Quantifying Analytics ROI

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I had a brief twitter exchange with Jim Davis, Chief Marketing Officer, SAS Institute on Return of Investment on Business Analytics Projects for customers. I have interviewed Jim Davis before last year https://decisionstats.com/2009/06/05/interview-jim-davis-sas-institute/

Now Jim Davis is a big guy, and he is rushing from the launch of SAS Institute’s Social Media Analytics in Japan- to some arguably difficult flying conditions in time to be home in America for Thanksgiving. That and and I have not been much of a good Blog Boy recently, more swayed by love of open source, than love of software per se. I love equally, given I am bad at both equally.

Anyways, Jim’s contention  ( http://twitter.com/Davis_Jim ) was customers should go in business analytics only if there is Positive Return on Investment.  I am quoting him here-

What is important is that there be a positive ROI on each and every BA project. Otherwise don’t do it.

That’s not the marketing I was taught in my business school- basically it was sell, sell, sell.

However I see most BI sales vendors also go through -let me meet my sales quota for this quarter- and quantifying customer ROI is simple maths than predictive analytics but there seems to be some information assymetry in it.

Here is a paper from North Western University on ROI in IT projects-.

but overall it would be in the interest of customers and Business Analytics Vendors to publish aggregated ROI.

The opponents to this transparency in ROI would be market leaders in market share, who have trapped their customers by high migration costs (due to complexity) or contractually.

A recent study listed Oracle having a large percentage of unhappy customers who would still renew!, SAP had problems when it raised prices for licensing arbitrarily (that CEO is now CEO of HP and dodging legal notices from Oracle).

Indeed Jim Davis’s famous unsettling call for focusing on Business Analytics,as Business Intelligence is dead- that call has been implemented more aggressively by IBM in analytical acquisitions than even SAS itself which has been conservative about inorganic growth. Quantifying ROI, should theoretically aid open source software the most (since they are cheapest in up front licensing) or newer technologies like MapReduce /Hadoop (since they are quite so fast)- but I think that market has a way of factoring in these things- and customers are not as foolish neither as unaware of costs versus benefits of migration.

The contrary to this is Business Analytics and Business Intelligence are imperfect markets with duo-poly  or big players thriving in absence of customer regulation.

You get more protection as a customer of $20 bag of potato chips, than as a customer of a $200,000 software. Regulators are wary to step in to ensure ROI fairness (since most bright techies are qither working for private sector, have their own startup or invested in startups)- who in Govt understands Analytics and Intelligence strong enough to ensure vendor lock-ins are not done, and market flexibility is done. It is also a lower choice for embattled regulators to ensure ROI on enterprise software unlike the aggressiveness they have showed in retail or online software.

Who will Analyze the Analysts and who can quantify the value of quants (or penalize them for shoddy quantitative analytics)- is an interesting phenomenon we expect to see more of.



HP goes GPU, Will software people follow

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One more addition to the GPU stack that adds up power when combined with CPU and GPUs. For numeric computing, it may be essential to have GPU- CPU mixed software as almost all hardware people now have offered GPU-CPU products. Maybe software companies can get inspired for new kind of GPU-CPU blade server software again.



But for “true” supercomputing applications, the SL390s G7 is the go-to server. Like its sibling, the SL390s comes with Xeon 5600 processors, but the option to pair the CPUs with up to three on-board NVIDIA “Fermi” 20-series GPUs puts a lot more floating point performance into this design. Customers can choose from either the M2050 or M2070 Tesla GPU modules, the only difference being the amount of graphics memory — 3 GB of GDDR5 for the M2050 versus 6 GB for the M2070. Each GPU module is served by its own PCIe Gen2 x16 channel in order to maximize bandwidth to the graphics chips. At the maximum configuration with all three Fermi GPUs and two Westmere CPUs, a single server delivers on the order of 1 teraflop of double precision performance. “So this is very much a server that has been designed for HPC,” said Turkel.

With GPUs on board, the SL390s fill out a 2U half-width tray, so up to four of these can be packed into a 4U SL6500 chassis. A CPU-only version is also available and takes up just half the space (half-width 1U), enabling twice as many Xeons to occupy the same chassis. This configuration will likely be the server of choice for the majority of HPC setups, given that GPGPU deployment is really just getting started. Pricing on the CPU-only model starts at $2,259.


, the ProLiant SL390s G7, provides more raw FLOPS per square inch than any server HP has delivered to date, and is the basis for the 2.4 petaflop TSUBAME 2.0 supercomputer currently being deployed at the Tokyo Institute of Technology.

Unbreakable Oracle Linux- and Unshakable-Libre Office-

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Oracle announced Unbreakable Oracle Linux (which is the first time I have seen Unbreakable word used in a formal software name)- Hats off to good ol’ Larry chutzpah. It is also quite a fast form of Linux for Enterprises-as the stats say at http://www.oracle.com/us/technologies/linux/ubreakable-enterprise-kernel-linux-173350.html

LibreOffice is a new fork from OpenOffice– Basically people who want to ensure OpenOffice remains free. It basically consists of efforts from everybody except Apple, Microsoft and Oracle (http://www.documentfoundation.org/supporters/) and it’s a new kind of workable office productivity suite-determined to remain free. I have used it- a bit shaky- but I really liked the new design and willingly will test it (and auto submit bugs) . It would be interesting to see the reaction of enterprise vendors like SAS, IBM,Dell, HP (and Lenovo)  and etc -as their support would be critical to both Unbreakable Oracle Linux and Unshakable LibreOffice.

