SAS CMO Details Firm's Repeat Success, Resilience, Reinvention

November 1, 2004

BY MICHAEL KRAUSS

A conversation with SAS Institute Inc.'s senior vice president and chief marketing officer Jim Davis is an intellectual marketing joy ride.

In one breath, we talk about up-selling and cross-selling wealth management customers at financial services firms such as Fidelity or UBS. In the next breath we're speaking about new approaches Wal-Mart might take with the information gleaned from RFID technology.

Then it's on to ways Cary, N.C.-based SAS facilitates pharmaceutical drug trials and FDA approvals. The next minute we're preventing customer churn in the wireless telephony business using analytics to protect the customer base at places like Verizon, Cingular or T-Mobile (though Davis never names his clients directly).

All of this comes after Davis addresses a cross-industry group of chief information officers at a technology conference in Chicago. Davis holds an undergraduate degree in computer science. He sounds more like an IT strategy consultant on the podium than one of the world's top technology marketers. Yet he's both.

SAS seems to have a wonderful duality embodied physically in Davis. SAS helps marketers across the globe glean business intelligence from data. They're a huge enabler to CMOs worldwide. Yet the story of how SAS evolved as a marketing organization is equally instructive.

Consider the statistics. SAS is the world's largest privately held software company. It serves more than 40,000 clients including 97 of the Fortune 100. SAS has revenue of $1.34 billion and offices in 105 countries. SAS has some 9,300 employees and it redirects 26% of its revenue back into R&D each year--nearly double the industry average. Maybe that's why the company never had a down year in terms of revenue. Even in the dot-com bust SAS eked out growth.

Most people know SAS as a model place to work. You may recall CEO Jim Goodnight's appearance on CBS's 60 Minutes. In an interview with Morley Safer, Goodnight positioned SAS as one of the best places to work--despite the fact that employees don't get stock options. As Safer reported, the company encourages a 35-hour work week, no dress code and "perks such as on-site car detailing, a putting green, and, of course, the masseur." There's also a 50,000-square-foot fitness facility and free M&Ms for employees on Wednesdays.

When I was a young brand manager in the early 1980s, SAS was a set of emerging software tools. When you thought of SAS, you thought of packaged analytics software. There was WordStar for desktop publishing. There was VisiCalc, the first spreadsheet program. There was SAS.

The information superhighway is littered with software products that crashed and burned after a moment's fame and fortune. Not SAS. Three times in the company's evolution, SAS has significantly shifted its marketing strategy--each time with great success.

"Our success is one of our biggest challenges," Davis says. "Our roots are in analytics. We still have the lion's share of the high-end analytics market. About 27% of revenue comes from high-end analytics. About 50% to 55% comes from data warehousing and data integration. The biggest segment of our business is in integrating and surfacing data so you can apply some form of analytics to it," Davis adds.

If you think about solving business problems using business intelligence it requires two core competencies--data integration and analytics. You have to pull the data together across the organization and then you have to apply analysis to it just-in-time, when the customer is at the cash register, on the phone or in the mood to buy. Some vendors are good at data warehousing. Some are good at analytics. SAS is good at both.

Since 1976, SAS has managed to evolve first into a highly successful provider of packaged software. Next the company morphed into a horizontal solutions provider grouping its myriad products into offerings that supported various organizational functions. Now, under Davis, the company is reinventing its marketing approach once again by delivering tailored offerings in vertical industries.

"We're calling it the third phase of our evolution," Davis says. "Phase one was from 1976 to 1995. What did the market want then?" asks Davis rhetorically. "They wanted tools. They had their own staff and they could just apply these tools."

"About 1995 we realized that the shrink-wrapped product approach was not going to survive. People were going to stop buying technology and they were going to shift toward solving business problems. We amassed more than a hundred products from 1976 to 1995 and we said, 'Let's treat our products as components to solutions.' We took those products and came out with horizontal apps like CRM solutions, human capital management, risk management, IT service level management, performance management.

"When the bubble burst we said, 'Alright, the market's tightening. We need to refine the value proposition. It's not about CRM, it's about customer churn for telecommunications companies.' " Davis repositioned the company as a vertical solutions provider.
SAS had long focused on the public sector, the educational sector and pharmaceutical companies. Building on that base, the company formalized a financial services business that now accounts for 36% of revenue, according to Davis. They formalized a health and life sciences sector. Last January SAS launched a retail industry program, which Davis is stewarding personally. A new focused approach to the telecommunications industry is expected to launch soon.

"When we say we vertical-ize, it goes far beyond the sales force," Davis says. "It's sales. It's marketing. It's product development. It's publications. It's education. It's a pretty big shift. Too many people just do it at the sales front. You'll get caught short there," he warns.

"We've shifted from a technology-driven company--an inside-out marketing company--to an outside-in company," says Davis, who has product strategy within his organization. He's adopted an approach he calls pragmatic marketing that takes into consideration the personas of his vertical markets and the problems the buyers in those markets face. He translates that back into R&D.

Davis says his success is based "on a very strong partnership between R&D and marketing, recognizing we need to look at what the user needs, not just what we think is cool."

Truer words were never spoken in technology marketing. Davis offers marketers more than business intelligence. He offers them a rush of ideas.

Michael Krauss is a partner with Marion Consulting Partners based in Highland Park, Ill., and can be reached at Michael.Krauss@Marionpartners.com or news@ama.org.