SAS's Goodnight won't say goodbye yet

Q&A: Jim Goodnight, the founder and CEO of SAS, is celebrating his 30th year at the head of the company which introduced a generation to statistical analysis

It is 30 years since Jim Goodnight and John Sall founded a company called SAS Institute (now simply SAS) and built it to a £1.7bn turnover on the ideals of excellence in software development and best practice in people management.

Through those years, Goodnight has kept a fierce hold on a company that has become a byword for prodigious application development. It now numbers its software products in the hundreds, covering areas like the financial sector, government applications and CRM as well as the core business intelligence (BI) market.

Last week, ZDNet UK caught up with Goodnight in Geneva at the company's annual forum and asked him about the next version of the core SAS software suite, the future for applications development, and his plans, or lack of them, for life after SAS.

You will only release software when it is ready. Other companies have a different approach. Do you have any advice for them?
Well, Microsoft is a monopoly, they can do what the hell they want to. The consumer doesn't really have a choice so there is no incentive for Microsoft to make any changes in the way they operate.

I think, to some extent, that Oracle is getting to that perch in the database business. Yet there is a lot of movement in the database business with open source software. We use one called Firebird. They should do something about it.

We had an experience when we were thinking about going public and our consultants said that we needed to get off SAS for our internal ERP work because it is just not a recognised brand and they suggested Oracle. It was Ernst and Young and we spent three or four years and $10m and it was just outrageous. And in the release (of Oracle) that we were working on there were over 10,000 bugs. That's horrible.

Is that a good reason not to make SAS a publicly quoted company -- because the software doesn't work?
Well it works now. I am only using that as an example but I am sure that Oracle ships a lot of buggy software. You know -- the customer knows -- that a new release means lots of bugs, lots of problems. But that's not what it should mean and not what it means from us. It really upsets me that CIOs of the world have in their mindset that they don't want to mess with a new release because it's full of bugs.We did not give customers that impression. It's the other vendors, like Oracle and Microsoft, that have given software a bad name.

A lot of people don't see the difference between business process management (BPM) and business intelligence (BI) software. What's your take on the difference?
In the past, BI has represented just the creation of reports. BPM has been a dashboard of KPIs (key performance indicators).We like to use the BPM as a sort of overview of all the KPIs and then we let you drill down and go into the BI reports. They really belong together. They are still two different pieces of software but that ability to start with the performance monitoring and then being able to drill down is the way to do it.

I share my dashboard with most of the managers in the company, so when we are doing really well and the revenues are really good they know when to come over and ask. The company knows what profitability and revenue levels we are shooting for and they can try and do their share.

Can you talk about the next release of SAS?
The next release is System 9.2, set for some time around March next year. We set development targets but we can't ship the product until it is finished. It has to be ready. We don't ship until the bugs are out.

We are doing a couple of things. One is "cascading prompts". That requires a lot of changes in a lot of software. The major releases are when we try and get all of the features that we can into the basic system. Multi-threading is part of that too. This is becoming more prevalent with dual-core and later this year, quad-core processors.

I was at a meeting when Scott McNealy pulled a chip right out of his pocket and said, "Jim, guess how many cores are in there?" Not four, not eight -- 16 CPUs, right there on that one chip. So we have that kind of power, but we won't be able to take advantage of it.

SAS, like all other programs, is written so that only one processor is working. Like all others they are written sequentially, so the software does one block and then moves to the next block.

How do you take an existing program that is written sequentially like that and spread it over multiple processors? Well, one way is you can break up the input into four different input streams and let each processor do exactly the same thing to each one of those input streams. Another way is pipelining. Take those same sequential blocks of code and get them to one thread. We can distribute the blocks but they still have to execute sequentially.

You spend a big percentage of your revenue on research and development. What kind of challenges do you see there?
We tackle some of the hardest problems in the world, like the credit card fraud thing which is incredibly complex. Look at Home Depot. They want us to help them price every single item in a store. If a competitor is across the street they have got to make sure for all those items that they carry, they have similar prices. That is a huge, enormous operations research and computing problem. Now we are talking about 72 hours of computing on some of the fastest computers. It can take them 72 hours to compute the price on 200,000 SKUs (items) across 1,000 different stores and have a different price in every store to optimise profit.We love those challenges.

What do you see as the biggest differences between Europe and America when it comes to software?
In the software market I don't see any difference at all. There are a few different products, such as Basel II, that we have sold a lot more of here than in the US but we have seen a lot more money laundering products sold in the US because of the US Patriot Act.

But now the Norwegian government has imposed money laundering restrictions there and all of a sudden we now process 80 percent of all cheques in Norway. And we turn it over to their police when we find exceptions. But then they don't know what to do with it, unfortunately. Because the police are so far behind there.

Do you think you will move the company more into consulting?
I never wanted SAS to be a consulting company, I just wanted to be a software company. About 10 percent of our revenues are consulting.
If you look at Siebel in their last year, we sold about four times more software than they did. They were a services company. Two thirds of Siebel's revenue was consulting. It's so damn hard to install that people had to spend twice that to make it work.

The sales force automation tools were really hard to install and once they were up and running the sales people don't want to use them. Why? They want to keep it all in that little notebook. It's the mentality of the sales people that defeated Siebel. Cognos is the same way. Last year two thirds of their revenue was consulting. A lot of software companies bring a lot of their revenue in from consulting. We don't. I have never really had a very profitable consulting business because the sales people talk 'em into doing stuff for nothing.

Who are your competitors?
Oh, we have about 200. Number one competitor is Oracle. We run into Oracle in about 10 percent of our sales situations. SAP is about 8 percent. Cognos about the same. Business Objects is about 5 percent. We have so many different products and every market we are in has different competitors. We like different competition.

Some times we get so bored with competing with the same companies that we go out and write some new software so we can compete against somebody new.

You have just been celebrating 30 years of SAS. Do you ever think about what's next?
Death. (Laughs.) Well, I have a golf course and I can say that as many times as I have played it I have never parred it and I don't think I ever will.
I enjoy golf about 25 times a year. I skied 10 days this winter.

I have a condominium out in Steamboat Springs, Colorado, with fantastic skiing. I am just so active and so enjoying life right now. I'm a member of the International Business Council, which is a group of 100 global CEOs who are sort of advisers to the World Economic Forum and I am on the Business Round Table in the US which is 200 CEOs from all over the country. We get into very stimulating and interesting discussions.

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