SAS chief, Dr Jim Goodnight, discusses what people are doing wrong with Hadoop, and why paying some teachers more money and improving education for preschoolers from low income families could help with the skills crisis.
He also spoke to CIO about why healthcare is the $3.09 billion company’s biggest opportunity, which industries are best at data analysis, and why SAS may find it tough to maintain its impeccable 38-year run of growth this year.
CIO: The data analytics market is getting fairly crowded, there’s lots of new players out there. Has this impacted your business? SAS has been such a dominant player for so long – how will you maintain that position and stay ahead of your competitors?
Goodnight: Things like massively parallel computing that we have been working on for many years, this stuff is several years ahead of the market right now. As a matter of fact, we are a couple of years ahead of our customers, and [convincing them] to convert from the old ways of doing things to the new massively parallel approach – is somewhat difficult.
[Customers] are using Hadoop as a data store and to analyse the data, they are pulling it out of Hadoop and putting it into another server to analyse. That is a horrible approach because Hadoop by its nature is resting in a Hadoop cluster of servers. We can pull the data directly out of Hadoop straight up into the memory in parallel and analyse it right there.
So pulling it over the network – just treating it like a SAN device – that’s a terrible waste. We should analyse it where it is right there. It’s not just one single [Hadoop] file, it’s hundreds of little files and each one of those little files can be read directly into memory.
So we have 100 little files we can read straight up into memory in a couple of seconds. But if it’s 100 million records and you have to send it over the internal network, it’s a huge waste of time.
CIO: And you find that a lot of customers are doing that?
Goodnight: There are and I think we’ve seen IT be at the forefront of Hadoop adoption because they look at it as a way to save money for storage. It’s one-third of the price of some of the big SAN devices.
It’s definitely cheaper storage but it’s a shame that more companies aren’t taking advantage of the fact that with SAS we can analyse the data right there where it sits and do it 1000 times faster than they can do by bringing it over the network. It’s a hard one to get across.
CIO: Which industries, in your view, are the best at using data analytics to understand customer trends and why?
Goodnight: Banking has been doing this for many years. Back in the ‘90s we had banks building predictive models around what to offer to customers and what interest rate you should charge for a loan. We are also seeing telcos now being able to use that data. Industries of all sizes and shapes are getting onto the analytics bandwagon to analyse their data and they are trying to find people to do it.
We’ve been on a fairly large program to try and produce more analytical-oriented people. We’ve made SAS available free of charge for educational purposes [since May last year] and we’ve had over 260,000 downloads so far.
We want people to be able to use SAS in their educational endeavours. We had seen some professors teaching ‘R’ because it is free even though it’s not as good a language so I guess to compete with free we need to be free.
CIO: We have an ongoing IT skills crisis here in Australia, not enough young people are doing STEM (science, technology, engineering, maths) subjects. What is the industry doing wrong?
Goodnight: Australia is doing a better job than the US. If you look at the Pisa [program for international student assessment] score ranking, Australia in maths is number 19, the US is 34th.
This [poor performance in STEM] gets back to our educational system. We need to make sure we have strong maths and science teachers and perhaps we should pay those skill sets a little bit more money. In the US, every teacher gets the same amount of money based on how many years they’ve worked. The idea of differentiated pay is somewhat controversial to the teacher unions but it’s something that’s necessary if we are going to retain the best and brightest teachers in the STEM area.
We also need more preschool education for low income families. A low income child who has been raised by a single parent has a much smaller vocabulary, they haven’t been asked ‘what colour is this, what letter is this?’ like middle and upper class families do all the time.
Educated parents want to educate their children and they play games with them all the time to get their kids [thinking]. Low income families don’t do that. Because low income is also low education.
We’ve got to find a way to bring the low income children up to the level of some of the other kindergarten kids. You’ve got to start at some point and it won’t pay off for 12 or 13 years. It’s crazy to keep [offering] a remedial education to kids that have sort of half dropped out of school because they can’t keep up. Let’s start with preschool right now to make sure everybody has got a good start.
CIO: What are your thoughts on the term big data? Is it hype or is it really something that organisations in every industry need to think about?
Goodnight: Clearly big data is being generated more and more and when we get into this Internet of Things, the [amount of] data generated is going to be enormous. Every company can usually benefit by taking all the data they do collect and analysing it for predictive purposes.
CIO: That’s a challenge for the CIO isn’t it?
Goodnight: We’ve seen banking CIOs have a fortress mentality that says ‘we are not going to let any malware sneak in so we are just not going to let any new software in.’ That’s a hard one to fight, it takes us a year almost to get a new installation of software into a bank because their mentality is to hold fort.
CIO: What are some of the biggest challenges CIOs are facing when it comes to analysing their data and presenting it in a meaningful way for the business?
Goodnight: CIOs need to be more in touch with business users and not just say ‘ we’ve got the data, we can write our own programs, you just tell us the programs you want us to write.’
We have been working on this massively parallel stuff for six years – 600 people working on this one problem. A couple of programmers are not going to have anything comparable to what we have been able to develop. There’s somewhat of an IT mentality that IT can just write the code and they can’t within any reasonable time and without huge resources.
CIO: Which markets will present the most opportunity for SAS in the years ahead?
Goodnight: Our biggest growth sector right now is healthcare – especially in the US because there have been some mandates about digital record keeping. That suddenly puts a huge amount of data at our disposal to help analyse things like patient safety.
We have products like Episode Analytics that follows the patient from the time they entered [the hospital] to the time they left to see during that episode, were there any side effects or infections that occurred? When you find things like that the hospital can correct the procedure so these things don’t happen again.
Pharmaceutical is a big market for us doing analysis of the efficacy and side effects of drugs. We are doing a lot of work with governments in the fraud area from unemployment fraud to tax fraud.
CIO: Last year, SAS reported its 38th year of consecutive growth. Do you expect to continue the run of form this year?
Goodnight: It’s going to be tough this year quite frankly [to grow], the US dollar is so strong. Two-thirds of our revenue comes from overseas, we’ve been pricing in local currency for many years, we don’t change the rate based on the dollar. So right now, two-thirds of our revenue is getting a 20 per cent haircut. So we are going to have to work really hard for the rest of the year to overcome the strength of the dollar.
CIO: How have you managed to grow the business for so long? Is it a mix of product and innovation, the workplace culture you have created or a mix of all these things?
Goodnight: The culture of the organisation is designed for creativity and innovation, which allows us to produce extraordinarily good products – and as we move into the massively parallel area, we are able to produce software that runs hundreds of times faster than other people. So big modelling jobs that used to run for 12 hours or more, we can do those in a minute and a half now. It’s a matter of getting people to think that these huge enormous savings in time is worth the small investment in learning how to use the new tools.
We see a lot of other organisations, public companies, if it feels like their profits are going to go down, the CEO has no problem with slashing people, reducing headcount. My belief is that it’s so hard to recruit new people that have the skills that you want. We try to provide a culture that it [SAS] is one of the best places to work in the world – that makes it much easier to retain people and recruit new people.
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