Thursday, November 15, 2007

SAS Adds Real Time Decisioning to Its Marketing Systems

I’ve been trying to pull together a post on SAS for some time. It’s not easy because their offerings are so diverse. The Web site lists 13 “Solution Lines” ranging from “Activity-Based Management” to “Web Analytics”. (SAS being SAS, these are indeed listed alphabetically.) The “Customer Relationship Management” Solution Line has 13 subcategories of its own (clearly no triskaidekaphobia here), ranging from “Credit Scoring” to “Web Analytics”.

Yes, you read that right: Web Analytics is listed both as a Solution Line and as a component of the CRM Solution. So is Profitability Management.

This is an accurate reflection of SAS’s fundamental software strategy, which is to leverage generic capabilities by packaging them for specific business areas. The various Solution Lines overlap in ways that are hard to describe but make perfect business sense.

Another reason for overlapping products is that SAS has made many acquisitions as it expands its product scope. Of the 13 products listed under Customer Relationship Managment, I can immediately identify three as based on acquisitions, and believe there are several more. This is not necessarily a problem, but it always raises concerns about integration and standardization.

Sure enough, integration and shared interfaces are two of the major themes that SAS lists for the next round of Customer Intelligence releases, due in December. (“Customer Intelligence” is SAS’s name for the platform underlying its enterprise marketing offerings. Different SAS documents show it including five or seven or nine of the components within the CRM Solution, and sometimes components of other Solution Lines. Confused yet? SAS tells me they're working on clarifying all this in the future.)

Labels aside, the biggest news within this release of Customer Intelligence is the addition of Real-Time Decision Manager (RDM), a system that…well…makes decisions in real time. This is a brand new, SAS-developed module, set for release in December with initial deployments in first quarter 2008. It is not to be confused with SAS Interaction Management, an event-detection system based on SAS's Verbind acquisition in 2002. SAS says it intends to tightly integrate RDM and Interaction Manager during 2008, but hasn’t worked out the details.

Real-Time Decision Manager lets users define the flow of a decision process, applying reusable nodes that can contain both decision rules and predictive models. Flows are then made available to customer touchpoint systems as Web services using J2EE. The predictive models themselves are built outside of RDM using traditional SAS modeling tools. They are then registered with RDM to become available for use as process nodes.

RDM's reliance on externally-built models contrasts with products that automatically create and refresh their own predictive models, notably the Infor CRM Epiphany Inbound Marketing system recently licensed by Teradata (see my post of October 31). SAS says that skilled users could deploy similar self-adjusting models, which use Bayesian techniques, in about half a day in RDM. The larger issue, according to SAS, is that such models are only appropriate in a limited set of situations. SAS argues its approach lets companies deploy whichever techniques are best suited to their needs.

But the whole point of the Infor/Epiphany approach is that many companies will never have the skilled statisticians to build and maintain large numbers of custom models. Self-generating models let these firms benefit from models even if the model performance is suboptimal. They also permit use of models in situations where the cost of building a manual model is prohibitive. Seems to me the best approach is for software to support both skilled users and auto-generated models, and let firms to apply whichever makes sense.

Back to integration. RDM runs on its own server, which is separate from the SAS 9 server used by most Customer Intelligence components. This is probably necessary to ensure adequate real-time performance. RDM does use SAS management utilities to monitor server performance. More important, it shares flow design and administrative clients with SAS Marketing Automation, which is SAS’s primary campaign management software. This saves users from moving between different interfaces and allows sharing of user-built nodes across Customer Intelligence applications.

RDM and other Customer Intelligence components also now access the same contact history and response data. This resides in what SAS calls a “lightweight” reporting schema, in contrast to the detailed, application-specific data models used within the different Customer Intelligence components. Shared contact and response data simplifies coordination of customer treatments across these different systems. Further integration among the component data models would probably be helpful, but I can't say for sure.

The December release also contains major enhancements to SAS’s Marketing Optimization and Digital Marketing (formerly E-mail Marketing) products. Optimization now works faster and does a better job finding the best set of contacts for a group of customers. Digital Marketing now includes mobile messaging, RSS feeds and dynamic Web pages. It also integrates more closely with Marketing Automation, which would generally create lists that are sent to Digital Marketing for transmission. Within Marketing Automation itself, it’s easier to create custom nodes for project flows and to integrate statistical models.

These are some pretty interesting trees, but let’s step back and look at the forest. Loyal readers of this blog know I divide a complete marketing system into five components: planning/budgets, project management, content management, execution, and analytics. SAS is obviously focused on execution and analytics. Limited content management functions are embedded in the various execution modules. There is no separate project management component, although the workflow capabilities of Marketing Automation can be applied to tactical tasks like campaign setup.

Planning and budgeting are more complicated because they are spread among several components. The Customer Intelligence platform includes a Marketing Performance Management module which is based on SAS’s generic Performance Management solutions. This provides forecasting, planning, scorecards, key performance indicators, and so on. Separate Profitability Management and Activity-Based Management modules are similarly based on generic capabilities. (If you’re keeping score at home, Profitability Management is usually listed within Customer Intelligence and Activity-Based Management is not.) Finally, Customer Intelligence also includes Veridiem MRM. Acquired in 2006 and still largely separate from the other products, Veridiem provides marketing reporting, modeling, scenarios and collaborative tools based on marketing mix models.

This is definitely a little scary. Things may not be as bad as they sound: components that SAS has built from scratch or reengineered to work on the standard SAS platforms are probably better integrated than the jumble of product names suggests. Also bear in mind that most marketing activities occur within SAS Marketing Automation, a mature campaign engine with more than 150 installations. Still, users with a broad range of marketing requirements should recognize that while SAS will sell you many pieces of the puzzle, some assembly is definitely required.

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