that SAS has been expanding its offerings by making them easier to access via the cloud, an area in which it grew by 34 percent in 2010, contributing significantly to the growth in its core of analytics and fraud. SAS has prided itself for many years on its focus on employees, earning an industry #1 rating as a place to work. But its focus on customers and products has earned it high ratings as well as SAS has invested in improving the usability of its broad portfolio.

In defining its core business strategy for 2011, SAS has set five global priorities: analytics, customer intelligence, data management, risk and fraud. These priorities reflect the areas where SAS found the largest growth in 2010: in the Americas, customer intelligence grew by 229 percent, risk management by 111 percent, fraud by 241 percent, and its focus on DataFlux for Data Management grew globally by 29 percent. All of these are areas of comfort for SAS, areas where it has market growth and deep competencies. Speaking to the analyst summit about his company’s technology strategy, CTO Keith Collins outlined focuses on high performance computing, process automation, business visualization, data management and software as a service. All of these are unquestionably important; I hope that SAS also investigates the value of introducing new collaborative methods for person-to-person and person-to-group interactions of the kind we have seen from the likes of Salesforce.com with Chatter and SuccessFactors with CubeTree. All systems used for business should be able to support collaborative interactions that can draw on its workforce’s knowledge and experience to maximize value.

SAS is continuing to develop the framework of its core of business analytics on which it has been working for 30 years. It stretches across data mining, forecasting, modeling, scoring and simulations all the way to advancements in supporting text and sentiment analysis. SAS also has gotten a lot better in discussing the business use of its algorithms and how they can be operationalized into activities and process. This analytics core is the foundation of its business; on it rests the layers of integration with information and data architectures across an enterprise.

SAS has invested significant time in making its analytics more accessible to stand as an alternative to other data-centric computing technologies like Teradata and new players like Aster Data which was just acquired by Teradata, Netezza which was acquired by IBM and Greenplum, acquired by EMC. SAS is betting these investments in high performance computing will make its analytics part of a larger future grid computing strategy in IT; it believes it will address inefficiencies in the new Hadoop and large scale data technologies as well as take advantage of massively parallel processing data technologies. SAS can abandon one partnership, which aimed to integrate its technology into the now-shut-down HP Neoview; now, however, HP has acquired Vertica to increase its columnar capabilities as my colleague has noted. SAS is not about to allow itself to be excluded from capitalizing on the broader demand for information management; in this regard it has continued its efforts with DataFlux, which it wholly owns. Last year I did a review of its direction. In a surprise move DataFlux also acquired Baseline Consulting to get more management and technology consulting depth to help it scale its ability to help organizations transform their data and information strategies across business and IT. It also now brings deeper value to its data integration, data quality and master data management portfolio with new technologies for federated data access and complex event processing (CEP) that compete against IBM, Informatica, Oracle and SAP. I highlighted the importance of CEP and what we call Operational Intelligence, which is  well-defined in Wikipedia; it’s good to see SAS understanding this as a competitive necessity and so addressing it as part of its portfolio. But I’m not sure SAS understands yet the importance of interconnecting to existing and newly implemented event streams in the enterprise.

SAS readily admits it should be a larger player in the business of business intelligence (BI), but its BI portfolio is still a good part of its overall revenue, estimated at about 10 percent. In response to some pointed questions about its commitment to BI, SAS provided more detail on its efforts. SAS is busy rewriting much of its BI portfolio, using its 350 developers to more thoroughly embrace the mobile technology revolution being driven by smartphones and tablets. As part of its overall strategy, SAS has announced a strategic partnership with MeLLmo and the Roambi technology. Demonstrating the integration of SAS Enterprise BI Server and Roambi ES3 technology already is helping existing customers get mobile-ready for Apple iPad and iPhone devices. Our benchmark research into business intelligence and information applications found a high level of demand by business, but also found IT not yet as optimistic or engaged in enabling the use of mobile technologies. Even our pending benchmark research in business analytics across thousands of organizations finds new demand across specific line-of-business areas. SAS does get overlooked for business intelligence projects quite often and for a number of reasons that are more related to marketing and sales to the target audience of BI and line-of-business analysts than to their product not having sufficient capabilities. It appears that SAS in 2011 will have a series of new releases to broaden the scope of BI with advancements in discovery and visualization, search, mobility and integration with Microsoft Office. This will be essential to compete against the usual suspects like IBM, MicroStrategy, Oracle, QlikView, SAP and even open sourced-based Actuate, Jaspersoft and Pentaho, all of which in the last year have released major new versions of their platforms and tools.

