Kevin Parker: A quick look at the varieties of intelligence needed for goods making

What do former Michigan Governor John Engler, today president and CEO of the National Association of Manufacturers (NAM), and SAS, the provider of analytic tools, have in common?

At the recent SAS manufacturing executive conference, where Engler was featured speaker, both wanted the same things.

SAS provides both “summary and predictive” analytic tools packaged as applications for things like demand forecasting, warranty analysis, and services optimization. At this stage in the downturn, Engler says, manufacturers have benefited, in comparison with other industries, from their “tightly controlled inventories and supply chain.”

Focus on productivity, however, brings with it other big issues, including education and globalization.

SAS, with revenues in 2007 of $2.15 billion, is the largest privately owned software company in the world. In an annual survey, about 80 percent of employees say private ownership is the one thing they don’t want to change. It’s easy to see why. At headquarters campus in the Raleigh-Durham area, SAS has two on-site childcare centers, a healthcare center, and a 50,000 square-foot recreation and fitness center.

In his pleasantly laconic manner, Jim Goodnight, SAS CEO and co-founder, talked about struggles companies have finding good employees. “The number of kids graduating high school hasn’t gone up, and the U.S. is ranked only 18th in the world,” says Goodnight. “Kids drop out because they’re bored. The world changed, but education remains based on paper and pencil. Students should have tablet PCs for doing mathematics and classrooms with ‘smart’ blackboards that download notes.”

SAS says it gave laptops to teachers and students at Hunt High School, Wilson County, N.C. In less than one year, discipline incidents decreased more than 12 percent and suspensions are down about 17 percent. Teachers and administrators say student engagement increased significantly.

“No-child-left-behind brings everyone down to the lowest common denominator,” said Goodnight. A true believer in the power of statistical methods, he added, “We need growth models that forecast where each child should be at the end of the year and seek to understand any shortfalls.”

Engler noted that $550 billion is spent each year on public education, “sufficient funding, but underperforming. The manufacturing workforce still includes 14 million people, and 80 percent of NAM members say they’d immediately hire those with the right skills. The K-12 system is broken. You ought to be able to go to college without remediation, or graduate from high school with a marketable skill, including simple skills, like communication.”

With consolidation in business intelligence software markets and world economic turmoil can SAS continue its generous employee and outreach programs?

Goodnight says SAS does much more than just BI, which it sees as a limited set of query tools. While Henning Kagermann, SAP CEO, has said it’s inevitable that transactional and decision-support capabilities merge, Goodnight said, “SAP has convinced a lot of people it does everything. SAP bought Business Objects because its former strategy was a failure. Business Objects is just query-and-reporting in a friendly environment.”

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