Much as I'd like to take credit, it's probably more happenstance that statistical juggernaut SAS has been in the news several times over the last week following my recent A SAS Story and Statistical Revolution blogs. But like me, the press hasn't exactly been favorable, adding credence to the claim that SAS is now facing serious threats on several competitive fronts.
In a Sunday, November 22 article in NYTimes.com entitled At a Software Powerhouse, the Good Life is Under Siege, with browser sub-title Rivals Take Aim at the Software Company SAS, writer Steve Lohr chronicles the SAS “story” from its inception in 1976, detailing the evolution of the celebrated SAS work culture that was so positively received by 60 Minutes six years ago. Their enviable business model has also been the centerpiece of Bschool case studies and anecdotes for years. SAS has been essentially alone at the top of the statistical market since 1980, its software at the core of critical predictive analytics work for most Fortune 500 companies. As a consequence, SAS was able to architect a protective “moat” around its business that made financial analysts drool – and gave the company pricing power it used ruthlessly. But, as Lohr notes, the analytics landscape is changing quickly, and SAS must now change its insular ways to keep up.
According to Erik Brynjolfsson of MIT, “Now, the data is available so business can move toward evidence-based decision-making. This market is a huge opportunity.” Though SAS certainly sees that opportunity, unfortunately, so does IBM, SAP and Oracle, each of whom has made significant intelligence and analytics investments over the past two years. And the open source R Project for Statistical Computing, with its huge world-wide following among academics and researchers, will see that loyalty migrate with students to the business world in coming years. IBM seems particularly well-poised for this challenge, with its acquisition of leading BI vendor Cognos last year, its recent purchase of SAS competitor SPSS, its legion of over 100,000 consultants, its established business vertical expertise, and its encompassing Smarter Planet strategic initiative. According to Ambuj Goyal, general manager of the IBM business analytics unit, “This is the big growth strategy for IBM, the company's next big play for this decade.”
IBM's analytics strategy is further amplified in the eweek article How IBM Brought Analytics to the Cloud, which seems less about cloud computing and more about IBM's analytics obsession. The IBM Smart Analytics Cloud combines the virtualization infrastructure of System z with the analytics platforms of Cognos and SPSS – all tied together by the vertical business and technology expertise of IBM services. Ambuj Goyal opines “This is a trend for us. This is not just an announcement; it's a journey...We will continue to grow through both organic moves and acquisitions.” According to Senior VP Steve Mills, “Our clients investment in business optimization is growing twice as fast as business automation.” Goyal concludes “This is about unlocking the business value of information. If you're going to treat information as a strategic asset, you need to do the transformation projects, And to do this we needed to build a service line built on consulting.” Expect IBM to continue its role of industry beacon for the use of analytics to optimize business processes.
As if they didn't have enough problems from technology bellwethers with deep pockets and a lust for the attractive analytics market, SAS now finds itself embroiled in a lawsuit against a former partner, World Programming Ltd, that markets a SAS-like compiler at a price over half an order of magnitude less than comparable SAS products. Indeed, I've tested the WPS system and have found it rock solid. Worried that many customers who feel they're overpaying for their annual licenses might come to a similar conclusion, SAS initiated litigation against World Programming, alleging that “its World Programming System software is in breach of the terms of the SAS Learning Edition Licensing Agreement". SAS seeks “to prevent the sale and distribution of World Programming System software that has been developed and tested using SAS.” Now I'm no legal expert, but I'm pretty sure this is as much a case of the class bully intimidating one of his mates. It might be time for WP to be acquired by a muscle-bound friend who can give the ruffian his comeuppance. Imagine the sales forces of either Oracle, SAP or IBM with a list of SAS customers and a proposition to replace one or more of its products at a savings of 75%!
As I've mentioned in previous blogs, the enhanced competition in the analytics marketplace will be a boon for BI. SAS will become a friendlier company to partner with – or fail in its insularity. And IBM – and perhaps SAP and Oracle -- with all the technology and people pieces of the analytics stack, will guide the market by providing a model for how to strategize, conceptualize, design, build and deploy evidence-based business. The open source R platform will start to gain business market share, its academic loyalty a leading indicator of commercial success. Ten years from now, competing on analytics will be the norm rather than the exception.
Steve Miller's blog can also be found at miller.openbi.com.