SAS and Marketing Automation
Being a technology leader today does not ensure longevity. Companies must continually reinvent themselves in a way that meets the needs of a rapidly changing market, yet reinvention must be balanced, incorporating the relevant aspects of a company that secured its top position in the first place. SAS Institute delivers business analytics solutions, but has been expanding its presence in certain verticals, and has been making a series of well-thought out acquisitions to sustain its technology leadership.
Part two of the SAS: Striving to Sustain Leadership series.
Leveraging its early 2000's acquisitions like Intrinsic's campaign management and Verbind's interaction management solution, SAS has become a notable marketing automation (MA) player rather than a business intelligence (BI) platform provider per se—other BI pure competitors, except possibly for NCR's Teradata division, will have a time of repeating SAS' feat. SAS and Teradata are be prime examples of technology providers that have initially had a long focus on very scalable BI and datawarehousing (DW) deployments (see SAS Institute Shoots for the Two-Stop-Shop with new Release of Warehouse Administrator and SAS Puts the "E" in "Data"). They have been evolving into true business applications players for some time now by being able to combine their deep analytics and BI solution functionality with certain enterprise applications areas, as seen in the case of MA. This will remain a key feat for these BI vendors as they expand their scope into more action-oriented business processes instead of limiting them to conceptual BI roles. In particular, SAS became a marginal player in the CRM and MA market with its acquisition of Intrinsic in 2001, and the release of SAS Marketing Automation 4 in 2004 gave it some sales traction and market visibility in the space.
To brush up on our knowledge, marketing automation (MA) involves analyzing and automating the marketing process, which includes a proactive strategy for using information and IT in marketing. The ultimate goal is to properly allocating marketing resources to the activities, channels, and media with the best potential return and impact on profitable customer relationships. The new metrics of customer profitability, lifetime value, and wallet share are needed to supplement the traditional metrics of market share and penetration. Typical functional components of MA include customer data cleansing and analysis tools, and campaign management systems.
SAS has been able to tackle the market owing to its protracted expertise in predictive analytics, which includes all analytics, both tools and packaged applications, that are more complex in their mathematics than core analytics. Core analytics are those used to define or analyze a current or past state, consisting of both tools and packaged applications that compute frequencies, cross-tabs, query and reporting cubes. Predictive analytics are better capable of determining the probable future outcome of an event, among other uses. For example, one can benefit from the ability to execute marketing campaigns, but it is much more beneficial to be able to identify segments within a customer base where subscriptions will likely be cancelled and the customer possibly goes to the competitor. It is thus more effective to have that predictive capability, and then build a campaign to go after those potentially lost accounts.
APICS Dictionary defines customer relationship management (CRM) as a marketing philosophy based on putting the customer first. In contrast to enterprise resources planning (ERP) back-office information, CRM emphasizes the collection and analyses of information designed for sales and marketing decision support to understand and support existing and potential customer needs, including account management, catalog and order entry, payment processing, credits and adjustments, and other functions.
Leading analysts concur that CRM is a business strategy designed to optimize profitability, revenue and customer satisfaction by organizing the enterprise around customer segments, fostering customer-centric behavior and implementing customer-centric processes. But, the major commercial CRM software application areas include sales force automation (SFA), customer service and support (CSS), call centers, and marketing automation (MA). CRM entails all aspects of interaction a company has with its customer, whether it be sales, marketing or service related. Computerization has also changed the way companies are approaching their CRM strategies because it has also changed consumer buying behavior.
Alliances, Partnerships, and Acquisitions
Modern BI suites should be able to access and present key business measures for sales, customer service, the supply chain, financials, purchasing, inventory, and many other areas. It should then allow this information to be used as the basis for comparisons, calculations, ratios, and metrics. Users should be able to dynamically combine business measures to derive key performance indicators (KPI), such as product profitability, margin analysis, book-to-bill ratios, return on investment (ROI), and other vital metrics. Typical data that manufacturing enterprises should know about, on a daily basis, include inventory situation, rejected items, throughput, booked sales, order status, on-time shipments, warranty levels, etc. In each of these categories, users may want to get behind the numbers and the trends to discern the root causes or find out what items, regions, channel partners, or customers are involved.
