North Carolina People; James Goodnight, President, SAS, Inc.

Good evening ladies and gentlemen we all know and Irish history that our country has experienced an enormous economic growth at home and around the world. This isn't due to a great measure to the entrepreneurial spirit of great Americans. Tonight North Carolina peoples in the home of one of those individuals Dr. Jim Goodnight. Our own North Carolina will meet and talk with him in just a few seconds. North Carolina people is brought to you by walkover banking investments and financial services for individuals businesses and corporations. We are here let's get started. Jim it's nice of you to let us come back to you in these rolling heels and you know this wonderful fish pond to visit with you this evening. I want to know something how did you get the idea of creating SAS incorporated

now that much of the great global organization when you were in sea state that what brought this to your mind. Well we were in charge of the group that I was with at NC so I was in charge of writing the computer programs to analyze the agricultural research data that was being collected at the university. And over the years we wrote various programs and then at a point back in 1966 like 66 early 67 Jim Barr came up with the idea of merging all of these together and put the framework around him and so he contributed some of the systems that work and I contributed some of the procedures and that's how SAS got to start from that simple beginning now today you know how many countries worldwide. Oh totally world wide. Yes I mean we have a hundred twenty eight countries represented that are that have sesame in use. We've got offices of probably 30 35 countries around the world all over Europe

and Russia. Moscow truly a global organization yes we are going out. Tell me what happens here. I'm one of those illiterates when it comes to software and all of this I think keep up with it. Something goes on here that is terribly important. What do you do in the software industry that makes it so attractive. But we deal with most of the large companies around the world who have a need to keep track of their business know what's going on make daily decisions. SAS is now more than anything else it is what we call a decision support system. We gather information out of the operational systems we put them in what we call a data warehouse and then we provide tools so that every user in the business can have access to the corporate data to be able to make decisions about you know what we need to be doing next what what's selling what's not selling. How's manufacturing doing house sales doing all of these all of these types of the citizens need information and that's what we do.

That must mean that you must have to update it every 12 months. How do you keep something like that fresh and current. Well that's been one of the secrets of success over the years. We first left the university to assess it was about 300000 lines of code and that 300000 is now about eight million. And that has been rewritten three three or four different times so we are constantly in the process of rewriting updating adapting to new hardware adapting to new operating systems. So it's a constant vigil just to try to keep up. Does that mean you make constant investment in innovation and creating this in this organization. You've got to keep up with a new idea and create half of them yourself and you think you know we spend over a third of our total revenues own R&D. This is more than any other major a software company. Even Microsoft does not spin that percentage of its revenues on R&D.

We are or we are an already driven company. I think a lot of this is us to do with the fact that I'm a minority myself and I'm not in the marketing side of success I'm more on the R&D side and we enjoy doing research and development and keeping the product fresh and moving forward. Well you certainly been an enormously successful person that it was that one reason you kept private control of the company and not public you could you could move the way you want to do it quickly and efficiently. Well I wouldn't say that essentially if you look back at the time when SAS was started back in 1976. At that time the thought of the feeding frenzy of the venture capital swapped around and then not much at all to start says we had to started owner own and We bootstrapped the company by working lots of extra hours doing extra jobs ourselves I mean I used to be in the book Packing part of the business after after writing software all day I'd be back in the back packing books to this and the

customers. So the original four of us had left the university and I had to make a major sacrifice to get the company up and going and we have never felt any pressure from venture capitalists to go public. And so that's one of the reasons we're still a private company. I came out here not so long ago when you invited our program and family later said to have a home here which we've been profoundly grateful. But I had a feeling when I left your GM that your company is so unique in that I saw the daycare center health center a gymnasium restaurant. You do something for your people that you don't see every day. Is this just your idea of employee relationships that produces a great community of your colleagues and company. Well I think first of all you have to stop in sort of picture of what SAS is about. We are a knowledge company that it's one

