A fraud ring or social networking - it's the same thing

Silicon.com sat down with SAS's CEO in Las Vegas this week to find out his thoughts on cloud computing, succession planning and the iPhone.
Written by Jo Best, Contributor
SAS is unique among tech heavyweights for its private ownership - the business intelligence (BI) company has been run for more than 30 years by its co-founder and majority owner, Jim Goodnight.

silicon.com sat down with SAS's CEO in Las Vegas this week to find out his thoughts on cloud computing, succession planning and the iPhone.

silicon.com: It's been one year since SAS and Teradata announced a strategic partnership. Could there be a merger on the cards?
Goodnight: We don't want them on the hardware and they couldn't afford me!

Is it an idea that appeals to you in theory?
You take vendors like HP, Sun, Dell, IBM, there's just lots of hardware that we need to run on and some of our alliances are very strong. Our alliance with HP - there's probably 20 go-to-market situations with them. We're working very closely with HP to deliver solutions to mutual customers.

If we buy Teradata, those kind of alliances would be frowned upon.

I would prefer to stay vendor neutral or at least have the ability to be vendor neutral. We favor one vendor… HP is one of our favorites.

One option I've heard discussed is that HP could potentially move into the BI space themselves.
There's not a whole lot left to buy and it's not clear to me [they're going in that direction].

There are a lot of cheap companies out there right now. The main problem is lack of money available from the banks. M&A has slowed down considerably - you can't go to the banks and say 'we need $5bn to buy someone' - the banks are saying 'we'd like to see $5bn ourselves'.

M&A money has dried up - cash is the only way.

You've got a lot of cash. Are you feeling acquisitive?
Not really, no. We've made two acquisitions [IDeaS and Teragram] already this year... we're still getting those under our belts. We've got enough to do without a merger.

You're investing in solar farms and in a Leed [Leadership in Energy and Environmental Design] building on your campus at the moment. How does that sit with your recent creation of a global oil and gas business unit?
We really looked at the oil and gas industry - we don't have nearly enough software revenue as we should. I think those companies have spent a lot of money on ERP type systems and they're not using the type of analytics [they should].

We've had some success with ConocoPhillips up in the North Sea to help them reduce downtime on their platform.

We help them forecast what type of parts they need... Some big platforms, they have 250 or more pumps - they're going to have a pump going out every other day. We help them forecast when they're going to need parts.

Will you be bringing more verticals into the same global business unit model?
I think that's the tendency right now.

As we move towards more 'globalness', quite frankly, if SAS as a company needs to have credit card fraud experts to help us sell credit card fraud [products] which we've done for HSBC all over the world - if we sell to other companies, do we suggest to every country to each hire yourself specific experts? Or do we put out a pool of experts?

There are regional issues - let's take Scandinavian countries - we should be sharing our resources across those countries more than we do right now. They're acting like independents, like a fiefdom. The idea is to try and share resources.

What do you think will be your strongest vertical going forward?
Retail will continue to be strong. Retail is turning more and more to analytics to operate the stores - like Sainsbury's which has hundreds of outlets. They use analytics to work out how do they optimize prices.

And what do you think will be your most challenging vertical?
We're still working hard in manufacturing. They use reporting and data warehouses and some analytics. We're trying to do things like spare parts optimization, warranty analysis to help them reduce their costs - making sure warranty information, parts information, is used at an earlier stage. There are a lot of things we need to work on.

One question a lot of people want to know the answer to is, who's SAS's next CEO? What's the succession planning?
With CEOs at the International Business Council [a body of 100 CEOs from diverse companies which advises the World Economic Forum and of which Goodnight is part] - the turnover, every year a third of people are gone, so public CEOs have a lifetime of about three years. They don't have time to plan their replacement, they don't have time for their own replacement strategy.

There's a reason people don't talk about succession - if you say it, two or three of your best people may decide to leave because they're not going to make it [to CEO].

You've been talking a lot about analytics around unstructured data. What about social networking?
Social networking isn't unstructured data. A telco might want to take all of the phone calls made from a cell phone and connect all those numbers together and work out which ones are being called and link them together.

There's a group of 40 or 50 people who predominantly do nothing but call each other. If you can identify the links - figure out who's in the middle, the dominant person, if you can use that to influence them, to convince them that a product or service is really good then you've got a lot of influence.

Is that something your customers are asking for?
We have some telcos that are doing that. We are using fraud analysis - looking for groups of people that for some reason have the same address or the same telephone numbers. Or they have the same name but live at difference places - they're working in one place but their daycare is off in another direction. That makes it impossible.

There's a lot of interesting things there. What we call a fraud ring or social networking - it's the same thing: a network of people that are somehow related to each other and you want to investigate the relationships between them.

What's the last piece of technology that really impressed you?
The iPhone, until the battery went dead in two hours. I got one of those 3G iPhones. The phone won't last a day and my fingers are too big to type on the screen. Most of us have given up and gone back to our BlackBerrys.

It's some gee-whizz technology I had to have - it's 'let's see, show me the nearest Starbucks'. It's a great feature but if you have GPS on it totally drains the battery.

What keeps you awake at night?
Nothing keeps me awake at night. Not even all the megavendors that are now in the BI space?
We have always competed against IBM, competed against Cognos. We've competed against SAP for many years. We have more than 400 companies we come up against every day because of the broadness of our products.

There is little that could happen out there that could keep me awake at night. We have a wonderful revenue model.

What are your plans for cloud computing?
We use SaaS [software as a service]. We're talking about a big server farm and you pick what jobs to run. It's no big deal, it's nothing new - somebody just came up with a new name for it.

It's eating up lots of electricity and creating lots of waste power. It's un-green. Think of cloud computing as companies that don't care about the environment!

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