SAS Sails Into Uncharted Waters With New Reseller Program

is setting sail into a new channel for revenue, and for the first time its sales force is not SAS employees.

On Monday, SAS outlined its strategy for working with channel partners to sell software and services to companies with less than $1 billion in annual revenues.

It's the first time in its long history that the world's largest privately held software company has made such a move. And SAS does so only after hiring an industry veteran of channel sales to spearhead the effort, then building a management team to plan and implement the strategy.

"We have wanted this channel and the channel has wanted us for a long time," said Jim Davis, chief marketing officer of SAS and a top confidant of Chief Executive Officer Jim Goodnight, the firm's co-founder.

"We produced $1.68 billion in revenue in 2005, and virtually all of that was done through our employees," he explained. "Our direct sales channel is doing very well. We have increased direct sales globally 21.4 percent this year, and in fact we are increasing the number of direct sales people, so business is good.

"The reseller is not a move to downsize the direct channel, but to grow the company."

SAS already has 500 "quota carrying" sales people in the United States and 1,300 globally, Davis said. But SAS needed more people on the street, not only to support direct sales to large customers but to sell to smaller companies with which SAS has not dealt in the past.

Rather than add headcount, however, SAS worked months on choosing to embrace resellers.

Through its partners, SAS expects to have in short order another 1,000 people in the Americas alone. That's where the reseller program is being launched, with 27 partners already signed on.

"We're not talking about hundreds of people," Davis said. "We're talking about thousands."

International partners will come later.

"What we are finding with the growth rate of 21.4 percent is that there is a lof of opportunity out there," Davis said. "We're telling resellers they can sell into that segments of companies with less than $1 billion in revenue. We can't cover the breadth of that opportunity with direct sales."

SAS originally expected to have 30 partners signed on by year's end. The program has already proved to be so successful that SAS has lifted its target to 50 by year's end, Davis said.

As an incentive to partners, SAS is offering them an annuity stream rather than a one-time fee for a sale. The partners get 30 percent of the first-year sale and then 25 percent of ensuing subscription sales for services.

"This incents them to build relationships with customers," said Davis.

SAS works hard to develop customer loyalty and relives heavily on recurring revenues from services and upgrades to drive its growth.

In talking about launching the reseller program, SAS executives ruled out what Davis called a "dump and run" approach - make a big sale and then move on to new clients.

What SAS wants its partners to do is "build an ecosystem around what SAS has to offer," he added. That includes more than 200 products and services, with an emphasis on business intelligence.

Given what he described as a "shakeup" taking place among other business intelligence providers, SAS decided that 2006 was the "opportune time" to launch the program, Davis added.

Brought in to lead the effort is Miles Mahoney as vice president of alliances and channels. He joined SAS several months ago and has already hired 40 people. SAS also will hold a "summit" for its new partners on Sept. 19-20 at the SAS campus.

"Miles has done this before," Davis said of the former Borland and Business Objects executive.

SAS has set significant growth goals for the group, with 15 to 20 percent of new sales to come from Mahoney's organization by 2008, Davis added.

To make SAS solutions and services more appealing to smaller businesses, the company has also reshaped its product offerings. SAS for the first time is scaling its prices downward for a "per user" basis.

"We've never done this before," Davis said. "This is only available through the reseller channel. We're removing the barriers."

In order to position itself for the reseller program and to adjust its own internal organization to reflect a changing sales environment, SAS did make some job cuts earlier this year. However, most of the people affected found jobs elsewhere in SAS, and Davis said that SAS' overall headcount is expected to increase 3 percent by year's end.