SAS held its annual Global Forum conference this week, which marked the company’s 40th anniversary. One key to its long-lived success was an early decision to sell software by annual subscription, rather than the one-time perpetual license standard in the industry when SAS started. This provided a steady income stream and focused attention on customer satisfaction to ensure renewals.
In recent years, much of the software industry has adopted a subscription model under the label of “Software as a Service” (SaaS). But the triumph of SAS’s pricing approach has been accompanied by new challenges to SAS’s business. Subscription pricing notwithstanding, SAS has largely sold its software for on-premise operation by its clients and required them to purchase a large stack of core technologies. This demanded a high initial investment but made expansion relatively easy – an approach that made sense when SAS's core analytical applications were pretty much essential to many clients. By contrast, the new SaaS vendors run software on their own servers and allow clients to access it remotely. This greatly reduces implementation effort and allows volume-based pricing, both of which lower entry costs to the client. The new SaaS software has also been relatively easy to integrate with other systems through open APIs and standard scripting languages such as Python. This also makes it easier to sell SaaS applications for narrow tasks rather than as part of a massive suite.
SAS’s growth and financial performance have been just fine despite the new competition, thanks to technical leadership in its core analytical products and pry-it-from-my-cold-dead-hands loyalty of its core customers. But the benefits of the new SaaS systems have made new sales harder, especially in peripheral markets such as marketing applications.
I’ve subjected you to this long-winded exposition because it provides context for SAS’s major announcement at its conference: a true SaaS version called SAS Viya.* This is a cloud-native system** that will reproduce existing SAS functionality and be compatible with the existing SAS 9 products. More exciting than the cloud deployment (which SAS had previously offered for SAS 9), Viya will be accessible through open APIs and scripting languages including Python, Java, and Lua, and – gasp – some components will be offered as on-demand services. In the SAS universe, this is truly revolutionary. It should open the door to new clients who were not likely to invest in a conventional SAS implementation. Initial Viya apps will be available in third quarter 2016.
For marketers in particular, SAS also announced Customer Intelligence 360, a SaaS version of its primary marketing suite. Like Viya, this is a separate product from the existing Customer Intelligence 6 suite, which will continue to be offered. The initial release is not a function-for-function duplicate of CI 6 but a “digital marketing hub” that delivers real-time messages in digital channels (email, Web, and mobile apps). Key features include customer-level data collection via on-page scripts, and applications for marketing tasks such as sending an email, delivering in-app messages, or building Web a/b tests. These applications combine previously separate SAS functions such as model building, visual analytics, segmentation, and content creation. They include some nifty advanced features such as recommending when to run tests and automatically discovering which customer segments are most responsive to each test version. The initial CI 360 release includes two modules, Discover (mobile and Web reporting) and Engage (digital interactions including testings). They will eventually be followed by marketing resource management. CI 360 works on a very flexible customer data hub, although that’s a separate product owned by SAS’s Master Data Management group.
CI 360 uses much of the same technology as Viya, including REST APIs and HTML5 interface. It will officially run on Viya once Viya is released. Like Viya, it does not require clients to purchase the full SAS stack and will be priced on volume rather than a simple subscription. In the case of CI 360, fees will be based on the number of “customer equivalent records” and marketing messages. A minimum installation might start around $10,000 per month, considerably less than the current CI 6 product and competitive with other mid-market digital marketing solutions. The initial CI 360 modules are available now.
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* The name is a little odd but it could have been SASaaS, so I guess we can be thankful for small mercies.
** Viya can run on the Amazon Web Services public cloud, SAS’s own cloud, or a company’s own private cloud.
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