When Customer Relationships Meets Business Intelligence Marketing
To compete with leading BI and data warehouse companies and enterprise resource planning (ERP) vendors that are moving into these markets, SAS needs to further open its products to make it easier to employ third-party tools. Also, like Cognos, Hyperion, and Business Objects, SAS should also exploit the current, weaker BI technology position of many ERP vendors to foster relationships with them, rather than viewing them as the adversaries.
SAS may also have to further adjust its business model. Currently, it still primarily provides its software on an outdated mainframe licensing model, deriving over half of its revenues from annual license fees that amount to about one-third of the initial licensing cost of its products. This provides SAS with a steady income, but may not be an attractive option for many prospective customers. SAS should consider moving to a more common enterprise software licensing model with annual support costs in the range of 15 percent of license costs. With its new product, SAS 9, SAS may be showing signs of recognizing that the old model of selling a complex tool kit, and then training its customers' internal staff on the tools, needs to be extended to many levels within the user enterprise. Strong vertical tailoring, more consultancy, and more out-of-the-box functionality to all areas in a business process are other positive signs that should be further exploited by SAS.