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SAS Institute Gets Some Bright IDeaS
The analytics and statistical analysis powerhouse acquires an on-demand price optimization vendor -- and builds a new practice around it.
Posted Aug 7, 2008
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SAS Institute, the Cary, N.C.-based business intelligence and analytics vendor, announced Tuesday that it has acquired Minneapolis-based IDeaS Revenue Optimization, a provider of revenue management software-as-a-service (SaaS) for the hospitality industry. As both firms are privately held, terms of the deal were not made available. 

Revenue management, also known as yield management, is a form of price optimization, one that IDeaS has applied to the travel-and-hospitality industry in particular. In general, revenue management is a process of adjusting the prices of goods and services to maximize profits, considering what a buyer will be willing to pay and other economic considerations, charging the right amount to the right customer at the right time.

“SAS is a perfect fit for IDeaS. Customers of neither company are locked into long-term licenses, so we both have to earn our customers’ business on a daily basis,” said Ed Booth, CEO and chairman of IDeaS Revenue Optimization, in a statement. “We have sought for some time to expand our scope beyond hospitality applications, and SAS, with a corporate culture remarkably similar to ours, will provide IDeaS with the resources to stretch its wings.”

The addition of IDeaS will complement SAS Institute’s existing retail revenue optimization suite, and in fact will become the core of a new practice area: Also on Tuesday, SAS announced the formation of a global practice in profit optimization. “The division will apply revenue-management techniques to help companies optimize profitability, using advanced analytics to scientifically and proactively determine the most profitable market segments and prices,” according to the company. To achieve this goal, SAS will build a new profit-optimization solution that will integrate revenue management, CRM, pricing, and distribution.

“This follows SAS Institute’s longtime strategy of expanding its capacity within the analytics market by acquiring specialized technologies,” says Dan Vesset, program vice president of business analytics research at market intelligence firm IDC. “Here, they’re getting something prepackaged for the hospitality industry and turning it into a profit-optimization practice. That’s a fairly horizontal, cross-industry discipline, but there are many opportunities for verticalization within it.”

The profit optimization practice is a good opportunity for SAS, Vesset says, but the company must make sure to utilize its new property wisely. “SAS has to make sure it retains people with expertise not only in the hospitality industry, but in related industries as well, so it can expand to its full potential,” he adds. “They’re not just buying technology, they’re buying expertise.”

While the pairing of SAS Institute and IDeaS Revenue Optimization seems like a natural fit, the announcement may still come as a surprise to some who watch the CRM industry and related disciplines. In July, Salesforce.com announced that IDeaS Revenue Optimization was using the popular SaaS CRM company’s applications, as well as several from the AppExchange, to operate its entire business.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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