Jim Goodnight Private company pampers workers

Office massages, a state-of-the-art gym, a gourmet cafeteria — and it’s 2003.

At the Cary, N.C., headquarters of SAS Institute Inc., one of the largest privately held software firms, it’s as though the technology boom never ended.

Carrie Kirby, Chronicle Staff Writer

And why not? A private company, SAS has no shareholders to answer to, and the firm has continued to grow despite the economic slowdown. In 2002, revenue rose 6 percent, low by its standards. In the first quarter of 2003, sales surged 18 percent.

SAS makes software that analyzes data for such diverse customers as Genentech, the Department of Homeland Security, Intel Corp. and Bank of America.

SAS’s 73 Bay Area employees also get to enjoy the company’s perks. Although the San Francisco and San Jose sales and training outposts don’t have the on- site facilities of the headquarters, the company offers employees free membership at the health club of their choice, and employees with kids pay only $300 a month toward putting the little ones in day care. The company picks up the difference.

After criticizing The Chronicle’s relatively drab hallways (SAS employs artists to adorn the walls of its offices), Jim Goodnight, SAS chief executive,

chairman, president and co-founder, sat down to talk about pampering employees, the advantages of being a private company, and the economy.

The Chronicle: SAS’ software sounds like complex stuff. Can you explain some of the things it’s used for?

Goodnight: Pharmaceutical makers use us to help determine the efficacy of their drugs. Intel and Sun and IBM use it to maintain the quality of their chips.

All the major banks and credit card companies in the world use SAS . . . to do credit scoring. We help determine which customers are offered credit cards. A lot of times when you swipe your credit card there’s a (program) at the other end that determines whether it should be accepted.

We work a lot with federal agencies. One of the big things we’re working on right now is the area of ID fraud, to be able to put a stop up front when somebody is using the wrong name or address.

We’ve done a lot of work with analysis of DNA. Genentech uses our software.

We helped banks with their anti-money-laundering programs (first for cracking down on drug trade, but more recently to hunt for terrorists). We found out there was a lot of that type of activity that went on with the terrorists. They get quite a bit of their money by getting credit cards. One of them maxed out as many as 25 different cards.

The Chronicle: Who gets all these company benefits? Executives or rank-and- file workers?

Goodnight: Our benefits are for our day care workers, landscapers and food service people, for everyone. We don’t out-source (these jobs). . . . You get a lot better quality job from people if they feel like they’re part of the company. Our people in grounds, they’ll have a particular area that’s their responsibility, and they take pride of ownership in that flower garden.

They all get the same profit- sharing and health care. The only things that vary are bonuses, salaries and raises. These are based on merit.

The Chronicle: You haven’t followed the industry trend of outsourcing software development overseas?

Goodnight: We have a small operation in India. We have 25 research and development testing people there.

The Chronicle: Do those workers get these benefits?

Goodnight: The Indian workers don’t have those perks.

The Chronicle: Why do you give workers all these extras?

Goodnight: We look at the things we do as improving our bottom line because they give us higher morale. Our voluntary turnover is under 3 percent a year.

By keeping our turnover so low compared with other software companies, we’ve been able to save probably more money than we spend. You either are going to spend your money on headhunters and training, or you could (spend it taking care of the people you have).

At our on-site day care, we have four full-time doctors. That saves us a couple million a year in health care costs, just by having our own on-site health care. People can be back to their job in 30 to 45 minutes, whereas if they go to a doctor across town, it could be several hours. It’s also a real savings in money spent for health care. They get in earlier (instead of letting conditions worsen before seeking medical attention).

The Chronicle: Companies have been spending a lot less on software in the past couple of years. How have you reacted?

Goodnight: We increased our spending on (research and development) — we hired a lot of good development people. The last two years have been a wonderful time to be hiring people. As a private company, we can counter the trend. We don’t have to worry about quarterly profit. The past two years has been a building time for us, to take advantage of the economic slowdown and bring some really good staff in.

It certainly helps to have a pot of money. We’ve got probably half a billion in cash right now, so we can ride through the slower times. We were still profitable the past two years. Even though profit was down a little bit from 2000, that was OK with me, because I don’t have to worry about meeting quarterly numbers.

The Chronicle: How do you feel about the prospects of the software sector?

Goodnight: I feel very good. We’re coming out of it very nicely, with an 18 percent increase in revenue for the first quarter. But I have always said our sector, business intelligence, would be the first one to come out. We’re the easiest to put in and the most beneficial for the cost.

We’ll probably see hardware come out next.

E-mail Carrie Kirby at [email protected].

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/05/19/BU295858.DTL