By John Dodge
July 15, 2003 | An unlikely superstar of the software industry, SAS Institute founder and CEO Jim Goodnight is on a roll. The financials of privately held SAS can’t be scrutinized like a public company’s, but from most indications the company has bucked the downtrend afflicting the rest of the technology sector. It hired so many new employees last year that its salary budget ballooned by $63 million, a figure that startles even the unflappable statistician. That torrid pace will moderate substantially this year. The company’s strong family-oriented culture and aversion to layoffs attracted the attention of Morley Safer at “60 Minutes,” which aired a segment on Goodnight in April.
Goodnight’s SAS, which passed $1 billion in sales in 2000, has resisted the temptation to go public and cash in. That has given the Cary, N.C., concern tremendous flexibility and a strategy that has worked marvelously. The company boasts 3.5 million users of its business intelligence software, 90 percent penetration of the Fortune 500, 10,000 employees, and 40,000 customer sites worldwide.
Goodnight says the pharmaceutical and healthcare industries together comprise between 18 percent and 20 percent of the company’s revenue. Bio-IT World Executive Editor/News John Dodge interviewed Goodnight recently at a SAS healthcare seminar in New York.
Q: Explain SAS’ position in the life sciences and healthcare.
A: We’ve always been involved in the life sciences. Pharmaceutical companies were some of the first customers once we decided that to survive at the university (North Carolina State), we had to bring in our own money. One of the consulting jobs I did as a graduate student to help pay my way through college when we were beginning to work on SAS was with Imperial Chemical Industries in Wilmington, Del. As a matter of fact, the SAS Institute was started to analyze agriculture and life science data. That’s the very reason for its beginning back in 1967 (the company incorporated in 1976). Our statisticians would help them set up the experiments so they were meaningful.
Q: Who were the first pharmaceutical customers?
A: Eli Lilly was I think the very first. They’ve been a longtime customer. We have always produced the tools that allowed these companies to do the analysis required by the FDA.
Q: There was a significant event last year, when SAS brought its life sciences group
back inhouse after spinning it off. Explain what happened.
A: We had spun off a company called iBiomatics to work specifically on nothing but pharma. We brought it back in because we were [sending] sort of a mixed signal out to our customers. They weren’t sure who they should be working with. Rather than confusing the marketplace, we just pulled our group back in.
Q: Wasn’t that just one event in a bigger reorganization at SAS?
A: Starting in January, we totally verticalized all of our [sales] practices, so every salesperson, every sales engineer, and most of the professional services staff works in only a particular industry. The idea is that they will continually build up more and more knowledge about that particular industry and really become industry experts.
Q: What’s your most innovative product for the pharmaceutical industry?
A: We have what we call SAS Drug Development, which is a Web-based system that we actually do an ASP (application service provider) model for. People send us all their clinical trial data, and we put it on a Web site. We do all the analysis, and all of this stuff is managed through a portal. If they want to put [up] unstructured data, lab comments, comments, and things like that, they can have all of this space to assist them. And if they have to make a change in a data point, they can completely document it as required and then be able to reanalyze the data.
When it’s ready to go to the FDA, they could merely relay the password. We haven’t gotten that far yet. We’ve got a number of compounds already that are resident on our systems and on our Web sites.
Q: Can you name any customers for this product?
A: We’re trying to put a press release out on that phase (at press time, SAS declined to name customers). You realize that most compounds before they make it to market change hands several times? Well, with this ASP model, [the seller] merely sells [the buyer] the password. It’s just data transfer.
Q: How can SAS help shorten the time and cost of drug development?
A: The idea behind drug development is that we’ve got a complete template so every drug investigator can get to see [the data]. [The product] is not something that has to be restarted with every new compound that [a pharmaceutical company] is working with. Everybody’s familiar with this particular [SAS solution] not only in one particular pharmaceutical company, but in all the different pharmaceutical companies.
When you change jobs, then your basic information platform will not change. You use the same platform that you were using before. This is certainly going to save a lot of money. The benefit is when you [make] the first submission to the FDA, [you say], “FDA, here’s the password. SAS machines are used [here], and all of our stuff is there.” That will really save a lot of time.
Q: What are the most significant differences between your life sciences customers and those in the other industries?
A: They’ve got a lot of very specific regulatory requirements or umbrellas. So they’ve got to make sure that they’re compliant with 21 CFR Part 11. We’ve made sure that our drug development [products are] compliant.
Q: SAS has taken innovative approaches to healthcare for its own employees. Explain what the company does and how.
A: We’re one of the first companies to open up experimental clinical trial treatments to our employees as a covered benefit. That is going to help speed clinical trials as more and more companies sign on to allow the clinical trials with their employees. The idea is to encourage companies like SAS to provide healthcare coverage for experimental cancer treatments.
Q: Who’s your competition in the healthcare space and in the pharmaceutical arenas?
A: Literally, everybody. And literally, there are the homegrown systems out there and then there are the big players as well. We are, I think, the de facto standard when it comes to the analytic side of the house.
Q: A lot is made of culture at SAS. Can you describe it?
A: We try to maintain almost a family feel to the company. We try not to have real autocratic bosses. I guess the philosophy starts at the top. I like to hire strong people and let them run with the ball. If you treat people like they make a difference, they will make a difference.
Q: What was it like being on ‘60 Minutes’?
A: It was very relaxing. I think they taped it five hours total. Morley Safer is a really nice guy, and we got along well. Thank God they didn’t come out and skewer us with something, because it’s just so unusual for ‘60 Minutes’ [not to do that].