SAS, the analytics software and services firm was keen to show that it has its ear on the ground – particularly when it comes to providing advanced data capabilities to enhance customer service and support so-called digital transformation.
More than 6,000 clients from every industry took over Denver’s conference center to hear what the company started by Jim Goodnight in the 1970s had to say about where the future of data is headed. And they are paying attention. Despite the tight competition, SAS continues to be the leader in its space with a 30.5 percent share of the advanced and predictive analytics market, well over twice the market share of the next-closest competitor.
But the analytics market is getting crowded – particularly in segments where SAS has enjoyed almost solo leadership, such as risk and fraud. In order to operate in this scenario, the company had to up its game. For example, it claims to reinvest about twice the average of major technology firms into R&D – 26 percent in 2017.
According to EVP, COO and CTO at SAS, Oliver Schabenberger, the analytics company wouldn’t have been able to survive if it didn’t invest as much as it does on research and if it didn’t have a close relationship with its customer base.
We needed to be able to navigate market changes and we do that through innovation and especially by understanding what our customers need. All these changes happened because customers had a need – and we listened very carefully to them and continued to innovate to meet those demands.
The market is clearly more competitive – analytics is everywhere and digital transformation brings many challenges that analytics is able to solve. In a shift like this, there are many vendors entering the market and that’s why we have to prove ourselves – it’s just a part of being in the business.
It is also undeniable that other options of analytics software can deliver similar functionality at a much lower price than SAS. According to the CTO, the company is not hiding away from that reality:
You can’t talk about price without talking about value – sure, there are less expensive alternative and all customers have choices and they do their homework. I encourage them to drill in and put us to the test – we can prove our value to them and we have a lot of success in that front.
The main challenge Schabenberger observes in his client interactions lies beyond budgets. When it comes to advancing their analytics capabilities, the executive says, the most difficult part is finding enough skilled people to work on analytics projects and this is particularly true outside the world of large organizations.
Especially for small and medium enterprises, the number one barrier is the lack of talent. They struggle to compete as talent is lost to larger companies as [professionals] tend to go where the problems – and salaries – are bigger.
According to Schabenberger, cloud-based offerings are particularly helpful to these organizations, as they address the issue of having to build analytics engines from scratch and also having to develop specific skillsets in house.
As part of its strategy to compete in the competitive analytics landscape, SAS is focusing on areas where it sees high revenue potential and creating “centers of excellence” to better support its client base. Yesterday, it announced the creation of a new global Fraud and Security Intelligence Division.
According to the Association of Certified Fraud Examiners, the typical organization loses 5 percent of annual revenues to fraud, equating to trillions of dollars in losses worldwide yearly, so the creation of the new division is intended to “further focus and sharpen” the SAS fraud and cybersecurity portfolio.
According to SAS, more than 400 employees in 25 countries across the Americas, Europe, and Asia support this new area and the plan is to add another 100 employees to the division over the next three years, with 50 new roles anticipated before the end of 2018.
The firm is also targeting Internet of Things (IoT). In January 2018, SAS created a new division to focus on those technologies, covering everything from engineering to product management to service delivery to commercialization. According to SAS, IoT revenue saw a boost of 60 percent in 2017 and the firm sees major potential in the Asia Pacific and Europe markets for the technologies going forward.
Artificial intelligence is another area the company is looking to expand, through a global team that is part of SAS’ wider R&D efforts to help customers implement AI technology.
Going back to the theme of access to skills, the executive points out that he often visits clients that have a technology organization that is much larger than SAS’s own team, so one of the goals of these new initiatives is helping clients better utilize their in-house resource to drive more innovation.
We want to help customers build things that add value, by providing a platform that gives them what they need in terms of analytics. That way, their teams are freer to build other important things for their organizations.
Even a company like SAS with its enviable reputation for quality, if expensive solutions cannot stand still. How does it compete in a world where the cost of computing resources has fallen so much and where the ready availability of powerful open source algorithms makes the development of new types of analytics so much easier than it was when Jim Goodnight founded the company 40 years ago?
The company line draws heavily on its trusted status and longevity/experience. So far that’s worked in a market where it is dominant and where the sheer number of fintech entrants makes for a highly fragmented (and noisy) group of ‘others.’
Once again we hear SAS talking price but does its premium position give it enough wiggle room to continue successfully arguing the ‘value’ story? One answer lies in what the company prevents by way of fraud in the banking arena. But even today, I’d argue SAS needs to get better at the predictive part of that equation. False positives are a bane of the end customer life which will not be tolerated in the (near) future.
While it is right to pose the question of existential threats, it’s important not to write off vendors that have been staggeringly successful and SAS is no exception. But it will be customers who are the ultimate arbiters. I’m sure that weighs equally with a company that’s never been short on straight taking.
Image credit - via SAS
Disclosure - SAS covered most of the author's T&E for event attendance.