SAS succumbs to the channel's lucre

After 25 years of direct selling, business intelligence (BI) applications
company SAS Institute has realized that to grow its revenues and market- share,
it has only one way to go-through channel. This is especially since the company
is now concentrating on the SMB clientele base, which it can

reach out to effectively through indirect sales.

Now the company is trying to make inroads into the fast-growing SMB market,
and with good reasons. While it will continue working with the enterprise
customers, the SMB market will provide it the organic growth at industry par.
But if the company has to hold onto its marketshare, which IDC pegs at 25
percent globally in BI applications, then it has to look at other avenues as
well. This is why SAS has fixated on the SMB space.

Phillip Beniac, VP-APac, SAS Institute said, “Our strategy for the last five
years has been to target only the corporate houses. But we are seeing the market
opening up. So far we made our marketshare of 25 percent in the global business
by going purely to the corporates. Now, if we want to increase our marketshare
we have to look beyond the enterprise to the next set of BI application, which
is the SMB clientele. Currently, the SMC constitutes 35 percent of the overall
BI applications market.”

Selling to the SMB market, which is largely spread across geographically, is
also not viable for the vendor. Partnering with partners who are already into
selling business improvement applications to the SMB will allow SAS to get a
foot in the door of this space.

Phillip Beniac,  VP-APac, SAS Institute

SAS had introduced its channel program in the US in 2006 and will now be
rolling it out in 13 other countries this year, including India. Since it was
the first time the company was dabbling in the channel it decided to take a
phased approach by launching the program in the US, under­standing the channel
need and then adding other geographies along the way. “We have 86 resellers
under the channel program and they are instrumental in bringing in 250
customers. Now, we are looking at recruiting more partners to our channel
network,” added Beniac.

He further added that working with SAS would be a win-win situation for the
channel because partners could get the entire suite of BI products from a single
vendor. The company has also created nine new application bundles that partners
can select to address the various BI needs of their customers. “All of these
bundles are priced appropriately for the partners, which gives them scope to
earn well while selling SAS,” said Miles Mahoney, VP-Strategic Alliances and
Channels, Worldwide Marketing, SAS Institute. It should be noted that SAS would
work with the channel only in the SMB segment, which is defined as companies
with a valuation of upto $200 million. Its direct sales team will also work with
select partners in the mid-sized clientele segment or with companies having a
valuation of upto $1 billion. The enterprise clients will still be handled by
SAS directly.

“We will have account managers who will decide which solution provider is
ideal for a particular client. At the same time we know that this can also
create some conflict. This is why we have come up with a registration system. If
a partner registers a customer with us, he will have the exclusivity to handle
that customer for nine months,” Mahoney stated. This means that a partner will
have nine months to get business from the client, failing which it will be
rotated to some other partner.

SAS has also worked out a channel compensation scheme based on the renewal
model. Partners who get the renewals will get 25 percent of that annual renewal
coupled with some other perks. Additionally, partners get a teaming fee for
getting new accounts registered with SAS and this could be across any of the
business segments it targets directly or indirectly.