It’s a remarkable turnout. I attended the event, in Sydney’s Hilton Hotel, and had difficulty finding a seat. Why were so many people there? The answer reveals a lot about the company.
I’ve been tracking SAS since the 1980s. It’s one of the industry’s more interesting companies. Its revenues now are closing in on three billion dollars, but it is still owned by its CEO, Dr Jim Goodnight and a couple of associates, who founded the company in North Carolina in 1976.
The company grew out of work they had done at North Carolina State University, where they developed statistical analysis tools to analyse agricultural data. It quickly grew to become the industry’s leading statistical analysis vendor, and had had an office in Australia since the early 1980s. Its software is used by 70% of the Fortune 500, and most of the ASX 200.
SAS is extremely proud of the fact that it has been profitable every year of its existence. It has no debt and has never had to lay off an employee because times were tough. In recent years it has successfully made the transition from a tools vendor to a supplier of industry-specific statistical analysis tools.
SAS has always done well, because people need to analyse data. It has competed largely against business intelligence (BI) tools, but never properly played in the BI space. Now, with the advent of so-called big data, it has really come into its own. It analysis techniques lend themselves very well to the massive volumes of structured and unstructured data being generated by today’s information systems.
SAS has developed a new technology which it calls ‘High Performance Analytics ‘(HPA) to analyse big data. It operates in memory, using hardware blades, but does not use the conventional database systems employed by BI tools. It has developed its own data structure which can also store and analyse unstructured data, such as that found in emails and social media, to provide insights into things like customer behaviour and financial risk.
At the conference I interviewed Mikael Hagstrom, a quietly spoken Swede who is head of SAS’s international operations. “We are shifting from a world where we think we know, because we sampled a little and extrapolated a lot, into a world in which we know and we can prove it.
“This is leading to a shift in human culture, all made possible by our newest and most important asset class – data. Over 80% of data today is unstructured, which gives us an extraordinary opportunity, given how much we’ve already been able to accomplish analysing the other 20%.”
One area where SAS is using its tools is in fraud. “Fraud is everyone’s problem,” says Hagstrom. “It cannot be ignored, especially in digital crime. In today’s turbulent economy much fraud goes untried, or even undetected.
“Costs are then passed on to consumers or other constituents in the form of higher prices, increased fees or lower margins. Clever analytics can prevent fraud by analysing transactions and other behaviour in real time.”
Many of the attendees at the Sydney conference were financial institutions – all of Australia’s Big Four banks are SAS customers, and NAB and CBA presented at the conference. Also presenting was the New Zealand Ministry of Social Development, which has a large scale SAS project to analyse patterns of welfare payments, to identify potential recipients that may become overly dependent on welfare and intervene before that happens.
We hear a lot about big data and big data analytics. SAS is in a good position. Founder Jim Goodnight is still running the company, but he is 70 now and visibly slowing.
But SAS is not. The people at the conference, SAS employees and SAS customers, are evidence of that. A thousand pieces of evidence.