David Menninger's Analyst Perspectives

I recently attended SAS Institute’s annual analyst conference. My colleague covered the multibillion-dollar company’s strategy and the event. Now I want to look into some of the details of SAS’s products for business analytics and how they are supported with business intelligence (BI), and information management. Although SAS is not a publicly traded company and therefore is not required to make the financial disclosures that others are, the company revealed numerous financial statistics. Business intelligence represents over $200 million in license revenue to SAS. That’s a significant figure, larger than publicly traded BI vendors QlikTech (NASDAQ: QLIK) and Actuate (NASDAQ: BIRT) have and smaller than but still in the same order of magnitude as MicroStrategy (NASDAQ: MSTR) and Information Builders. These figures are consistent with results in our benchmark research on business intelligence and performance management: 18% of our research respondents reported using SAS products, which places it in the middle of the pack.

SAS has a broad portfolio of BI products including query, reporting, OLAP, visualization and dashboarding. The existing product line lags behind competitive offerings’ collaboration and mobile capabilities, but SAS has plans to address these areas. An upcoming release, planned for later in 2011, will focus on visualization, some in-memory capabilities, expanded collaboration and mobile deployments. SAS has a history in the visualization space with its JMP product. The new release will bring more visualization along with in-memory technology to the core BI product. The visualization capabilities will be delivered in both iPad and Flash versions.

My colleague highlighted collaboration as one of five technologies creating a revolution in business in 2011. On the collaboration front, SAS provided integration with Microsoft Outlook last summer and will be expanding those capabilities. I am a fan of Outlook integration. The product may not be as sexy as Salesforce Chatter or other social media channels, but a collaboration channel must have critical mass to be successful. That is, if the people you need to interact with aren’t present on that channel, your communications won’t reach the intended recipients. Integration with Outlook solves that problem because everyone in the enterprise uses e-mail and it is the dominant client software. Sure, I’d like to see a roadmap that includes other collaboration channels, but Outlook is the logical starting point and can be a bridge until those other channels are more widely adopted.

Users should be aware that many SAS applications were built before its BI stack was available and are still based on separate components. Newer applications such as Customer Intelligence are based on the BI stack, but older applications are migrating to the BI stack only over time. This obviously impacts integration among parts of the product line. But since many applications are not based on the BI stack, there is less pull-through from sales of those applications, and this suggests that the BI products are succeeding on their own.

When it comes to information management, SAS let’s its wholly owned software business handle the development of its products and to the marketing and sales activities. DataFlux, acquired by SAS more than 10 years ago, maintains a separate identity and a separate product line from SAS Data Integration, although the underlying components and metadata, rules and transformations can be shared and process flows can be orchestrated between the two lines. DataFlux, with over 2,300 customers, provides data integration, data quality and master data management capabilities. In 2011 it will be moving into complex event processing for operational intelligence. See our benchmark research on the subject here.

While the SAS and DataFlux information management products can deal with cloud-based data, they do not yet offer a software-as-a-service versions of their products, which some other vendors do. SAS also needs to provide more integration between its BI products and the information management products. For instance, data lineage and glossary information cannot be surfaced through the BI products today, although SAS can provide impact analysis of where information is used in the BI products.

Business analytics at SAS is a separate category from BI. In it SAS includes statistics, forecasting, predictive analytics and text analytics. Our recent BI and performance management benchmark research shows that less than one-quarter of respondents use predictive analytics. However, in our newly completed benchmark research on business analytics 80% of organizations said that it is important or very important to apply predictive analytics to predict future outcomes, so we expect usage to grow. SAS has a long history in the analytics space and a well-developed product line, but it is still extending its algorithms. In 2011 SAS will be focusing on new algorithms for high-frequency data and more powerful optimization techniques. Part of the development centers around high-performance computing techniques that distribute processing across multiple servers to handle large volumes of data quickly. These high-performance techniques will be delivered as an analytic appliance. SAS also plans to provide operational analytics through workflow and business rules.

In all the talk of high-performance computing, SAS said little about Hadoop. I expect to hear more from SAS on this topic, but the plans are still in the formative stages. (For discussion of what other organizations are doing with Hadoop, see my previous post “Living in the Era of Hadoop and Large-Scale Data”. SAS is also working on enterprise search capabilities, which we believe are important as discussed here

So while most of SAS’s business derives from applications, there is a robust tools business for BI, analytics and information management. Whether you are an SAS customer or not, I hope this recap of what’s going on at SAS helps you understand some of the ways in which analytics and BI are becoming more intertwined. 

Regards,

David Menninger – VP & Research Director