of the very first independent software companies and there was a company not owned by one of the hardware manufacturers. So the whole process of creating software is entirely an intellectual process. It's all mental. We don't predict widgets or things that you manufacture we create essential easier as in one's bits of information that till computers what to do. So the vast majority of our workforce is college graduates. They require our. They need to be in an environment that they can be creative. So we have always taken great strides to make sure everyone has a private office so they've got the best computer equipment that we have a brick station just down the hall if they want to get a cup of coffee or they can walk in and get it and they come back to their desk and work server. We are different in that respect that for the first

time in history we have the ability to create a knowledge based company and therefore we've tended to make our benefits and the things we do for people new and different like you've been sighted all over all kinds of organizations for this very wonderful way of looking at people as colleagues and fellow scientists in the way have you put a very high premium on creating this innovative thinking don't you. Well that's correct. That's what software is you have to have a movie inventive creative people to generate the software. And I want to. You've done something here recently I was in the airport this week in a mayday and the plane came in that I wanted to ride back to Raleigh Durham and here you are in the airlines business Midway airline. How do you how did you begin to expand and diversified by getting in the airplane business. Well I'm not personally that involved Marilyn that isn't as

I was with a group of folks already some money to help try to rescue Midway. I guess if you go back and look at when American was here and how we got to the airport hop on a plane just about any time of day didn't get us into where we wanted to go that was a great a great feeling having that American home here. Then when they left the Midway people came in and they made some mistakes and were not very profitable their backer the and the still chill Mark fond of Chicago had a three year investment program and they were fully invested and they really could not put any more money into the airline. And so they were looking to try to sell it. There was a one other rival group called the smith group who also own Hawaiian Airlines. If they had bought it they would have. Their plans were to move most of the planes to Hawaii and leave us without a good hub here. So I decided that the that we needed to keep it here

so we stepped up to step up to the plate. We were very fortunate that in this process we met a gentleman named Bob Ferguson who is the CEO who is at Midway now Bob who was responsible for bringing continental out of bankruptcy. And he did a who did a tremendous job there. Well you've always operated on the principle of it. A company has to be a good community and a good citizen a good neighbor a civic leader. And I know that's what leads you to think you know a good deal about elementary education and you know Kerry Academy had all that stark you know fertile brain. Oh that's I guess I have to give a lot of credit to that to my wife who's basically the ideal person here that started that. We had long discussions our son was was in public school are both our daughters graduated from public schools here

and here in Wake County woman to Duke graduated they're the Caroline graduated there. But as our son came along we were just not as pleased with public schools as we had been before and we felt like. We would like to experiment on or own to see what we could do to improve the quality of education. I felt it was important that computers be involved in every class on every day. So we established a group of curriculum development specialists who work at SAS and still work there as more folk were even expanding their group. But their goal is to is to build a complete computer based educational system for students in the middle and upper schools should be very interesting to follow that because there's so much going on in public schools without so many innovative ideas being tested charter schools private schools are one thing in another when you've certainly been a

pioneer here again. And then your wife has certainly had that. How do you feel about this first year is it going well. It's going to extremely well goes to most of the kids just to just love the place don't want to leave in the afternoons or the parents or even the coming over at night to learn that computer system that was set up so that they're all getting involved in it. I think computers are just an absolutely natural replacement for textbooks and pencils and pads all of that you can do on the computer and at the same time have access to the whole world of information through the Internet. And one of the things are specialists do is to. Look at all the websites around the world they've visited thousands and thousands of websites to find which websites actually have content that we can actually use. And that sort of reminds me that one of the basic problems and education right now is the idea that I think the governor's behind the

president's behind it less wire up every school put a computer in every classroom. Well essentially unless you have the content lined up about what those computers are going to be looking at and how the kids are going to be using them. It's a big waste of money. It certainly is. I would you know my recommendations for public schools is let's put a let's put computers in one class English class or history. It happens to both the English and history classes or the easiest place to find content. It's all over the web all over the world. You can visit museums and Karo you can visit the Louvre in Paris. It's just enormous amounts of historical information and all the Shakespeare plays everything. Everything is on the line out there so if you can develop course material around allowing kids to have access to this world wide web then you really have something that is useful.

