Mahesh Sharma | World according to Jack Noonan | June 10, 2008
FOR a company specialising in predictive analytics, SPSS might be accused by some of being a bit slow off the mark.
It emerged more than 40 years ago, and while some of its competitors of that time have grown into the world's biggest enterprise software vendors, it wasn't able to track this growth.
By the mid-1990s it was in danger of being swallowed up by one of these bigger players.
Its tools and analytics are widely used today, but the company hit the wall under the leadership of co-founder and chief executive Dr Norman Nie, who was replaced by Jack Noonan, Ernst and Young's 2007 entrepreneur of the year.
Noonan has turned around the company and taken it to the verge of one of the biggest growth periods in its long history.
How desperate was the situation when you first took over?
It wasn't like the world was coming to an end, but it wasn't the easiest thing in the world. You don't change chief executives when everything is great.
I joined at a time when we were very challenged financially.
The company had about $US34 million in revenue, we had a debt of $20 million, we were out of cash, and were challenged to get a new piece of technology out the door.
The company was stressed at that time.
What was your priority?
My first challenges were to keep the wolf from the door, get some new technology out and figure out how to take this 30-year-old single-product company in a new direction.
Over the next 16 years we did 23 acquisitions, integrated the technology and moved from being SPSS the stats company, to real stats real easy, to driving the predictive enterprise. That has been our evolution.
Norman Nie grew the company from zero to about $US34 million in 25 years.
Since then we've grown eightfold in the next 16 years.
How close were the wolves?
We weren't in dire shape. This was just put your head down, make the right cash decisions and get the product out the door and sell it.
Also Nie was the one that had the vision to invest substantially in taking the technology to the Windows platform, which was new at that time, and was struggling to get the technology out the door.
What are SPSS's main revenue drivers and how will this evolve?
The largest contributor is our 40-year-old stats product. Then it's our data mining technology and data collection.
Deployment technology is in its infancy -- a new area that takes the output of our data mining and statistics tools and puts them in Siebel, SAP and Peoplesoft.
We're looking at that being the largest growth opportunity over the next five years, and probably the next 10 years.
It seems strange that a technology can be around for more than 40 years yet still be in its infancy. How can that be?
Over the past 30 years SPSS has been in the business of making analytics easier to use.
Over the past six to seven years the output of predictive analytics and deploying in business systems has been used to automate decision making rather than merely assisting it.
Automation of decisions is in its infancy, whereas the ability to deliver forward-looking information and reports is very old.
How hard is it to sell something customers don't know about?
Early in any product adoption it's hard, because they don't budget for something they don't know about.
Every time you go out to sell a system you have to create budget for it. Nobody's doing requests for proposals for something they don't know about.
No one comes to us and says they want to deploy a real-time system in Siebel to upsell and cross sell automatically. They don't know that exists.
Where will you get the most traction in the market?
We're starting to see the early adopters in IT looking at bringing predictive analytics in and creating a platform for it.
The other piece that will drive our growth is the adoption of this technology in the systems integration firms, which want to take their customer relationship management to the next level with predictive analytics.
How much convincing is needed to get the systems integrators on board?
We're in our infancy in partnering with the major systems integrators.
You'll see some announcements over the next two years in which the Accentures of the world will start building a practice around predictive analytics.
A number of our customers that have made substantial commitments to this technology are now bringing our partners in to help them do it.
Are any acquisitions on the radar?
We have two acquisition strategies. One in the technology space and the other in the deployment space.
Firms that have built analytical applications, and this is like our deployment systems, by definition would have strong vertical market expertise and weak analytics if they're not us or our competitors.
We could then bring in their domain expertise, bring in our analytics, put the two together and take them to market in a stronger fashion.
Could SPSS have done things differently?
Had we chosen to be an application development company, had we chosen to be a business intelligence company, had we chosen to be a application software company, maybe we could have been bigger than we are now.
There are a number of companies that chose to do any one of those and are bigger, but they don't exist any more as independent companies.