Inside SAS: A vendor dossier

The cult of Dr Jim Goodnight...

The cult of Dr Jim Goodnight...

Currently I am flying at 39,000 feet above the Rocky Mountains on my way to Las Vegas.

I am travelling with business analytics software provider SAS who will announce the latest iteration of its analytics and business intelligence software suite, SAS 9.0, at the Better Management Live event.

What's more I am travelling in the company's own private executive jet - but no ordinary jet, this is a Boeing 737 and it is furnished like a very exclusive drinking club or billionaire's study.

The plane is decked out in leather sofas and armchairs, French-polished walnut wood panelling on the walls and the bar and designer fixtures and fittings. Only the seatbelts on the armchairs and the clouds outside the windows betray the fact this is an aeroplane. A touch of turbulence over the Grand Canyon adds further confirmation.

The staff - pilot, co-pilot, stewardesses times two - are full-time employees of SAS. Interestingly, mobile phone use is positively encouraged during take-off and landing, heaping doubt on many airlines' claims of interference, and the Bloody Marys are wonderful.

The company also has a Citation jet in the hangar at Raleigh Durham International airport, just down the road from its headquarters in Cary, North Carolina. I can only hope the smaller jet bears a bumper-sticker which reads 'My other plane is a Boeing 737'.

There are plans afoot for a fourth jet. There is already a third in Germany servicing staff out the company's European headquarters in Heidelberg.

I'm stood at the bar discussing - certainly not complaining about - this extravagant way of travelling with Wes Rehm, senior vice president of SAS.

The company was founded by Dr Jim Goodnight and Dr John Sall in 1976 and Goodnight, still the company's CEO and president, decided it was best to travel this way following the events of 11 September, 2001, but Rehm assures me it is also cost effective - though possibly not in the short term. He tells me, in detail, about the tax deductible aspects of jet ownership.

But this doesn't belie the fact Goodnight likes to spend money - travelling around the SAS campus earlier in the day it is clear his staff are among the most notable recipients of any expenditure. Perhaps predictably Goodnight told me that a happy workforce is a productive workforce. Less predictably, his actual words were "contented cows give more milk".

But while that ethos isn't rocket science to fathom, few companies go about practising what they preach with the same level of dedication as Goodnight. Driving through the campus, a gym, wellness centre, health centre, sports halls, tennis courts, 'soccer' pitches, restaurants, subsidised cafes, bars, crèches, the Cary Academy (a high school with a technology focus) and rolling verdant grounds which are tended by a full-time team of 26 landscapers are the immediately noticeable tip of this HR iceberg.

Many of these benefits have been in place for more than 20 years. Since its inception in 1976 SAS has always offered flexible working and a 35-hour week policy.

Regularly SAS scores highly in almost any 'best workplace' surveys. For eight consecutive years it has made Fortune's '100 Best Companies to Work For' - often in the top 10; scoring third, second and second during the late nineties. SAS has also made something of a habit of being named in Working Mother magazine's 'best company for working mothers' list - a fact it is particularly proud of due to the family feel it attempts to foster.

And a number of genuine families do work for SAS. The talkative tour guide who takes us around the campus works there with her husband, daughter and son-in-law. That 'wholesomeness' may be the reason she was given such a public facing role but she was also suitably full of facts.

For example, the research and development centre at Cary boasts the largest atrium in the state. (Whether this is actually impressive or interesting I know not, but I defer to the more atrium-aware residents of North Carolina for confirmation.)

Beyond the actually building, SAS has made a huge commitment to R&D investment which currently accounts for 25 per cent of its revenue each year. That budget is managed by CTO Keith Collins, who, like the rest of the executives is a graduate of North Carolina State University.

Goodnight, Sall, the company's chief marketing officer Jim Davis and CIO Suzanne Gordon make up the rest of the executives' NCSU alumni.

As well as a budget now in excess of more than $250m, the R&D centre boasts a full size model of Jedi Master Yoda in the reception area - proof that techies will be techies irrespective of the size of their atrium.

But one area where SAS staff do differ from many others is in their workspaces: a surprising 99 per cent of SAS staff in Cary have their own office - "not cubicle", it's stressed - with floor to ceiling walls and a lockable door. It is very much their own space.

The buildings are all decorated with original works of art bought by the company's two 'artists in residence'. When the company becomes a little tired of these works they are auctioned off to staff at prices far lower than their purchase price or perceived value.

So, all in all it's a nice place to work, but what does this all mean?

SAS has one of the lowest churn rates of staff in the industry - around four per cent per annum. Goodnight wants to make sure his cows don't stray into other people's fields and start providing milk for one of his rivals - Cognos, Business Objects, Hyperion and Siebel are four names which crop up in conversation more than once.

