QUESTION: The industry is going through a tough time. What’s your take on when things will come back?
ANSWER: Well, I hope it comes back soon, our worldwide revenues are only up 18 per cent…
QUESTION: So how were you able to buck the trend?
ANSWER: I really
think companies like SAS that are in the business intelligence space are going to be the first group to come out of the slump, and that’s because we provide software that helps companies keep their customers. If they need to identify which customers they are likely to lose next, we can do that. If they are doing marketing and need to identify which prospects they ought to include in a campaign, we can do that. It just goes on and on. The type of software we produce can be used for and produce a good return on investment and help that bottom line. This is not the time when people say ‘let’s start a $25 million project and install a new ERP system.’ That’s not going to happen for quite a while.
QUESTION: Have you also been able to maintain a similar level of profitability?
ANSWER: We’re down just a little bit but that’s because we chose not to lay off anybody and we chose to continue to hire. We increased our staff last year by eight and a half per cent. Being a private company, we can take a long-term view and we don’t have to worry about quarterly profits. Two years ago, I said, ‘The market is clearly slowing down, there’s a lot of people being laid off, now’s the time to go out and hire good people. There are good sales people out there, there are good R&D people out there, they are the people we are hiring.
QUESTION: Are you glad that IPO you once planned never went through?
ANSWER: Oh, yeah. We never even got that close. We were still working on internal financial systems to make our auditors think they could audit our books better.
QUESTION: Business intelligence software is still your main focus. What do you see as roadblocks to wider acceptance?
ANSWER: The only difficulty in doing any of this is really getting the data together in all the disparate sources it is located. That’s most companies’ major problem. When we go to some of the banks and financial institutions, it takes a long time to convince them the hardest part of the problem is going to be getting the data out of your different silos.
QUESTION: You’re looking at some new areas as well, risk management for example?
ANSWER: We’re doing a lot of work in market risk. We also have a couple of installations where we are working on operational risk, one in Belgium and one in Poland, and we are working against the clock for Basel II. (Legislation planned for 2007 that will force banks and financial institutions to meet more stringent reporting requirements for calculating their exposure to risk especially when it comes to loans and extending credit.) That is an area where we are beefing up on staff. One of the things that seems to be in more demand is credit risk, loans that a bank may have — we need to do some simulation and see what really is at risk there.
QUESTION: So it’s things where there’s a lot of number crunching involved?
ANSWER: SAS is the world’s best number-cruncher. That’s what we do. We’re heavy into analytic capabilities and crunching numbers. Take anti-money laundering (SAS unveiled anti-money laundering software in October 2002). Working with one of the bank’s data, we were processing about 20 million records in about a minute and a half. This is the kind of performance we are getting.
QUESTION: About a year ago, you also released a text mining product for analyzing e-mails and documents. How’s that been going?
ANSWER: It’s an area that a lot of people believe you point this engine at a bunch of text and it comes back and tells you all sorts of things about it. That’s really not what it’s about. By and large, we are taking all the “”key work”” frequencies and doing a mapping so we can forecast. Normally a person would have to go through and score a document on how important it is, maybe on a scale of one to a hundred. They go through and score maybe several hundred documents, and then we build a model so that we can accurately predict that score. Before, this was all being done manually.
QUESTION: Can you give an example?
ANSWER: We had one situation of a company getting large numbers of complaint letters. They began scanning these in and then they would score it, so they would be able to know, out of hundreds of thousands of incoming documents, what needed to be looked into. Or, if you are looking at a newswire, and you have a model that can score it, this stuff is important. We’re using frequency of words to help predict outcome.
QUESTION: Are you still programming?
ANSWER: Not as much as I used to. The last time was a month ago on a Saturday morning.
QUESTION: What were you working on?
ANSWER: Anti-money laundering software.
QUESTION: Do you miss being able to program?
ANSWER: I very much miss it. It’s almost like working on a puzzle….being alone and using your mind and concentrating on one particular thought process. It’s a great relief and it’s always fun. Like some people like to read a good book, I like to write a good program.
