Stanford Graduate School of Business Case Study: SAS Institute

This is a success story on SAS Institute that has been the largest privately owned company for over two decades.  This study was done in late 90’s when the company was estimated to have $753 million in revenue and 5,000 employees worldwide.  Now this company is estimated to have $2.3 billion in revenue and over 10 thousand employees worldwide.

In my opinion, two things  in general are the responsible  factors for SAS Institute’s success: Good business strategy and their employee/customer policies.

While many companies go where big chunks of money is, SAS institute, from its beginning, has focused on selling its software to as many customers as possible regardless of the cost and profits; knowing customer satisfaction will encourage their customers to renew their licenses.  While many software companies rely on selling software and then selling upgrades on regular basis, SAS Institute focuses on selling as much software as possible by offering free 30-day trials and one-year licensing for upgrades at a very low cost and  maintains its customers by offering exceptional customer service by frequently asking them for feedback to cater them a software THEY want.

To maintain its competitive edge, SAS Institute has to rely on the best software developers.  To get the best software developers, SAS institute has acknowledged the importance of providing a work environment and incentives that would get the best talent available.

SAS relies on three simple principles for its people policy.  First, they treat all employees fairly and equally.  All employees work in offices as well as their managers and are treated the way upper management would want themselves treated.  Second, SAS Institute emphasizes on intrinsic motivation, realizing that people either like the company they work for or they don’t and realizing they can get more out of their employees by coaching and mentoring them rather than monitoring them.   They do not believe that employee evaluations are a good tool to measure performance and have realized that bonuses and raises do no more than keeping their employees happy temporarily. Third, they encourage long-term thinking and visualization.  They have acknowledged the fact that sometimes you have to make huge investments that will not necessarily have any return for a few years.

By reading this article I can see that SAS Institution spends a lot of time and money in research and development.  What’s more important is that SAS Institution, without any doubt, spends a lot of time and effort into its people, keeping them happy and in their recruiting process to maintain their competitive edge in a highly competitive industry.  They don’t necessarily give their employees the highest salaries in the business but they ensure their happiness by having a fair and just system in place that creates a working environment that provides their developers with the comfort needed to develop the best software and also provides their employees with the kind of rewards and incentives that keep them happy to be at work.

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~ by aliahmadian on February 27, 2010.

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