Walking the walk with SAS CEO Jim Goodnight

IT suppliers can talk such hot air. Yet there are a few characters in the supplier industry who have enough experience to make...

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.

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