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
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.
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
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.
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
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
Krauss is a Chicago area tech writer and consultant.