SAS buys revenue management firm to complement its business intelligence practice

SAS has acquired revenue management specialist IDeaS Revenue Optimization, maker of profit optimization software for hospitality companies.

SAS Institute Inc. has acquired IDeaS Revenue Optimization, maker of revenue-management and analytics software

for hospitality companies, and established a new division dedicated to "profit optimization techniques."

The two moves are aimed at capitalizing on what SAS sees as the growing trend toward revenue or profit optimization: analysis of customer demand and past and current market data to proactively identify profitable customers, and time pricing deals to maximize revenue.

SAS, which specializes in business intelligence (BI) and analytics software, believes this pricing technique will continue to migrate from hospitality and travel companies to other industries, including media and manufacturing companies, creating a potential new market for revenue management -- sometimes called yield management -- technologies.

Cary, N.C.-based SAS already has a retail revenue management offering, which it plans to build upon with IDeaS "subject matter expertise," according to Alex Dietz, a member of the SAS profit optimization global practice, as the new division is called.

"[IDeaS] fits very well into our portfolio of products that we can sell into the hospitality and gaming industry," Dietz said. "They bring a lot of subject matter expertise that we intend to use both in the hospitality industry and as we expand applying revenue management, price optimization technologies across a broad variety of industries."

IDeaS collects and analyzes data from its customers and third parties (including competitors), sets optimum prices, then feeds them automatically into customers' reservation and booking systems. Companies monitor prices through an online dashboard, where they can make adjustments if needed.

Profit optimization was pioneered by American Airlines in the early 1980s, following government deregulation of the airline industry. Since then, it has expanded to other travel and hospitality-related industries, including hotels, casinos and car rentals.

That expansion continues today, with media and advertising industries experimenting with profit optimization technologies and techniques, according to Henry Harteveldt, an analyst with Forrester Research.

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He said revenue management and BI are similar disciplines, and the acquisition of IDeaS, generally considered the leading vendor in a market dominated by small pure-plays, was a natural fit for SAS.

"Companies are always looking for ways to expand their business," Harteveldt said. "Profit optimization is going to expand. I don't know any CEO who looks at profit optimization and says, 'Oh, I don't have time for that.' "

As part of the new profit optimization global practice division, SAS plans to develop a new tool that will integrate revenue management and customer relationship management software with pricing and distribution analysis.

IDeaS will continue operating independently as a wholly owned SAS subsidiary, but the companies will share technology and expertise, they said.

IDeaS' 200 employees are expected to remain with the company, which is based in Minneapolis. IDeaS currently has 1,300 hotel customers, according to CEO Ed Booth. Neither company revealed terms of the acquisition.

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