CARY, N.C. – IBM’s latest billion dollar-plus offensive into the business intelligence and data analytics space isn’t intimidating , says senior vice president and chief marketing officer Jim Davis.
The world’s largest privately held software company that sold more than $2 billion of BI and analytics related software and services in 2008 has flourished despite a wave of consolidation in the industry. The latest acquisition came Tuesday when IBM said it would buy Chicago-based SPSS for $1.2 billion.
In a Q&A with Local Tech Wire and WRAL.com, Davis said SAS:
• Wasn’t surprised by the IBM-SPSS deal
• Will stay focused on its own business
• Isn’t interested in being acquired
• Isn’t interested in making any acquisitions itself
• Is making deals in a tough global economy
• Acknowledges sales cycles are taking longer
• Currency fluctuations are hitting SAS revenue
• Will remain a partner in some areas with IBM
As consolidation continues in the business intelligence/analytics sector, does SAS have any interest in being acquired by a larger rival?
We are not interested in being acquired. We are in a good position. We are profitable, have no debt, and do not have to answer to outside investors. We are in the hottest space in technology today and quite frankly, we are enjoying meeting the challenges businesses throw at us.
Is SAS interested in making any acquisitions?
While other software vendors make acquisitions to buy customers and market share, SAS does things differently. We look to acquire industry domain expertise that allows us to expand into new markets. We feel we have the technology necessary to handle industry’s toughest issues.
SAS reaction to the IBM deal? More competition?
Not really. We knew this was coming. What SPSS offers is a component of a much larger offering, which is why IBM acquired them – to get that breadth. The IBM-Cognos merger (in 2008) didn’t have any impact on our business and we expect the same thing here. SPSS has been a SAS competitor at a limited level (primarily within universities). We own 33 percent of the analytics market as compared to SPSS’ 14 percent and our business is based on much more than just analytics.
How does SAS counter?
SAS will continue to focus on the value and domain expertise we provide our customers. Customers want to see that if they spend money with you, they’ll get a bottom-line return. They also want to see that you understand their industry. SAS has demonstrated domain expertise and solutions for nearly every vertical industry. And we continue to focus on innovation. That’s hard to do when you become a small part of a large, public company.
Acquisitions create a lot of upheaval for the companies acquired, and for existing customers. IBM and SPSS have a big challenge ahead. While they’re working out the details, SAS will keep on providing value to our customers.
It’s all about focus. SAS remains focused on business analytics software and services. IBM is interested in so many things. Do customers really want to sacrifice focused innovation for one-stop shopping?
IBM also launched an analytics business offering today in addition to new business group announced earlier this year. How is SAS responding to these threats?
Our partnership with IBM won’t change. We have strong relationships with IBM’s hardware and services groups. The activity we’re seeing at IBM is focused on their software side. It’s healthy "co-opetition."
In 2008, IBM spent $5 billion to acquire Cognos. Yet SAS has continued to grow during the interim despite a slowing economy and more competition. How is SAS meeting these additional threats?
Again, we’re focusing on providing a comprehensive analytics solution for our customers that gives them bottom-line value. That’s our value proposition, and even in this economy, customers are responding to it. If you have true analytics capabilities, you’re giving customers the ability to move from reactive to proactive decision making and helping them solve industry-specific problems.
Cognos represents a best-of-breed component not a solution. It represents the presentation layer of a solution, not the solution itself.
How about a mid-year update on SAS this year – How are sales performing? Is SAS on track to continue its growth and year-over-year profit increases?
Our value proposition appears to be resonating in the market. SAS’ sales cycles are a bit longer than in years past, but that is expected. Customers and prospects want to understand the value they are receiving before committing to a deal. The deals are taking place. One other dynamic that affects our revenue is fluctuation in currency exchange rates. SAS derives that majority of its revenue from outside the U.S. It’s good to have a global presence; however the value of the dollar can impact growth rates in US dollar terms.