Is this I see this available to every child care you get me now that access is there. Yes every every class has got a computer for each child or at most there are two children per computer and they're on the machines about about half that half the class and the other half they're having discussions and things like that. But the idea that in public schools if we want to introduce computers there we really should concentrate them not just put one in every room where it's going to sit back in the corner somewhere and used you know less haven't heelys course based around the use of the computer or a history course. How difficult is it to find a teacher that you can really master the equipment in like this is just a constant process you have to train your own up. Have you done it. Well it's centrally at Cary Academy we were very fortunate in that we hired a total of 32 faculty members and this was from approximately 2000 resumes that we received. So we were very

lucky to be able to take the very best that we could find that that applied. Essentially today's computer using the web is not much more than the click of a mouse button and just learning a few very very basic ideas. So I don't think it's anything that any of our current teachers couldn't pick up fairly rapidly but they do need training and good Swamp Thing We built into the Curie cademy the first month before school started. Every instructor or teacher was there for over a month's worth of training so they were they were ready when school opened every day and you get up you get this wonderful organization you hit and you get the airline and think about you. Cary Academy What was Jim Goodnight do this of sheer recreation you in and get away from here who wants them out. There's a lovely old you know in this huge lake out he had no it's fun here but how do you how do you refresh it. Well I actually just coming home at night is refreshing but I

didn't say we did just that on the terrorists or in the summer and things like this was very nice personally. I've been trying to learn to play golf about the last six or seven years. We ended up with Preston wood Country Club as part of a land deal that we deliver a sober rescue from the RTC back right when everybody was going bankrupt and I figure I should learn to play golf since we have a country club server. I've been I've been hacking away at that now for less than six or seven years. You look healthy and sun tan you must enjoy it. Well I try to get out once a week and play a course during the winter one of our favorite pastimes as well as skiing. We have a place up in Steamboat Colorado which is just a great ski lift recently Larry ski town and the people there are just so friendly and it's just wonderful to go out there we got there a couple weeks a year.

I want to pull you back to the the global figure you are policy in American corporate decision making. It's our country in the term economic terms now. Doing the right kind of things in this global leadership role of his play. What do you see out there that we need to be doing differently. I think right now economically we're doing quite well. I think we're producing more now than we've ever produced before we're exporting more now than we ever have before so in the whole computer business really originates right here in the U.S. all of the development of just about everything that happens in the world all around the world with the growth of computer stores right here and I as you look at SAS for the next five years what what if you blocked out as the next arena of attack. I may put it that way. Where is the future life. Well first of all.

We don't block out things in five year blocks because things change. The industry is so rapidly changing that we try to stay as as mobile as we can so that the new operating system comes out of some new computing metaphor some user interface that people are gravitating to and our users tell us that's where they want us to be. We like to be in a position to be moving in that direction so that you know right now we're looking at new releases of the SAS System that provide for all of our output being generated in HTL so that can go directly on to the web. Right now it's more of a proper form of output and we're two are very near ready to get that release and when you have people go out or at the colleges in the spring time then what. But Type A person are you looking for when you recruit today man or woman what level of training in mathematics must play a great role in who you choose. They're not but what about these quality of personal characteristics that I

see so much of at you. Well I think what we what we're really looking for is somebody that's really interested in working that's got some real real good. Pent up desire to be creative and to be in the process of creating things that other people use I think this will be great satisfactions. Being a programmer is that you're developing tools that other people will be using and it sort of gives you a satisfaction to know that you're able to develop something that will make someone else's job easier. All these people you have here this compound the worker satisfaction the employee retention rate you must be the very best among your peers. Is it. All these things you do to make me feel that I'm so much a part of what you're trying to do does not have that effect. Well we have seen in the last few years and in the computer industry software industry an average turnover of around 17 percent. At SAS

Ours is about 4 percent. That difference of course has got a lot to do with the way we treat people. You know one of our basic philosophies of course. At work is that we trust each other we're going to trust our employees. So that feeling of trust of sort of permeates the whole place and you know you see people coming in late and we see him leaving late and there are very flexible hours that we have it's as you can pretty much set your homework time between say 7:00 in the morning and 7:00 and I can take early launches so you can go to the gym. But all of that involves trusting people to do to do the right thing. It's terribly important in building this comradery. But but other than that I noticed a clinic and if I'm here I get medical care I get dental care that include my family if I'm one of your team. Well.