Where SAS has made its presence known is in the office of marketing and related areas, helping them succeed in management and specific operational activities including campaign management and a range of customer analytics from gaining predictive insights on future outcomes to understanding customer behavior at a granular level. SAS has emphasized its focus on resource management, bolstered when it purchased Veridiem many years back and now augmented by the recently announced the acquisition of Assetlink to further deepen its presence in marketing. My colleague recently assessed SAS Customer Intelligence and the portfolio that is gaining traction with new deployments across industries. SAS has also expanded its social media analytics offering to support monitoring deeper sentiment and relationship analysis. SAS has for many years focused on improving the role of technology in marketing, an area that has also been seen as important by the likes of IBM, which acquired Unica and Coremetrics, and recently Teradata, which acquired Aprimo. Our benchmark research into customer analytics and marketing analytics show significant room for improvement, potential that will continue to provide SAS room for great customer and revenue growth. SAS is working hard to unify its suite of applications, seeking to ensure consistency of user interfaces and then deliver support for the mobile needs of marketing organizations. All of these activities are heating up what looks like to be a battle for the CMO’s attention and spend – a battle that will require fluency in talking marketing-speak to be successful.

SAS has invested more deeply into four key industries: banking, insurance, retail and government. I will not get into the details of the significant growth of the offerings that address risk and fraud for these industries and healthcare, as they require more in-depth analysis, but this clearly is where the business analytics foundation plays to its strength in providing suites of applications. One of the interesting aspects of the analyst summit was what was missing as part of SAS’s communications about strategic directions. SAS has invested into many areas including finance, human resources, supply chain, sustainability, IT and into areas of performance management. All of these areas have potential and were highlighted last year, but SAS’s efforts in these areas remain mostly unknown by the specific line-of-business buyers; unless and until SAS invests further into the marketing and sales it probably will not find much new growth compared to previous years. This should be something that concerns it, as have a growing base of customers focused on solving their enterprise problems helps drive improvement and refinements to its business focus. I also have not seen SAS invest yet into area sales and customer service or contact centers. SAS has alluded to adding support for contact center operations but we’ll have to see how that plays out in regards to my colleague’s research areas of agent performance management and customer experience management. Also, I pointed out last year and still believe that SAS will need to invest into speech analytics to gain insight to the true voice of the customer that can be found in customer interactions in contact centers.

From a market perspective SAS has business analytics competencies in industries where I do not see that IBM and SAP have deepened their efforts. On the other hand, SAS is not as strong in healthcare, retail, life sciences, energy and manufacturing. I am sure this will continue to change as the market heats up. I also am not clear where Oracle is at since it has not articulated a portfolio approach to business analytics across industries and lines of business beyond IT and its own application efforts. Also, I need to make sure not to miss the dozens of dedicated line-of-business analytic and performance management application providers that are growing rapidly in areas like sales, contact center and talent management.

SAS has come a long way since IBM donated a mainframe to a university in North Carolina to help advance the statistical programming movement in 1966, back when Tony Barr was part of the origins of the statistical analysis software. Tony and Jim Goodknight, John Sall and Jane Helwig started SAS Institute in 1976. In now reaching its 35th anniversary, SAS Institute has helped advance the science of analytics in so many ways that will never be measured. Now SAS Institute will need to examine if it can expand beyond its comfort level and areas of growth it has outlined to areas where it has new growth potential. If you have not considered SAS for technology and applications in a range of business analytics, look again; there are many great business-friendly offerings that can provide great value. SAS is transforming and simplifying its efforts, bringing its offerings into the cloud, which is part of the reason it has been able to grow without having to increase its consulting services organization. SAS has also opened up and worked very closely with consulting services firms that can help use its technology to transform management and business processes. The only caution in considering SAS is to be aware of the areas where it has not yet upped its investment. But it is worth watching it attempt to deliver on a mission of business analytics for every line of business and industry.