Speaking to Goodnight he cites research which values such strong staff retention at $85m for SAS in terms of costs saved per annum.

Furthermore the growth in numbers of this workforce has been impressive as has the growth of the campus. Currently there are plans under way for further building on the site, including a luxury hotel - a side venture of the Goodnights.

Worldwide, SAS employs 9,500 employees. That figure has almost doubled since 1997 - evidence that SAS literally sailed through the tech downturn.

In fact, during the worst days of the recession SAS was even hiring those cast off by other companies. To Goodnight those culls elsewhere provided rich pickings and hiring during a recession was a gamble he was happy to make.

Not having to get such a move past any shareholders also helped. Goodnight is the founder, majority owner and CEO. It is his company and there are no plans for an IPO.

And that's not a point which the company ever glosses over. I speak to several people over the course of three days spent with SAS and at least three or four open with the same sentence - almost verbatim.

"SAS is the world's largest privately-owned software company, and that's not going to change, so we'll get that one out of the way from the start."

You get the feeling they've tired of being asked about an IPO. Jim Davis expands on the company's plans to remain privately held.

"I don't think software companies and Wall Street are meant for each other," he said. "It's unrealistic asking software companies to innovate on a quarterly basis."

Many of the staff I meet speak word-for-word in the same way - same anecdotes, idioms and phrases. SAS is clearly a closely-knit company, but beyond that there is something of the cult about this shared-belief and the dedication behind the scenes which must have gone into ensuring everybody is singing from the same hymn sheet.

It doesn't help that staff refer to their leader as "Dr Goodnight" - who sounds every bit the cult leader, in name at least. It also doesn't help that the good doctors, Goodnight and Sall, both have their houses built on the campus.

The only team not toeing the line to the same degree - perhaps unsurprisingly - are the Brits among us, who maintain a refreshing air of irreverence.

"Don't eat the blue M&Ms," they joke. "And stay away from the room with the flashing lights."

I didn't see the room with the flashing lights but the M&Ms are everywhere. And I do mean everywhere. Bowls and bowls of the sweets on almost every desk.

This year the SAS office in Cary will consume 22 tonnes of M&Ms and that is no mean feat. The sweets have been a fixture on the 'perks' list since day one, back in 1976, but back then SAS had seven employees and presumably the tonnage was significantly lower.

But it's not just confectionary that SAS has been buying over the years. The company has taken a highly active approach to acquisition.

ABC Technologies, Dataflux, Infotap, Intrinsic, Marketmax, OpRisk Analytics, RiskAdvisory and Statview are among the companies brought in to firm up SAS' analytics and business intelligence product range.

And despite some significant outlay and costs associated with such consolidation, the policy has only added to the success of the company. In 1999 revenues broke the $1bn barrier - a notable highlight during 27 consecutive years of profit and growth. Revenue for 2003 was $1.34bn, up from $1.18bn the previous year.

Currently SAS makes 48 per cent of its revenues in its domestic market and 42 per cent in the EMEA region.

In fact the only problems related to such growth in terms of size and products is understanding what's what, said Goodnight and that realisation is tempering any plans for further acquisition - though he refuses to rule it out altogether.

In terms of consolidation among his immediate rivals he doesn't see particular urgency to shrink the number of players - adopting an attitude of "there's plenty of room for all of us" for now.

He's also untroubled by moves in Redmond to enter the analytics and BI space.

"Microsoft? Aren't they a consumer company making computer games consoles?" he asks rhetorically. "What are you going to do, do business intelligence on an Xbox?"

The company has also developed a very strong partner programme - working closely with technology partners HP, IBM, Intel, Sun and Unisys. It also has a number of consulting partners including Accenture, CapGemini, Deloitte and IBM Global Services.

And the outlook? Rosy according to anybody you ask, which comes as little surprise and the signs do point to a company strongly positioned in its market.

The consecutive years of revenue growth support this, but Goodnight adds for good measure: "We've got plenty of working capital and no debt." Other companies should be so lucky.

Recent budget hikes across many vertical industries on the back of tightening compliance legislation have also played directly into the hands of companies in the analytics and BI markets.

Goodnight recognised the opportunity. "As soon as the Sarbanes-Oxley bill was announced we had a whole team of people looking at how our products would [fit in to compliance planning]," he said.

And that spend is likely to continue. SAS' Wes Rehm agreed with the suggestion that compliance is the new Y2K "with no end".

Or to paraphrase one SAS employee, sat in the cockpit: "We are currently cruising... and the outlook is good."

For more facts and figures on SAS, see our fact file.


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