Dr Jim Goodnight is founder and CEO of SAS Institute, the world"s largest privately held software company. He talked to Computerworld Hong Kong"s Stefan Hammond at the SAS Forum International (recently held in Lisbon, Portugal) on subjects ranging from competitors, Chinese business etiquette (or lack thereof) and the Patriot Act.
CWHK: Your company prides itself on spending a high proportion of revenue on R&D. But does that R&D budget impact your marketing efforts?
Jim Goodnight: We spend about US$20 million annually on marketing globally. We have about 50 [marketing] staff who are pragmatic marketing people. They find out where customers want us to go with our product. We treat our customers as our shareholders, because they"re paying us every year to add features they want.
CWHK: You"re heavily involved in the financial sector in Hong Kong and elsewhere, and said that one of the features you provide is protection against fraud.
JG: The way we set up our anti-fraud features involves a combination of heuristic and modeling techniques. The models work best on past historical records-that is, the client indicates which transactions have been fraudulent and we predict the probability of future transactions being frauds on a 0-100 [percentage] basis. They then set a threshold and anything far above that would be cut off [as fraud] while transactions which are closer to the threshold would be examined by staff.
CWHK: You also mentioned anti-money laundering features.
JG:patterns. In the US, we have access to court records-it"s a straightforward list. Things like large deposits or multiple deposits-you know how in Hong Kong you have many branches of HSBC, so people could make multiple deposits. There are about 25-26 different scenarios.
The bank feedback leads to the models, which helps to eliminate "false positives."
CWHK: We"ve heard the phrase "BI for the masses"...what does that mean?
JG: Vendors like Cognos and Business Objects offer query-and-reporting products that do things like print out simple reports-tell you who"s been with the company ten years, give you salary breakdowns, etc. And they"re also announcing that they"re not meeting their [revenue] projections. I would think they should probably look over their shoulder. I don"t think these two companies realize what"s happening to them.
CWHK: You"re very upfront when it comes to discussing competitors. What"s your edge?
JG: There will always be niche-market players. But more and more, clients want stability in a software vendor. Nobody has to worry about SAS being bought by, say, SAP or Oracle. We don"t have to go public. Ever.
CWHK: You started as a university professor, then moved to the private sector. Do you see a current trend towards computer science students learning Linux skills at universities with a goal towards being hired by major vendors?
JG: There"s no built-in motivation for hardware vendors to supply an OS with their product. And we see speeds and performance continually improving-dual-core, quad-core processors, with multithreading [capabilities]. So they must ask themselves: do we adapt our Unix [OS] to run on these new machines? So yes, I see a future for Linux in that environment.
CWHK: What"s your edge in the service-on-demand business?
JG: We do about US$30 million annually for a number of banks and pharmaceutical companies who send us data that we analyze overnight and send back. This business is growing at about 30 percent a year-some companies force us to sign multiple NDAs [nondisclosure agreements].
Some even forbid us to do similar types of research for other firms for periods of up to ten years. This isn"t a business we advertise.
As for "service-on-demand," it"s basically not that different from time-sharing, which was invented in 1955. IBM has their "on-demand" computing but really, it"s nothing new, it"s old stuff. Maybe whoever"s selling it hadn"t been born then!
CWHK: You"ve recently been named to the World Economic Forum"s India Steering Committee. What"s your China policy?
JG: We just replaced our mainland [China] manager about eight months ago. We"re excited about our new manager, but frankly, it"s hard to make a profit in China. Deals don"t materialize. Contracts are signed but then don"t get paid. It seems there"s a general lack of business etiquette there.
We do some good business in Hong Kong-HSBC is one of our financial clients there. And we have about 175 people involved in R&D in India.
CWHK: How have compliance initiatives like Sarbanes-Oxley and Basel 2 impacted your business?
JG: The SAS Drug Delivery program is a good kickoff point for Sarbanes-Oxley. When we saw what it entailed, our people realized that we could use our existing program as a model...within a month or so we had a solution for Sarbanes-Oxley.
These compliance initiatives help drive business and force companies to look at their practices. But the Patriot Act [in the USA] has some things that really should be pulled back, as far as personal rights are concerned.