1. Basic Business Model
The business model of SAS is such that it in general it offers services coupled with software. Unlike typical firms in the industry it follows an annual software subscription model. Rather than sell its software, SAS leases to its customers - a strategy of immense importance in understanding the company’s relationship to its users. The fact that leases must be renewable annually creates a tremendous emphasis on customer satisfaction and quality in addition to stabilising its revenue. Furthermore, its products are made based on what customers require and its developmental process is almost wholly customer driven. There is also a strong focus on employee satisfaction leading to customer retention and loyalty which SAS believes is directly linked to customer satisfaction. As seen by the SAS Institute, the leasing strategy helps keep the company sharp by ensuring that technological advances are driven solely by customer needs.
2. Capabilities and Core Competencies to execute its Business Model SAS possesses many capabilities and competencies to help execute its business model effectively. These include flexibility from being a private company, an effective tacit leadership, unique corporate culture, strong brand, dedicated human capital and a considerable amount of financial resources which they efficiently allocate to certain projects whenever required. Being private, it is able to focus on the long term, continue to implement activities which have a strong focus on employee satisfaction and focus on slower but steady growth, something that would have most likely have not been possible had SAS been a public company. With a strong leadership spearheaded by CEO Jim Goodnight, coupled with a strong brand, SAS is able to recruit and retain the key talent it requires to execute its business model. Having a corporate culture which is egalitarian and based on mutual trust and respect also plays a significant role in retaining talent and keeping employees loyal and happy. With a dedicated human capital striving to continue the company’s growth, SAS does not only come up with innovative products which increase its revenue, it also saves more than $100million due to its low attrition rate.
Key Success Factors
The key factors are its unconventional management philosophies, customer driven developmental process and it being a private company. Unlike other software companies that focus on monetary benefits, SAS’s management philosophy is mainly employee centred with the provision of many intangible benefits. It also believes in a long term view of all issues and does not actively strive to reach specified short term financial goals. These have led to a build up of a loyal and talented workforce and sustainable long term growth. Moreover, its products are built on customer needs and customer feedback is taken very seriously. Using the Voice of the Customer (VOC) approach, customer opinions and suggestions are compiled and used to guide the development process. Being a private company with no debt has allowed Goodnight to have a long term view of issues and also implement the abovementioned policies to provide employee satisfaction and consequently customer satisfaction as well.
3. Building of Capabilities and Core Competencies via People Management Practices With attraction and retention of talent central to the company’s continuing success, it has developed certain principles in its recruitment, compensation, employee benefits and outsourcing policies. It has a stringent recruitment process to ensure the cultural fit of its new hires and thereafter gives its employees as much autonomy as possible. It also actively promotes a work life balance and egalitarian culture with a promotion of non financial incentives, unlike other software firms thus creating a unique corporate culture, “One of cooperation, teamwork and mutual respect” . Moreover its flat organization structure, open door policy and...
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