SAS Gets Structured for the Unstructured

SAN ANTONIO, TEXAS -- As a centerpiece of its user conference here this week, SAS Institute announced yesterday its acquisition of Teragram, a provider of natural language processing (NLP) and advanced linguistic technology. As a result of the deal, SAS plans to enhance its existing text mining and analytical business intelligence offering and Teragram will gain access to SAS's 44,000 customers. Terms of the deal were not disclosed.

Unstructured data makes up approximately 70 percent of a company's total data, according to business management expert Bill Jensen, which makes the motivation behind this acquisition fairly obvious. (Another reason theorized by pundits? SAS was eager to replace the technology it had long been licensing from Inxight, a vendor snapped up by Business Objects in 2007, before Business Objects was itself acquired by SAP.) Structured data helps companies understand what customers look like and what they're doing, but effectively leveraging unstructured data will help companies "understand what customers think," says Gaurav Verma, global marketing manager for the enterprise intelligence platform at SAS.

While SAS has had its own text-mining solution, SAS Text Miner, since 2002, Cambridge, Mass.–based Teragram is one of the few companies that provides significant technological expertise in language and linguistics, according to Sue Feldman, a research vice president at International Data Corporation (IDC). The acquisition, therefore, proves to be the next evolution for SAS and its initiatives to decipher the abundance of information in an enterprise and generate actionable solutions. SAS aims to delve deeper into mobile business intelligence and enterprise search, to better understand facts, events, and relationships with customers, as well as customer sentiment.

The primary pain point this technology addresses is the ability to "provide a single point of access for people to get at all the information in the company without having to figure out where it is or what format it's in," Feldman says. With the massive amount of internal data -- and an unknown quantity free-floating externally on wikis and blogs -- companies need a way to capture and make sense of the information. Paper-only documentation is becoming a thing of the distant past and with the ability to manipulate data electronically, companies will be able to do incredible and unusual things, she adds.

Even as many companies continue to struggle with structured data, Feldman says that some forward-thinking firms are increasingly aware of the benefits to be uncovered from unstructured data. According to Feldman, approximately $1.4 billion was spent on search and text-mining solutions in 2006, a 35 percent jump over the previous year; in 2007, spending increased to $1.7 billion. Sophistication in this area will only serve to make the technology more accessible and more prevalent. "[It] will change how we interact with computers as computers become smarter about human language," Feldman says.

Teragram will continue to operate as its own company as a SAS subsidiary, similar to the structure of SAS's acquisition of DataFlux in 2000. Verma emphasizes that the two companies are highly "complementary" and Teragram's solution will be part of SAS's overall offering. Feldman sees Teragram as an "enabling technology" that will be embedded into SAS, rather than one that will require an entire system overhaul and any major integration efforts. Nevertheless, there will always be a people challenge in any sort of acquisition, in this case, she says, between the people in the text mining groups of SAS and Teragram, which will undoubtedly need to be ironed out.

According to a corporate statement, SAS positions its acquisition strategy in much the same way as it positions the company as a whole -- iconoclastic: "While other software vendors make acquisitions to buy customers and market share, SAS does things differently. SAS buys companies with specific and complementary technologies that enhance and extend SAS' own software lineup." While not very splashy with its acquisitions, SAS has acquired a number of technology firms since 2000, including the following:

• DataFlux Corp. (2000) -- data quality solutions;
  
• Intrinsic Ltd. (U.K.) (2001) -- campaign management software;
  
• ABC Technologies (2002) -- activity-based management solutions;
  
• RiskAdvisory Software Co. (Canada) (2003) -- risk management and consulting and software;
  
• OpRisk Analytics (2003) -- operational risk consulting;
  
• Marketmax (2003) -- merchandise planning; and
  
• Veridiem (2006) -- marketing resource management.

[UPDATE: Earlier versions of this story incompletely referred to the scope of expenditures in a market study, stating that $1.4 billion was spent on text-mining solutions in 2006. In fact, the figure referred to expenditures in search as well as in text-mining -- as the text above has since been modified to reflect. DestinationCRM.com regrets any confusion this may have caused.]

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