SAS appears to be in revenue and product portfolio the largest supplier of business analytics technology and products, and will continue to grow as businesses invest into the information and analytics that help them not just optimize but perform at the expected level.

Regards,

Mark Smith – CEO & EVP Research

Recently Human Concepts sold its personal organizational structure software OrgPlus to Administaff . Since it retains other products with the OrgPlus name, this step might seem puzzling, but it makes sense in terms of the company’s developing product strategy. The sale also frees Human Concepts to focus on organizations with more than 1,000 employees, where growth is more readily available. Human Concepts is experienced in the workforce management market; its customer and partner Zentiva Group won our firm’s 2010 Leadership Award in HR and Workforce Management. Late last year Human Concepts unveiled a new workforce analytics technology tool called Workforce Monitor. It uses the organizational chart as an analytical tool for more than display or monitoring of information – it can provide workforce analytics and planning to serve the needs not only of HR but of line-of-business management and analysts. The product does not just retrofit the limited capabilities of spreadsheets and presentations widely used for analytics, planning and publishing of workforce information. This is a valuable advance; our benchmark research in workforce analytics found that spreadsheets are used universally or regularly in 96 percent of HR organizations but that 39 percent of organizations are not satisfied with their technology and information is not actionable in more than half of organizations.

As well as HR the other business areas need a fast and effective method for assessing the performance of individuals who may work in sales, field service or contact centers. Managers need quick access to quantitative performance metrics also to reformulate organizational structures. Currently most analytics and business intelligence tools only use charts and tables for review of data and provide little if any capability to understand the analytics and metrics by organizational structure. Human Concepts incorporates charts and tables as part of the drill-down process for reviewing departments, managers and employees from within the org-chart view. Our performance management for talent management benchmark found that gaining visibility about progress toward goals and targets has the highest importance in 94 percent of organizations, as does blending of organizational and personnel charts in 53 percent. Workforce Monitor addresses these needs in a simple way that advances the workforce analytics industry.

In addition, Human Concepts has brought to market OrgPlus Mobile to provide rapid access to organizational and employee information on the Apple iPhone and RIM BlackBerry, with devices running Google’s Android coming in the near future. This application will help organizations provide ready access to the employee directory and related information in a secure and consistent manner, which normally is a challenge. This new capability, announced in late 2010, is timely as mobile access becomes significantly more important. It also sets the foundation for further advances in accessing other information from Workforce Monitor; the combination could create a significant opportunity for Human Concepts. But it is not yet clear how compatible the Workforce Monitor technology is with existing browsers and environments that operate on smartphones and tablet computers today.

Both Workforce Monitor and OrgPlus Mobile complement the vendor’s OrgPlus Enterprise platform and can help existing customers gain more value from using the organizational approach to workforce analytics and planning. The new products also can add value to existing sets of data from underlying HRMS and talent management systems that rely on reports and dashboards by allowing users to examine the organizational chart. Workforce Monitor is made available in the rental model of software as a service (SaaS) or cloud computing, which enables users from HR or any other organization to start using the software rapidly. The price point for the technologies is calculated as a percentage of the number of employees. Now Human Concepts must convince more organizations to use the technology than merely its 600 or so OrgPlus Enterprise customers. Other organizations could use the capabilities through specialized data integration of their in-house data to the cloud-based system.

Human Concepts will have to sharpen its marketing edge to increase enterprise sales and distribution through new channels. It must show the market that Workforce Monitor is not a monitoring or reporting tool but a sophisticated workforce analytics application that can help with organizational and succession planning and related areas. Career and succession planning is one of the top three functions that organizations in our research demand from talent and performance management suites. Their value may be even more important for contact center, field service, sales and retail store departments that have routine changes in employees and reporting structures; these departments need to analyze behavior proactively to improve business outcomes and not just wait for annual performance reviews. The tool also can be useful as organizations look to do what-if and scenario planning with their human capital. Human Concepts faces direct competition in its organizational approach from Aquire and others in the talent management application market, but its new approach makes a breakthrough in the simplicity of applying sophisticated analytics and planning in one application.

Regards,

Mark Smith – CEO & EVP Research

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