IT suppliers can talk such hot air. Yet there are a few characters
in the supplier industry who have enough experience to make them
worth hearing. Jim Goodnight, CEO of SAS is one of them. Lindsay
Clark reports
In businesses across the UK there is a battle being fought. It is a
struggle, according to Jim Goodnight, co-founder and chief
executive of SAS, between the person in control of IT and the
people who use IT to do business.
"This is a classic struggle between the IT manager who wants to be
the totally dominant person making all the IT decisions [and the
business manager]," he says. "There is a struggle going on out
there - I witnessed it just this week - between a business manager
and an IT guy. The IT guy was saying, 'I make the decisions' and
the business guy replied, 'I want this'."
His observations come from a recent tour of key UK customer sites
and his insight shows he is not a typical software supplier chief
executive. Goodnight is not given to outrageous hyperbole, he does
not claim his solution is revolutionary or "very unique". He is not
a marketing person or an accountant. He is a computer man through
and through, and he has the credentials to prove it. A
mathematician by training, Goodnight wrote programs for General
Electric that were used to help build base stations around the
world for the Apollo space programme in the 1960s.
Understanding the business manager who says, 'I want this', is one
of the main problems for IT in today's environment of restricted
budgets and demand for return on IT investment. Understanding the
business needs is crucial if the IT manager is to succeed, says
Goodnight.
"It depends on how effectively [the IT manager] works with the
business to really understand that its problems are not just the IT
department's problems," he says.
Goodnight founded SAS in 1976. It had its origins in an academic
project to understand agricultural data from experimental stations
at universities in the southern US. But after receiving enquiries
from insurance and pharmaceutical companies Goodnight moved the
project off campus and helped to found SAS.
During the early years most of his customers came from
pharmaceutical companies that needed to analyse drug efficacy to
get their products approved by the Federal Drug Administration
before taking them to market.
Since then SAS has taken its data analysis techniques into a broad
range of industries and its customer list now reads like a who's
who of leading global players: Lockheed Martin, British Airways,
HSBC, BP Amoco and IBM.
Now it makes software that promises to analyse customer data to aid
retention and marketing campaigns, assess risk in
multimillion-pound financial decisions and to help in detecting
fraud.
Goodnight believes that the way for IT directors to win the
struggle with business managers is to tap into the key business
driver they will recognise. This involves building intelligence on
top of the IT infrastructure that in most large companies has taken
years and cost millions of pounds to build. That is the way to get
value from these customer databases and supplier information, he
says.
"We can help you to try to improve your bottom line by not losing
the customers you already have and by trying to improve the quality
of the customers you bring in," Goodnight says. "All these things
have rapidly moved to the bottom line. It is not like enterprise
resource planning [ERP] that is going to take five or six years and
cost millions of dollars and ends up only replacing an older ERP
system that you had up and running.
"What we are trying to do is work with IT managers and say, 'Look,
you have made this enormous investment in this business process
stuff, now what you need to do is add a layer of intelligence on
top of all that. That allows you to forecast better to keep your
existing customers, to get new customers, to know your suppliers
better, and to provide better information to management about the
key performance indicators of the company'," he says.
This challenge has been particularly severe in the current economic
slowdown. The pulling back of IT spending hit SAS. "Last year is
the first year that we didn't have double-digit growth," Goodnight
says.
"We were hit hard in the US - quite frankly everything shut down
after the 11 September terror attacks. Everything dried up. People
were scared to travel. It is a phenomenon that you would really
have to be from the US to understand. For people here [in Europe]
it was something that happened and they went on with their
business. It changed the psychology of people in the US.
"Now people are back to normal. Our education courses are an
example to me that things are looking pretty bright. It is up a
little this year and every month this year we had more students
than in previous years. That shows that people are loosening up on
travel and education budgets."
And he believes that many IT departments will find there is money
left after a year of stringent penny pinching. "There are going to
be a lot of IT shops with money left in their budgets at the end of
the year that they may want to be spending," Goodnight says.
And he believes there are political as well as economic reasons for
supporting IT spending. In the US the Patriot Act, which was passed
following the 11 September terrorist bombings, requires financial
companies to take more stringent measures to prevent money
laundering. Meanwhile in Europe every bank must comply with the
Basel Capital Accord (Basel II) by 2006 which requires new
approaches to managing financial risk. Through joint work with IT
departments in the financial services on both sides of the pond,
SAS is gleaning knowledge of how this legislation may work in
practice.
"Basel II does not mandate any specific risk methodology provided
that they can come up with their own and prove that it works. [IT
departments] have just learned about it recently. We've got until
2006 to get that stuff sorted," Goodnight says.
Understanding the range of drivers for IT investment from the
business is key to being successful in IT management.
"Let us not assume that the IT director is in charge of all
business decisions you have on business. You've got marketing
people saying, 'I've got to have a new campaign management
system... we are losing money the way we are running our marketing
campaigns'. In that case IT is going to have to listen and work
with them.
"When the government says there are two years before you have to
comply with this new rule, you don't have a choice - you have to do
it. There are so many things that have to be done from the business
perspective that IT does not have the decision-making power over.
They make the decision on how it gets implemented but they are not
the ones solely in charge of everything that happens."
The mission of IT directors is getting that information out of the
business and into a coherent IT strategy that will deliver.