Striving to meet this need, SAS has recently enhanced its demand management module , High Performance Forecasting. High Performance Forecasting is aimed at consumer packaged goods (CPG) manufacturers, and allows users to crunch millions of predictions over hundreds of different stores, locations, or products in short timeframes. The tool is designed for companies with a large number of product stock-keeping units (SKU), which creates a vast number of potential combinations for a forecast. The tool not only looks at historical sales data, but it can also factor in seasonality, holidays, and promotions. The key difference between High-Performance Forecasting and traditional forecasting products is its ability to automate forecasts by embedding so-called "smart defaults" within the data in order to determine the best forecasting model and to pick different forecasts for different models. Up until now, a good forecasting required a savvy analyst to handcraft a forecast, but no human can possibly build a sound forecast for thousands of items.
So far, SAS has a notable track record with its customer profitability projects. Examples of such projects include Auna Group in Spain, Vodacom in South Africa, and One in Austria, whereas SAS Telecommunications Intelligence Solutions are used by many of the world's leading carriers to drive their broader BI efforts. Customers range from Hutchinson 3G in Austria to MTS in Russia and Omnitel in Lithuania. In addition to helping identify customer, product, channel, and tariff profitability, the enhanced SAS Telecommunications Intelligence Solution also includes the following capabilities:
- Customizable telecommunications-specific analytic and reporting components for customer retention, payment risk, cross-sell and up-sell analysis, customer behavior and segmentation to speed implementation and increase ROI.
- Flexible and scalable telecommunications-specific data architecture that supports modular and more rapid implementations for both mobile and fixed line systems.
- Enterprise wide business scorecard with telecommunications-specific KPI that enable a more strategic single view of the enterprise.
In addition to enhancements to products, SAS has also created a strategic alliance with Amdocs, partnered with Aprimo, and acquired Marketmax.
This is Part Two of a three-part note.
Part One profiled SAS.
Part Three will present a marketing analysis and make user recommendations.
Strategic Alliance with Amdocs
In mid-February SAS and Amdocs (NASDAQ: DOX) announced a strategic alliance that promises to deliver advanced marketing automation (MA) and decision-centric BI solutions to communications service providers (CSP). Amdocs, an Israeli-based, global provider of billing systems, customer care, and support for the communications industry, has revamped its marketing strategy aiming to become a customer relationship management solutions provider offering software and services that encompass the entire customer life cycle—from target, sell, deliver, bill, and support. In this new alliances the two companies seek to give CSPs a better means to track and analyze customer data, offering a solution that will present valuable information dynamically in the operational systems that span the customer life cycle. Ultimately, through this alliance, SAS and Amdocs promise to decrease their customers' total cost of ownership (TOC) while increasing their customers' ROI.
The first offering from SAS and Amdocs is the Customer Profitability and Segmentation solution. It offers augment the ability of CSPs to make and execute decisions by looking at customers' behavioral drivers thereby creating a personalized and differentiated customer experience. Other solutions, such as churn management predictive modeling are also forthcoming. In addition to joint products, SAS will also take over Amdocs' current marketing campaign management application.
Amdocs will encourage dozens of its campaign management clients to migrate to SAS Marketing Automation 4 offering. Customers will also be offered access to SAS Telecommunications Intelligence Solutions. This prepackaged solution has been available since mid-2004 and caters to the distinctive needs of carriers. Marketing Automation 4 incorporates SAS' proven activity-based management (ABM) and gives carriers the ability to identify customers, product, channel, and tariff profitability. Ultimately, this strategic partnership should give customers granular views of cost and profitability for more effective decision-making.
For more details, see the Amdocs Overhauls Its Marketing series, part 3.
