Customer confidence
Customers are so confident of where sas will lead them that Goodnight's knighting of Andre Boisvert as his replacement as president last fall caused little more than a ripple in the market. It was not seen, as similar moves in other companies often are, as a prelude to early retirement by the man who built SAS. And when Boisvert suddenly left the job in January, barely six months after his appointment, the news once again failed to cause a stir. Little is being said about Boisvert's departure, but industry watchers speculate that he and the SAS management team were on different timetables for SAS' proposed IPO. The offering is now not expected until some time in 2002.
The fact that the company remains private despite a desire to offer employees stock options and other benefits of a publicly held entity shows a steadiness and attention to the long term. After all, SAS has a lot to protect. In addition to phenomenal growth rates and prosperity, it has no debt. That's not something many of its competitors can boast.
Cognos, the leader in the midtier space, issued an earnings warning earlier in the year, and last month announced it was cutting 300 jobs. Hyperion Solutions announced last month that it was cutting close to 400 employees, or about 15 percent of its work force, in the face of a revenue shortfall. And MicroStrategy, another midtier vendor, has had a particularly bumpy year, losing 99 percent of its market value and getting hit with shareholder lawsuits. MicroStrategy has managed to get its finances under control, but not before being forced to lay off 600 employees in April.
Peter Urban, an analyst at market research firm AMR Research, acknowledges that market conditions are to blame for much of the turmoil, but also argues that many vendors were slow to make the shift to an Internet-enabled thin-client model and got caught with their pants down. "Some of these guys have had a hard time going to the Web," Urban says. And users have been more inclined to turn to companies such as SAS that have a complete thin-client strategy in place, he says.
That's where having a visionary such as Goodnight on board pays off. SAS' client is so thin and trim that the company has made the move to the Web with little more than a polite burp. In fact, SAS recently picked up the APICS Technology Partnership Award of Excellence - APICS is the Educational Society for Resource Management - for the data warehouse/Internet access solution it developed for the BMG Direct Record Club.
The record club, already a SAS user, needed a way to assess the music tastes of its customers so it could market music choices more directly to them. SAS was able to build a Java/HTML interface to the company's SAS data warehouse, so that company analysts and marketers could get to the data.
At VitaGen, a Synteract clinical application is being used in concert with SAS' e-Intelligence software to analyse and get access to data, and to assign random identification markers to critically ill patients participating in clinical trials of an artificial liver, the Extracorporeal Liver Assist Device. Using a Palm VII, VitaGen workers can access data no matter where they are, says Pat Maguire, a former surgeon who is now vice president of medical affairs at VitaGen. He notes that the application looks the same on a laptop, desktop or Palm unit, and that it frees VitaGen workers from being chained to their desks, without compromising the trials and excluding desperately ill patients.
SAS' pricing model is also designed to keep it focused on customer needs. Instead of buying a software license outright from the company, customers pay a yearly "subscription" fee. That means a lower cost of entry for customers. "They don't have to pay $5 million up front," Urban says.
But it also means customers could bolt, because they're not locked in. SAS "needs to make sure its customers get value throughout the year, because each year it's going to bill companies," Eddie Bauer's Boyd says. "It's not a one-shot event."
SAS currently enjoys a 98 percent renewal rate, and can attribute the wayward 2 percent almost entirely to mergers and acquisitions or people vacating their positions, rather than to any real dissatisfaction with its products. Part of its success comes from the fact that SAS itself has an extremely low turnover rate, meaning customers know from year to year exactly with whom they'll be dealing.
In fact, SAS' reputation for catering to its employees is legendary in business and technology circles. It regularly appears on top of Best Companies to Work For lists, including Interactive Week's. In addition to 35-hour work weeks, Goodnight has provided employees on the Cary campus with pools, a gym, a cafeteria subsidized by the company with a piano player to soothe them during lunch, and mounds of M&M candies. The campus is located on considerable acreage that is also home to a working farm and the Cary Academy, a high school started by Goodnight and Sall. And talk about hands-on: The company's two founders still reside in homes on the property.
The company's goal is to maintain its stellar reputation as it expands into the midmarket, and to capitalise on the current upheaval.
"Business intelligence is the one area of IT [information technology] that can add value to a company and its bottom line," Goodnight says.
