Note: The Skinny blog is written by Rick Smith, editor and co-founder of WRAL Tech Wire and business editor of

RESEARCH TRIANGLE PARK, N.C. – Is trouble on the horizon for SAS?

A new “Magic Quadrant” report from Gartner warns that the Cary-based company faces threats to its “stronghold” as the “800-pound gorilla” in the business intelligence and analytics market.

SAS has for years been a global leader in the use of business intelligence or “BI,” which is. using software tools to turn raw data on sales or consumer buying habits, into actionable information such as fraud monitoring or inventory or pricing. And much larger companies such as IBM have moved aggressively into the “BI” space as more enterprises worldwide from Wall Street to Beijing have discovered the bottom line benefits of repurposing its data to improving performance, cutting theft and predicting future trends.

Gartner noted the increasing threats as well as opportunities for SAS and IBM as well as other major BI players.

“The increased proliferation of interactive visualization tools, more integrated data mining and packaged analytic applications that encapsulate the complexity of using sophisticated BI analysis tools from business users, are all pushing the power of analysis into the hands of a larger number of users than ever before,” Gartner reports.

“Moreover, this data and Gartner inquiries suggest that there is an increasing need for more accurate forecasts and optimized business processes, and to identify leading versus lagging indicators.

“In response, and challenging the once stronghold lead of SAS, IBM is leveraging its SPSS acquisition, its Cognos BI platform and other IBM technologies, such as content analytics, to deliver packaged analytic applications through its Global Business Services unit.”

SAS reported another record year for revenues in 2010, remains very profitable, is adding employees worldwide and is continuing to launch new initiatives. (Read details here.) And it’s the best place to work – two years running. (Read more here,)

But complacency has yet to set in – if it ever will. The people at SAS closely monitor reports from firms such as Gartner, so this new report was most likely required reading around its global operations. One big reason is that the final results are based on in-depth interviews with hundreds of corporations worldwide. When the customers speak, SAS listens, as its record of growth over 30 years indicates quite clearly.

The “cautions”

In a section labeled “cautions,” Gartner noted:

  • “SAS’s dominance in predictive analytics is being challenged on many fronts.” Gartner npted the IBM deal for SPSS as a major move that should concern SAS.
  • “On a regular basis, Gartner hears from customers about ongoing costs of running SAS.”
  • While Gartner notes that “only 5 percent they are planning or considering discontinuing use of the product,” the company added that SAS “needs to continue providing value to justify customer costs.”
  • The complexity of SAS is a problem, too.Gartner ranks SAS as “the No. 1 firm” in difficulty of implementation.
  • “Historical perceptions of limitations in usability” also means that SAS “continues to struggle to make it onto BI platform shortlists.”

The “strengths”

To be fair, the Gartner report also notes several SAS strengths.

  • “As far as mind share and capabilities are concerned, SAS remains the ‘800-pound gorilla’ in the analytics space, with packaged applications enabling companies to analyze customers (for marketing, retention and risk assessments), products (for product development, quality control and support) and corporate data,” Gartner says.
  • Plus: “SAS takes a solution-oriented analytic application approach to the market, which gives the company the advantage of having the widest variety of cross-functional and vertically specific analytic applications out of the box.”
  • And: “The primary drivers for customers choosing SAS are functionality, data integration and company road map.”
  • Gartner also notes that SAS is partnering with database firms to “push the execution of the SAS models directly into the database management system.”

SAS pours hundreds of millions of dollars a year into research and development while moving quickly to embrace emerging trends such as social media. It continues to form partnerships with companies such as Teradata, and the company takes great pride in being more nimble while at the same time more stable than larger rivals making large-scale acquisitions. At the same time, SAS targets smaller firms in potentially lucrative spaces such as its deal for Memex in the national security and law enforcement data space last year.

The “800-pound gorilla” is hardly asleep, but as the Gartner report notes the BI space is going to match SAS up with some opponents who pack some serious weight, too.

Read the Gartner report here.

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