Psstt: SPSS hard to find, but tough to beat

April 18, 2005

BY MICHAEL KRAUSS

It's hard to predict where you'll find Chicago's top technology companies. Take 37-year-old SPSS. Quick. Where is SPSS headquartered? Have you seen a neon sign that says, "SPSS -- Predictive Analytics Software Sold Here."

Nobody knows SPSS is in that nondescript, rectangular, overbuilt colossus called Sears Tower. I asked SPSS CEO Jack Noonan, "What about a small sign at ground level on the Franklin Street side?"

He wasn't buying. Instead SPSS is doing something more sophisticated. This month, Noonan is opening a Customer Experience center. It's not on the Sky Deck. It's on the 11th floor. It's not for school children. It's for chief marketing officers and chief information officers of companies such as Procter & Gamble, OfficeMax and Harley Davidson. You might even see executives from the Centers for Disease Control, McDonald's or State Farm Insurance wander through.

250K customer base

Noonan's software is installed at 95 percent of Fortune 100 companies. "We have 250,000 customer sites worldwide," Noonan says. "Everybody has at least one copy of SPSS installed."

Noonan employs 400 in Chicago and more than 1,200 worldwide. His company develops its statistical and data-mining software locally as well as in the U.K., Amsterdam and France. SPSS just opened an office in Xian China, a university town. Why China? Noonan says it's not to reduce costs, but to tap the unique availability of Ph.D. statisticians who also write software,

I think Noonan needs to take a bow. He's led SPSS for 13 years, and grown the company from $34 million in annual revenue to $224 million. That's nearly 600 percent growth. Profits stumbled last year, falling to $6 million from $9 million a year earlier, but SPSS stock at about $17 a share is up more than 40 percent from last August.

It's not the rocket ride of a Silicon Valley startup. It's slow and steady like a Midwest manufacturing company.

"I see a 'B' for billion behind the revenue number before the decade is over," Noonan adds. His formula for increasing revenues is a 50/50 blend of organic growth and acquisition.

Noonan attributes SPSS' low profile to the nature of the customer base, not the lack of sign-age. The company sells software that helps businesses predict the future. More precisely, Noonan describes it as predictive analytics software.

Insurance companies use it for claims processing to sort out the honest customers from the fraudulent ones. Using SPSS, an insurance company can evaluate data on its customers, and reduce costs by subjecting better customer's claims to less rigorous evaluation.

While Noonan might not be enthusiastic about signage, you have to compliment him for the stability and evolution of SPSS. Once a software developer for academics and market researchers, SPSS under Noonan has been transformed into an enterprise software provider -- hence the need for the Customer Experience center.

Could SPSS get gobbled up by Oracle, Microsoft, SAP or one of the other software giants?

"Could be, could be," Noonan says, downplaying the possibility, while acknowledging the risk. "There is a lot of consolidation going on in the business intelligence space, in the apps space before predicative analytics ever becomes a part of the fray."

Maybe Noonan's approach should be named the Chicago-style of technology company management.

Of course, I'm not sure where we'd hang the sign.

Bits & bytes

Abbott Labs CEO Miles White addresses the Economic Club Tuesday evening at the Chicago Hilton & Towers. ... Also Tuesday, the Chicago Interactive Marketing Association meets at Maggiano's, and The Indus Entrepreneurs (TiE) gather at Gardner, Carton & Douglas. Speakers at TiE include Ian Robertson, Wrigley, senior director for global IT; Pat O'Donnell, former UBS Warburg CIO; Mohan Warrior, Alfalight CEO, and Bob Zieserl, KB Partners managing director. David Weinstein, president, Chicagoland Entrepreneurial Center moderates.

Darcy Evon, IIT corporate relations executive director, will moderate Wednesday at the MIT Enterprise Forum at Gardner Carton & Douglas. Her topic: ownable distinction: methods that tech entrepreneurs use to avoid product commoditization. ... Northwestern University associate dean Linda Salchenberger speaks Wednesday at the Society for Information Management at Spiaggia.

Michael Krauss is a Chicago area tech writer and consultant.

 

 ©2005 Marion Consulting Partners