SAS Gets Smart

It's been a year since SAS Institute launched its reseller program in the U.S. in an effort to expand sales of its BI, data analysis and data integration software to the SMB market. While the effort has had some hiccups, most notably the departure of the company's chief channel executive in July, so far the initiative appears to be on track.

"I think they've done all the right things," said Charles Burke, president of The Normandy Group, a Cincinnati-based solution provider that has worked with SAS technology for years and was one of the first VARs to join the channel program. "They have a defined commitment to the channel," he said, noting the vendor's emphasis on cooperation between its field sales force and channel partners to avoid conflict and the generous availability of training resources from SAS. "It's allowed us to ramp up very quickly," he said.

Last November, SAS enlisted Avnet Technology Solutions to be a conduit between the software vendor and Avnet's Hewlett-Packard VARs, playing matchmaker to encourage resellers to market SAS applications with HP servers and storage systems.

By the end of July, SAS had recruited 93 resellers to its channel program with expectations that number will reach 150 by year's end and 200 to 250 by the end of 2008. That may seem modest by some standards: Competitor Business Objects has enlisted as many as 1,800 channel partners in its recent push into the SMB market. "We're slow on this by design," said Jim Davis, SAS senior vice president and chief marketing officer. "We don't want to add 1,800 resellers overnight. [Resellers] have to qualify to sell our software."

Less modest is SAS' revenue goals for its nascent reseller efforts. While channel sales are just a trickle today, "We're assuming that in maybe three years we'll be seeing 15 percent of all new business [being conducted] through the channel," said CEO Jim Goodnight during an interview at SAS' campus-like headquarters in Cary, N.C.

That's quite a change for a company that until now has generated almost all of its revenue—which reached $1.9 billion in 2006—through direct sales. Goodnight acknowledges that prior to two years ago when SAS debuted query and reporting, forecasting and predictive analysis software to compete in mainstream markets against Cognos, Business Objects and others, he didn't see the need for a channel strategy. "But once we were in a competitive position at the low end, we decided we should get into that market," he said.

SAS also recognized that SMBs are a relatively untapped market for BI software. But SMB customers are looking for packaged solutions that are relatively easy to buy, implement and use. And those solutions had to be priced far below the premium SAS gets for its top-shelf products. So last year SAS inaugurated the channel program, authorizing VARs to resell a half dozen of the company's BI, analytics and data integration packages targeting small and midsize businesses. (SAS defines small and midsize companies as those with revenue less than $500 million and between $500 million and $1 billion, respectively.) Bowing to reseller wishes, the company prices VAR-sold products on a per-user basis, a change from the per-server pricing it charges for direct sales.

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