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November 24, 2010

SAS: It’s a family affair

Business intelligence firm SAS Institute is the largest private software firm in the world. Jason Stamper talks to founder and CEO Jim Goodnight about the latest trends in BI, his decision to keep SAS privately held and his philanthropic beliefs

By Jason Stamper

Jim Goodnight, SAS CEO

Named by Harvard Business School in 2004 as one of the "20th Century’s Great American Business Leaders", Dr Jim Goodnight built a company that has made him one of the wealthiest businessmen in the world. He told CBR in an exclusive interview this month that it all started when he used to work in his dad’s hardware store in Wilmington, North Carolina: "During the whole time we worked in Wilmington, which was during my middle school and high school days, I would work at the hardware store during the summer and on the weekends. It certainly gave me a sense of business."

Jim Goodnight was born in Salisbury, North Carolina, and his parents moved to Wilmington when he was 12. From a tender age maths and chemistry were his strongest subjects, and he later enrolled at North Carolina State University to study maths, later gaining a master’s in statistics. He formed SAS in 1976 with colleagues from NC State, and has remained CEO ever since.
SAS has managed to grow revenue every year since it was founded, posting total sales of $2.31bn last year. It claims to have 45,000 customer sites in 21 countries, and that 92 of the top 100 Fortune 500 use its technology.

"When I was at college someone told me about a course they had taken and it was about how to program a computer," Goodnight says. "Well, I didn’t know what a computer was but I walked past this lab area where the computer was, and there was this electric typewriter typing all by itself, and that was just amazing to me: those electric typewriters with a little ball that bounced around? It was typing all by itself and that was just so cool!"

The here and now
Of course, business intelligence technology has moved on considerably from when Goodnight founded SAS, and the company’s technology has moved with it. SAS has a reputation for building rich, yet perhaps somewhat complex, technologies that are often – but not always – used by statisticians or SAS software specialists.

So what does Goodnight think about what companies are now calling ‘agile BI’? "Well, most of the agile stuff is what we call OLAP [online analytical processing]. Building out cubes but you keep all the raw data in memory and you can drill down into anything you want to," he says. "With multi-threaded machines these days and multiple cores you can certainly do that, and we do it ourselves on a very, very large scale here. But it depends on the nature of the underlying models that you are trying to build."

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Another technology that is getting considerable attention in the BI space is complex event processing (CEP), an area considered so hot that Sybase bought CEP player Aleri while Progress Software bought Apama. Is this a technology that is right for its time, helping companies look for patterns and trigger rules from very large data sets? Goodnight seems underwhelmed when I suggested that SAS has been rather quiet on this front: "Yes, we do [have CEP], but it’s mostly used by our intelligence communities [such as the CIA], so we don’t talk about it much. Certainly with the volume of data coming in we need ways to process it quicker, and with so much information coming in from the web, Tweets, blogs; there’s a huge volume of stock exchange data flowing through. There are some applications where that’s important but I would say it’s maybe only one or two per cent of applications that would require that [CEP]."

What about open source business intelligence? We’re hearing some successes from the likes of Jaspersoft, Pentaho, Talend in the BI and data integration markets. Do such companies pose a threat to SAS’s proprietary software model? "We haven’t noticed that a lot," says Goodnight. "Most of our companies need industrial-strength software that has been tested, put through every possible scenario or failure to make sure everything works correctly. That’s what you’re getting from software companies like us – they’re well tested and it scales to very, very large amounts of data."

Public cloud computing gets a similarly cool reception, despite the fact that SAS does have a number of hosted or on-demand business intelligence tools: "I think most clouds will be internal clouds, I don’t think there’s that big a demand for external clouds. We use some here inside of SAS with a number of applications; one is our demo centre where we’re trying to show how a particular application on a particular machine and show it to someone out in the field somewhere in the world.

"We also use it for test – we can run all the tests we need to in a virtual environment. So I think there’s some need for it, but I think for external clouds there’s a security issue for data, there’s a volume transfer issue for data." Goodnight continues: "Most people can buy a PC for $500 or $600 that performs similarly to the hardware in cloud, which is usually all Intel blades. It’s not like the old days when a mainframe used to cost three or four million dollars. To my view there’s not really anything new about cloud computing, it’s just a virtualised time-sharing machine, and we’ve had virtualisation and time sharing since the ’60s."

Goodnight, who according to the 2010 Forbes 400 list is worth an estimated $6.9bn, has been known to have an interest in using some of his wealth to improve the state of education, particularly elementary and secondary education, and he’s also the benefactor of Cary Academy, a private school near the SAS Campus.

He explains why he is involved in such activities: "I believe we have about 30% of our kids not graduating from high school here in the US. And there are basically no jobs for these people, and probably will not be for another 20 or 30 years. I think it’s a disgrace that the US cannot graduate all their students from high school.

"So I’m trying to figure out why, what’s the reason? A lot of people blame the teachers but I think a lot of it has got to do with the fact that a lot of kids just aren’t as motivated as we were," says Goodnight. "They think that everything has already been invented. All their internet stuff, Tweeting, texting each other. A lot of the scientific and maths area I think kids are just thinking it’s too hard work and are taking the easy courses. At the same time you are seeing a huge growth in intellectuals in India and China. It is my concern that we’re not only going to be buying everything from China but we’re going to also end up having everything invented there. I think it’s up to every generation to make sure that the next generation is educated, and I think my generation has failed to see that happen."

We are family
Has Goodnight never considered floating off SAS as a public company? "No, and in fact every day that goes by I am more convinced that we do not want to be a public company. If you’re a public company somebody might come in and buy us and then fire half the people that work here.

"Three years ago we were approached by one of the companies that’s doing a lot of the buying up right now and I said no to them. We’ve seen what companies do when they swallow companies up -they destroy people’s lives, they lay them off. I don’t want to see that happen to the people who work at SAS."

Whether discussing staff as if they are family is more than a motivational ploy is impossible to know. However, a whole section on the SAS website is dedicated to the "SAS family", which goes on to explain that "Jim Goodnight set a self-fulfilling prophecy early on for the SAS culture – to treat employees as if they make a difference".

But what about Goodnight himself? He is still active in developing products for the company he runs, but since it crossed the $2bn mark and has been growing since 1976, there surely can’t be many more challenges left to overcome. Asked whether he still feels 67-years young, and still enjoys the SAS buzz too much to hang up his calculator, he replies: "That’s well said, that’s exactly the way I feel."

Goodnight, on most subjects, is a man of few words. But judged by SAS’s success where so many other firms have fallen by the wayside, his actions have made him and the rest of the ‘SAS family’ a business tour de force.

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