SAS under pressure from Pentaho

Computer Business Review recently reported an interview with SAS CEO Jim Goodnight in an article titled SAS CEO says CEP, open source and cloud have “limited” appeal

Firstly, welcome to the party, Jim.

This article is good news for Pentaho. Here’s why. For proprietary software companies the first rule of marketing against open source competitors is ‘don’t mention them unless you absolutely have to’. Microsoft discovered this over 12 years ago, and since then have not managed to create an effective anti-open source marketing campaign (read about the Halloween Documents here and here for more info). That’s with 10 years to think about it and over $10 billion to spend. So SAS must be under some pressure otherwise Jim Goodnight (the CEO no less) would be keeping his mouth shut. Hence the title of this post.

What this means is that SAS has moved from the Igorance phase to the Ridicule phase of battling open source, they only have Fighting and Losing to go. See Red Hat’s Truth Happens video for an entertaining description of the phases.

There are a couple of other interesting points in the article.

Jim Goodnight says of open source BI:

We haven’t noticed that (open source BI) a lot. Most of our companies need industrial strength software that has been tested, put through every possible scenario or failure to make sure everything works correctly.

He states that SAS does not come across companies like Pentaho in their part of the BI market. Interestingly he picks on quality and the extend of the testing environment, which is actually a strength of open source development over proprietary development. He implies that his customers have additional requirements that other BI consumers might not have. He seems to be saying that SAS has enterprise products and enterprise customers, leading us to conclude that open source BI is only a competitive threat in the small and medium sized business (SMB) market. There are a couple of problems with this for SAS. Firstly they lists their customers on their web site, and its very easy to cross-reference that list against the companies we know have downloaded and installed Pentaho’s software – a quick comparison shows the overlap is higher than 30%. Ouch. So much for SAS’s customers not having an interest in open source BI. You can check the Pentaho forums and see the activity of SAS customers integrating with Pentaho, and (oh no!) migrating from SAS to Pentaho. Google trends shows us how interested people are in Jim Goodnight’s company vs ours.

The reason SAS has not noticed open source BI is that those projects have gone off the radar and their sales reps don’t even hear about them. They don’t see because they’re not looking. Meanwhile, the SAS sales reps almost certainly have a deck of slides to position SAS against open source alternatives. If they are anything like the slide decks of the other proprietary BI vendors they are amusingly inaccurate FUD. Send me a copy if you have one, I’d enjoy them.

Also Jim Goodnight’s viewpoint of open source BI is interesting because it shows where the ‘Open Source Tide’ is. Here is the rising of the tide:

• Operating systems vendors (Microsoft, 1990’s) say open source is for hobbyists.
• A few years later database vendors say open source is fine for your OS but not for your databases
• A few years after that middleware vendors say open source is fine for OS and databases, but not for middleware
• A few years after that application vendors say open source is fine for the rest of the stack, but not for applications

At this point in the tide we are into sub-markets. Jim Goodnight is implying that open source is suitable for SMB BI but not SAS’s kind of BI. My favorite Open Source Tide article is a Forbes one titled A Fatal Flaw for Open Source. In this article it is essentially stated that open source is ok for everything except multi-tennent hosted applications. Wow. The tide is getting pretty high. Not much ground left to stand on. Of course the Forbes interview is with the CEO of a company that provides hosting services. The common theme here is that these CEO’s are telling us ‘open source is fine for everything except what we sell’. Predictable really. But they can never really tell you why – how can SAS tell us open source BI is not enterprise ready when they support Linux, MySQL, PostgreSQL etc?

Here is another thought. A few years ago, weren’t the established BI vendors saying their avenues for growth were going to be the SMB market and emerging markets? Now the CEO of SAS is saying he’s comfy staying in the enterprise zone. Hmm, so emerging markets is the fallback? SAS has customers in 45 countries. Pentaho has installations in over 180 countries. Good luck entering those geographies with expensive proprietary software, when open source BI is already the incumbent.

With open source presenting challenges in both SMB and emerging markets you might expect the growth of BI for the old guard companies to be rather flat – oh look

• Business Objects (SAP): -0.2% market share growth last year
• Hyperion (Oracle): 2.3% market share growth last year
• SAS: 2.7% market share growth last year
• MicroStrategy: -6.4% product license revenue growth Q3 2010 from Q3 2009
• Pentaho is on target for 150% growth this year

One final comment: I’ve worked for proprietary BI companies including Hyperion. If you’re going to pick on open source, don’t pick on quality.