Partnership with Aprimo
The most recent tool (and a buzzword) in the world of marketing automation is the emergence of the marketing resource management (MRM) pioneered by Aprimo (http://www.aprimo.com), an Indianapolis, Indian-based (US), privately-held vendor. Facing shrinking budgets, marketing departments are more accountable for the cost of their activities, and MRM applications are designed to improve the use of marketing resources. They should help marketing professionals to plan ahead for the factors like time for human resources, time for financial resources and responsibilities for different team members at different steps. The focus is on designing and creating a sound marketing strategy, determining the best allocation of marketing budgets, managing marketing skills, and more effectively tracking and supporting marketing processes, such as the marketing collateral creation. MRM combines workflow capabilities for assigning tasks and triggering alerts and knowledge management (KM) to comply with marketing best practices.
Tighter control over the projected budget, the planning, and the execution combined with a myriad of functions from campaign and lead management modules have pushed the limits of MA and that is the reason vendors such as Aprimo and Unica are now referring to their products as enterprise marketing management (EMM) solutions. To that end, Aprimo Marketing 6 is a suite of Web-based software products designed to enhance and work interfaced with existing ERP and CRM systems, as to enable marketing teams to achieve improved execution, gain managerial visibility across the global marketing organization and create more demand for products and services. Aprimo is delivering value to many industry-leading companies, including Bank of America, Alticor, Delta Faucet, Ernst & Young, Merrill Lynch and Pfizer. For more information on Aprimo and Unica, see Can the Market Sustain a Stand-Alone EMM? and Should Uniqueness Vouch For Marketing Automation Niche Players?.
As a result of the demand from their mutual customers, earlier in 2004, SAS and Aprimo announced a partnership to integrate the MRM products within the Aprimo Marketing suite into SAS Marketing Automation 4. The integrated solutions will be immediately available as a SAS offering through its global sales channels. The vendors cite that tightly linking the ability to execute and analyze with the ability to plan and manage should accelerate the marketing optimization cycle and decrease the disruptive time spent moving huge data loads between diverse environments.
The result was SAS' MA suite, comprised of proven customer data management, campaign management (an application used by marketers to design multi-channel marketing campaigns and track the effect of those campaigns, by customer segment, over time), predictive analytics, campaign, and optimization solutions. It also includes Aprimo's marketing planning and budgeting, production management, and marketing asset fulfillment and delivery management applications. The combined offering should give marketing departments an integrated environment to manage and coordinate pertinent marketing programs, activities and related resources.
The vendors tout that Aprimo's comprehensive vision to provide precision, discipline, and control across an increasingly complex marketing environment, combined with SAS' ability to manage the planning, analytic targeting, execution and assessment of responses for campaigns track, and then analyze and take action on customer data, will bring to the market a solution that continually improves both the efficiency and effectiveness of business-to-consumer (B2C) marketing investments. It will allow marketers to possibly achieve significant cost savings and increased revenues from their marketing activities. In other words, the resulting offering should enable B2C marketing teams to execute more and better targeted campaigns with less human and financial resources, to make better strategic decisions, and to generate more demand and revenue, while efficiently tracking results throughout the process. Partnering rather than competing with SAS might be Aprimo's wise approach towards bolstering its chances of its continued long-term independent operations.
With the acquisition of Marketmax, the former provider of retail intelligence and merchandising applications, SAS can now provide the retail industry with a more complete view of the retail demand and supply chain. The linking of Marketmax retail optimization solutions with the total-cost-of-supply information of SAS Value Chain Analytics enables more profitable demand-driven decisions for retail (see Retail Market Dynamics for Software Vendors). One should also expect future use of radio frequency identification (RFID) tags to further drive up the amount of data a business generates, and the importance of being able to report on and make sense out of that information (see RFID—A New Technology Set to Explode?)
This concludes Part Two of a three-part note.
Part One profiled SAS.
Part Three will present a marketing analysis and make user recommendations.