Last week I had the pleasure to attend a first-class executive conference in Las Vegas put on by SAS, the analytics powerhouse. I wanted to learn about the company’s new social analytics offering and get a more general update on SAS.
Let’s start with the big picture. Despite a down economy, SAS CMO Jim Davis says the company grew about 2% last year and expects better performance in 2010. Pretty impressive in an environment where “flat is the new up.” So how did the company manage to grow from around $1B in annual revenue to $2.3B over the past decade? Davis attributes this mainly to a shift to vertical solutions begun in 2000, moving steadily away from its heritage as a tools vendor. And indeed, the conference expo was largely organized around industry verticals, like financial services, retail, etc.
Of course, you still need products to make a solution. SAS now boasts over 200+ products in customer intelligence, risk management, IT data services and more. In addition to its vertical focus, SAS has also been working hard, Davis said, to improve functionality of its marketing solutions, closing the gap with best-of-breed vendors like Unica. They’ve also been working on improving ease of use, which has been a challenge given the geeky orientation of the company over the years.
Big marketing automation win — a sign of more to come?
To underscore its improvement in marketing automation, SAS recently notched a big win at T-Mobile USA over Unica, Oracle and Chordiant. According to VP of Marketing Philipp von Holtzendorff-Felling, they were looking for a robust multi-channel marketing solution to ensure the right offers were sent to the right customers at the right time.
Go back a couple of years, and I’d say Unica probably would have won this deal. But T-Mobile selected the SAS solution, and in part it was because SAS was “easy to use.” That’s a phrase not often associated with SAS, again because of its analytic tools and a culture where complexity is/was often viewed as a Good Thing. This win speaks volumes for SAS’ improvement in providing not only functionally rich marketing solutions (which is certainly a key requirement), but also solutions that people can easily use in the era of Web 2.0 and social media.
From social analytics to engagement
If you’re an analytics company, then social media is the next frontier for understanding the “voice of the market” — including customers (if they can be identified) or prospects and influencers. And of course there has been a lot of activity in the social media monitoring (SMM) space from companies like Radian6, Visible Tech, Alterian/Techrigy and many many more. Although the list has been shrinking due to acquisitions (e.g. Attensity and Biz360).
Plus, many other vendors are adding social “listening” capabilities, including enterprise feedback management vendors (e.g. Allegiance, MarketTools, Satmetrix), text mining (e.g. Attensity, Clarabridge, Overtone) and CRM vendors (e.g. RightNow, SAP). Call it Social CRM if you must, but there’s no question that social is a channel that must be leveraged by most customer-oriented software companies.
So social listening is not a new concept anymore. Heck, even IBM, not exactly a first-mover in this area, got into the VoC game with a custom analytics solution late last year. And more recently acquired SPSS to bolster its analytics and text mining capability.
Now the stage is set for Social VoC (SVOC, you heard it here first!) vendor consolidation and SAS is making its move. Earlier this year SAS entered the market with a new Social Media Analytics solution, targeted for large enterprises. Basically this handles the collection and analysis of social media content, including categorization and sentiment analysis like other vendors. The core text mining technology comes from the Teragram acquisition in 2008.
At the conference SAS announced the next step: the SAS Conversation Center. The idea, according to SAS product marketing manage John Bastone, is to focus on “engagement”—a word I’ve been hearing a lot more of late. At SAS, engagement means not just analyzing the social content (tweets initially) but also providing a tool for managers in PR, marketing and customer care to actual do something. You know, have an actual conversation. Now we’re talking real social.
This new on-demand solution, to be available in January 2011, can be used in a standalone or point solution style, which is how most SMM solutions have been deployed to date. But it also has the hooks to enable companies to integrate with existing legacy systems. I expect that’s where SMM to end up in the next five years or so, at least for large companies. In most cases, social is a feature or a channel, not a solution.
Real-time predictive offers for retailers
During the event, I also had the pleasure of chatting with Eric Williams, Executive VP and CIO of Catalina Marketing. If you’ve ever gotten an instant coupon during a checkout process at a grocery store, chances are his company was behind the scenes analyzing your purchase history and current shopping basket, and determining on the fly what coupon to offer.
The beauty of this approach for retailers is that the brands (P&G, Coke, etc.) fund the coupons and Catalina Marketing’s services. And of course what consumer doesn’t like a relevant offer? Williams says the offers driven by their behavior-based marketing technology (from SAS, naturally) gets a much higher redeem rate than mass coupons like you might see in the Sunday newspaper. For more on this, see the SAS case study.
Opportunities and threats
Getting back to the big picture, SAS has been growing nicely and steadily improving its product portfolio. It’s nicely positioned to capitalize on high interest in analytics for many different applications, but especially for customer intelligence.
But what about key threats for the future? Well, I’d say IBM is one. Recent software acquisitions theoretically position IBM to challenge SAS for large enterprise deals in marketing (Unica) and analytics (SPSS). But SAS CMO Jim Davis isn’t worried, quite the opposite. He says that the recent IBM acquisition of Unica will open a window of opportunity for the next 12-18 months. Based on a few other people I consulted, I would tend to agree. IBM has a mixed track record handling acquisitions, and at the very least there will be some near-term uncertainty about the future of Unica within the folds of Big Blue.
A more interesting threat comes from the open source world: R. That’s right, just one measly little letter. How tough can that be?
Well, R is a free and open source alternative to some of the analytics tools that SAS offers. Over the past few years, R has gained quite a following, amassing 2M+ users with penetration into the F500. And while it may not match every feature that SAS has developed in its 30 year history, the price tag of “free” certainly has pull.
Still, all in all, SAS seems to be executing quite well, especially for such a big software company. I look forward to seeing the Conversation Center when available early next year. Meanwhile, I expect social media monitoring/analytics pioneers will work furiously to stay ahead of larger vendors like SAS who are building up momentum.
Disclosure: SAS paid my travel expenses and provided a free pass to attend the conference. SAS is not a client or sponsor of CustomerThink. This post is not an endorsement of SAS or its products/services.
Further reading: The New Conversation: Taking Social Media from Talk to Action (Free 20-page white paper, no registration required, highlighting findings from HBR survey of 2,000+ organizations on social media views and adoption.)