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Thursday, March 28, 2013

The Nimble Dance of a Rich Legacy Software Company

SAS Institute, the world’s largest private software company, is mainly known for two things. It was the pioneer maker of sophisticated software for analyzing data, long before anyone was using the terms analytics or Big Data.

SAS is also known for the seemingly lush life on its corporate campus in Cary, N.C., with on-site doctors, gyms, swimming pools, day care, even barbers. In 2012, SAS ranked second in Fortune magazine’s annual list of the best companies to work for, trailing only Google.

With big companies and start-ups plunging into the data analysis business in recent years, SAS looked vulnerable. The company’s software was not built for the new computing architecture of highly distributed, parallel computing, in which digital chores are cut up and spread across many microprocessors. And its software was designed for a world of mainly captive data, housed in corporate and government data bases, rather than the unruly realm of unstructured data, like Web pages and sensor signals.

In 2009, I wrote a long piece that looked at SAS and the challenges it faced. The headline read, “At a Software Powerhouse, the Good Life Is Under Siege.”

On Wednesday, SAS executives came to New York for an event at the Pierre Hotel to show off its retooled technology to customers. The code has been rewritten to run on modern hardware â€" so-called massively parallel computers. A new version, coming in June, will be able to run entirely in remote “cloud” data centers. “It’s a complete cloud distribution, totally cloud-ready,” James Goodnight, co-founder and chief executive of SAS, said in an interview.

Those clouds can be private ones operated by companies or government agencies. But SAS has its own hosted data centers, and its software now also runs on Amazon’s Web Services cloud.

SAS has developed new visual tools â€" so users can do data analysis with a point-and-click on a laptop, or swipe-and-tap on an iPad tablet, as SAS demonstrated this week. The goal is to broaden the base of SAS users well beyond its traditional core of SAS-trained data experts. “Democratizing data is exactly what this is about,” said James Davis, an SAS senior vice president and chief marketing officer.

SAS, to be sure, faces a long list of rivals from giants like I.B.M. and Oracle, to data analysis software specialists like Tableau Software, TIBCO Spotfire and MicroStategy, and a host of ambitious start-ups. The market for Big Data technology will be a competitive hotbed for years, and how things will play out is uncertain.

But industry analysts say SAS has made considerable progress and shown real agility, especially for an established company.

“SAS is a real canary in the coal mine for how legacy software companies respond to massively parallel computing and Big Data,” said Merv Adrian, an analyst at Gartner. “And the company has done a pretty impressive job.”

As a private company, SAS does not report its financial results. But Mr. Goodnight said its revenue grew 5.5 percent last year, held down by weakness in Europe and a strong dollar against the euro, which reduced reported sales. Europe is about the size of the United States as a market for SAS.

This year, Mr. Goodnight said, SAS hopes to achieve a 12 percent growth in revenue. The revamped product line with visual tools and cloud offerings are fueling that optimism.