SAS Institute is in the midst of a corporate reorganization that signifies an increasingly competitive market for business intelligence (BI) tools, according to analysts.
SAS this week confirmed plans to close two regional training centers in September. Last week, the company said it would eliminate 100 marketing positions as part of an effort to consolidate its U.S. sales operations. In May, the company eliminated 72 inside sales positions.
Jim Davis, senior vice president and chief marketing officer at SAS, said the actions stemmed from the decision several months ago to merge the company's U.S. commercial sales group with another group that manages sales to government, education and Latin American customers. He characterized the moves as a "reallocation of resources" and not a reduction in head count.
All of the employees whose positions were eliminated were offered the chance to apply for other positions within sales, Davis added. Of the 72 employees in the inside sales group, all but 16 did not find new positions within the company. While 13 of the 16 employees were qualified for new positions, they opted for retirement or severance, he said.
Davis said the company is adding positions, has 178 openings now, and expects to end the year with an increase in head count. SAS has about 10,000 employees. Over the past six months, the company has seen new sales grow by 21 percent, he said.
"It is not our intent to reduce numbers [of employees]," Davis said. "It is our intent to get more people out in front of customers. We had a lot of marketing resources, probably more so than most people have in our industry."
In September, SAS will close a regional office in Orlando and another in Cincinnati. Employees from those offices will work from their homes. SAS decided to close the training centers after analyzing its training needs and employee and customer locations, according to a SAS spokesperson. In Orlando, a 10,000-square-foot space housed 13 employees in sales, and 13 people in Cincinnati worked in a 9,000-square-foot-space, according to the spokesperson. SAS will move its training to customer sites or to local community colleges.
"As we grew, we would put regional offices in places where a high enough concentration of customers were located to justify it," the spokesperson said. "As we moved toward selling industry-specific solutions and reorganized our sales force along those lines, that approach no longer made sense. Our salespeople focus on specific industries, not geographies."
SAS is among several vendors in the business intelligence space, including Cognos and Business Objects, that have experienced sluggish sales in the past few months, according to analysts.
Keith Gile, an analyst at Forrester Research, said the elimination of cost centers such as training facilities at SAS likely means that the company's revenue is not where management would like it to be.
"They are hurting from the same thing the other BI vendors are. There is a lack of demand for new products," Gile said.
Many companies are trying to whittle down the five to 15 different BI tools they use in-house to a more manageable two to three, he added.
However, Gile noted that although many companies are balking at buying more-generalized products such as query and reporting and analysis tools, they are more interested in specialized applications from SAS that are designed to eliminate customer churn in the telecommunications business and to stamp out credit card fraud for financial services firms.
In addition, the increasing focus of vendors such as Oracle and Microsoft in the BI market is affecting traditional pure-play BI vendors, said Dan Vesset, an analyst at market research company IDC. IDC plans to release new research next week that will show that Microsoft's BI market share grew twice as fast as that of Business Objects, SAS and Cognos in 2005, Vesset said.
"There is an increasing realization that it is tougher and tougher for [BI vendors] to compete on core reporting and analysis tools because that is where Microsoft and Oracle are coming in," he said.
However, Vesset noted that SAS, which the IDC report will rank as the No. 2 company after Business Objects for BI market share, has invested heavily for the past several years in analytics applications focused on vertical industries and business processes.