We have our own clinic on campus. We started that perhaps 10 at least 10 years ago with a single nurse practitioner here in North Carolina were able to use nurse practitioners and as a screener to prescribe stuff for sore throats or colds or flu or whatever and you know anything more serious of course will be referred on to a doctor over the years that is built up to the point we have a five nurse practitioners four five nurses we've got two doctors now on staff full time. It's great for the employees because instead of spending two hours to drive across town the way they drive back to they can be at the clinic. So you see a doctor or a nurse practitioner in the back of their work and 30 minutes so it's a great time so it reflects in the bottom line and then if you don't have it up to 3 percent turnover and people can work as they please as long as they produce. That's a very unique arrangement.

Well it is in the health care. Gives us as a company a great savings and money instead of paying you know losing those hours of those employees being gone and providing all the preventative services that we do because we're going to catch that flew right off the bat or that sort of right off the bat before it gets worse. And we encourage people to to to to come to the clinic as soon as they can and to get get yourself fixed back to the company a minute big so innovative and creative you're testing a lot of bad his and his strategies and all of us all the time. You miss one once and wow do you ever fail on something like this and you work and you do get a trial and error. Well there's a lot of competitive products out there that I wish that we had created that would be good you can't see them all on the other hand. We don't penalize failure. We have failed a number of times. We've had very large

amounts of money spent on projects that we've eventually cancelled because it just is not going to happen you know this is the product that we're working on it is not getting out the door. It's time has passed. Something else has come along with that. That's going to take its place. I think that very spirit is one of the reason for your success and people know that you are willing to do that and I can try I can innovate. That's what I tell people never to worry about how big a hole they did because they're not going to be able to do it bigger ones I have back out there in the woods you know because I've made some really stupid moves in my life. That's a long good life and that's what make this is the best always. Well I think the secret about digging holes is when they get deep enough you've got to acknowledge it and walk away from all over. So some people just keep going then that's not the right thing to do as you look at read the third world and Southeast Asia Latin America even though you're so closely identified with all the Fortune 500 companies. You see great economic opportunity for our country in the next 10 years.

Well Latin America especially we sees we're seeing tremendous growth right now in the computer field so you know my measurement of all this is really based on who's buying software. China right now is just really booming Shanghai and all the coastal coastal regions of China. We've got three offices now and just in Mainland China does that require you to go abroad often. No not really. I sort of pick and choose where I want to go. I go to a three or four user conferences around the world. Each year we have one here in the U.S. I get two or there are national conference here and then I'll go to some of the root won't win either one or two regional conferences here in the U.S. we have a probably a total of. But 20000 users a year come together at various meetings around the world to talk about how they're using SAS and how now what you know of the things I want to see us work on to improve SAS. So we've got a really a tremendously good

user group community. You have your own video center here. You must still do a lot of teaching by way of failed and that television there's all this stuff why at best that's how it got started. We were back in the early 80s were producing a video educational courses that we would we would sell to our customers. And over the years that you know has continued to grow and grow and course now on that particular use of video for education to sort of waning and now it's more computer based where where everything needs to be done on the computer. Well I'm sorry that we've used up all of our time Jim. It's such a joy to sit here and listen to you but then for all North Carolinians I want to express our pride in your success and what you do owe all these wonderful enterprises around you had literacy education and many other things. We're grateful for your good citizenship. Thank you for the opportunity to come to your home to visit today. Well thank you Bill it's a very pleasure talking to someone who has done as much fun with you as you

have. Thank you for the North Carolina people is brought to you by walkover banking investments and financial services for individuals businesses and corporations. Walk over we're here let's get started.