Sas Case

The software industry has a highly competitive structure. The firms in the industry needed software talent, which was getting scarce, in order to develop innovative but useful products to satisfy the customer. The people talent will complement the Research and Development, which contributes significantly to the industry development. In order to make profits, the above mentioned two resources should innovate to keep the technology up-to-date and change it when required; else companies will shut down like the ones which did not change its design to away from the outdated IBM mainframes.

SAS’s main strategy is to focus on customer driven development process and providing exceptionally high level of service. This is evident from the 98% customer renewal rate. In terms of product strategy, SAS maintains a broad range of products ranging from video games to educational software’s. It should be noted that SAS doesn’t have a competitor that provides the range of products that it offers. These are its strategy in view of the external market. SAS also maintains an internal strategy in terms of employee satisfaction since it is a knowledge based business with continual need to develop new software. Jim Goodnight, CEO of SAS, developed these 3 strategies to be in lieu with the long term focus which is the driving factor. Implementation of these strategies requires high investments both in R&D and employee satisfaction. More than 30% of its revenue is invested in R&D, which is around twice the industry average. This results in keeping technology and product range ahead of the competition. SAS provides its employee to work on new ideas and new domains, one of the main rewards to its employees. Employees are given high degree of freedom in terms varying the roles and divisions in the organization. Moreover, Goodnight gives each of the 27 division reporting to him, authority to take decisions without interference. To facilitate a highly skilled work force, SAS maintains a selective recruitment process since it gets lot of employment offers, as it is known as a family-friendly place to work. It gives emphasis on internal promotion and employee referral. As expected, cultural fit is a major criterion in the recruitment process, since cooperation, teamwork and mutual respect are highly valued. The industry requires competitive technical skills to develop new products which are provided by internal training programs. Orientation program is also given importance so that new employee fit into the culture, which is provided by the senior managers on the company history and its vision.

SAS maintains a very unique corporate culture of a friendly, fun and stress free environment, which is employee focused. This is based on a unique business model of SAS “Satisfied employees create satisfied customers”. Unlike the competitors, SAS maintains a 35 hour work week and provides benefits such as subsidized health care, education of employee’s child and exercise facility. The management is very interactive with employees from all levels. This is evident from the fact that Jim Goodnight walks into the child care room or the warehouse. This is essential to keep the employees motivated and to assure them that the firm is focused on the employees. The system for performance evaluation and compensation is highly differentiated from the industry, in form that it doesn’t offer stock options and doesn’t believe in formal appraisal process. Evaluation is informal and simple. It is based evaluation on monthly revenues and expenses,