See more here-http://www.documentfoundation.org/download/

Why Cloud?

Here are some reasons why cloud computing is very helpful to small business owners like me- and can be very helpful to even bigger people.

1) Infrastructure Overhead becomes zero

– I need NOT invest in secure powerbackups (like a big battery for electricity power-outs-true in India), data disaster management (read raid), software licensing compliance.

All this is done for me by infrastructure providers like Google and Amazon.

For simple office productivity, I type on Google Docs that auto-saves my data,writing on cloud. I need not backup- Google does it for me.  Ditto for presentations and spreadsheets. Amazon gets me the latest Window software installed whenever I logon- I need not be  bothered by software contracts (read bug fixes and patches) any more.

2) Renting Hardware by the hour- A small business owner cannot invest too much in computing hardware (or software). The pay as you use makes sense for them. I could never afford a 8 cores desktop with 25 gb RAM- but I sure can rent and use it to bid for heavier data projects that I would have had to let go in the past.

3) Renting software by the hour- You may have bought your last PC for all time

An example- A windows micro instance costs you 3 cents per hour on Amazon. If you take a mathematical look at upgrading your PC to latest Windows, buying more and more upgraded desktops just to keep up, those costs would exceed 3 cents per hour. For Unix, it is 2 cents per hour, and those softwares (like Red Hat Linux and Ubuntu have increasingly been design friendly even for non techie users)

Some other software companies especially in enterprise software plan to and already offer paid machine images that basically adds their software layer on top of the OS and you can rent software for the hour.

It does not make sense for customers to effectively subsidize golf tournaments, rock concerts, conference networks by their own money- as they can rent software by the hour and switch to pay per use.

People especially SME consultants, academics and students and cost conscious customers – in Analytics would love to see a world where they could say run SAS Enterprise Miner for 10 dollars a hour for two hours to build a data mining model on 25 gb RAM, rather than hurt their pockets and profitability in Annual license models. Ditto for SPSS, JMP, KXEN, Revolution R, Oracle Data Mining (already available on Amazon) , SAP (??), WPS ( on cloud ???? ) . It’s the economy, stupid.

Corporates have realized that cutting down on Hardware and software expenses is more preferable to cutting down people. Would you rather fire people in your own team to buy that big HP or Dell or IBM Server (effectively subsidizing jobs in those companies). IF you had to choose between an annual license renewal for your analytics software TO renting software by the hour and using those savings for better benefits for your employees, what makes business sense for you to invest in.

Goodbye annual license fees.  Welcome brave new world.

SAS/Blades/Servers/ GPU Benchmarks

Just checked out cool new series from NVidia servers.

Now though SAS Inc/ Jim Goodnight thinks HP Blade Servers are the cool thing- the GPU takes hardware high performance computing to another level. It would be interesting to see GPU based cloud computers as well – say for the on Demand SAS (free for academics and students) but which has had some complaints of being slow.

See this for SAS and Blade Servers-


To give users hands-on experience, the program is underpinned by a virtual computing lab (VCL), a remote access service that allows users to reserve a computer configured with a desired set of applications and operating system and then access that computer over the Internet. The lab is powered by an IBM BladeCenter infrastructure, which includes more than 500 blade servers, distributed between two locations. The assignment of the blade servers can be changed to meet shifts in the balance of demand among the various groups of users. Laura Ladrie, MSA Classroom Coordinator and Technical Support Specialist, says, “The virtual computing lab chose IBM hardware because of its quality, reliability and performance. IBM hardware is also energy efficient and lends itself well to high performance/low overhead computing.

Thats interesting since IBM now competes (as owner of SPSS) and also cooperates with SAS Institute



You’re effectively turbo-charging through deployment of many processors within the blade servers?

Yes. We’ve got machines with 192 blades on them. One of them has 202 or 203 blades. We’re using Hewlett-Packard blades with 12 CP cores on each, so it’s a total 2300 CPU cores doing the computation.

Our idea was to give every one of those cores a little piece of work to do, and we came up with a solution. It involved a very small change to the algorithm we were using, and it’s just incredible how fast we can do things now.

I don’t think of it as a grid, I think of it as essentially one computer. Most people will take a blade and make a grid out of it, where everything’s a separate computer running separate jobs.

We just look at it as one big machine that has memory and processors all over the place, so it’s a totally different concept.

GPU servers can be faster than CPU servers, though , Professor G.



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Also I liked the hybrid GPU and CPU

And from a paper on comparing GPU and CPU using Benchmark tests on BLAS from a Debian- Dirk E’s excellent blog


Usage of accelerated BLAS libraries seems to shrouded in some mystery, judging from somewhat regularly recurring requests for help on lists such as r-sig-hpc(gmane version), the R list dedicated to High-Performance Computing. Yet it doesn’t have to be; installation can be really simple (on appropriate systems).

Another issue that I felt needed addressing was a comparison between the different alternatives available, quite possibly including GPU computing. So a few weeks ago I sat down and wrote a small package to run, collect, analyse and visualize some benchmarks. That package, called gcbd (more about the name below) is now onCRAN as of this morning. The package both facilitates the data collection for the paper it also contains (in the vignette form common among R packages) and provides code to analyse the data—which is also included as a SQLite database. All this is done in the Debian and Ubuntu context by transparently installing and removing suitable packages providing BLAS implementations: that we can fully automate data collection over several competing implementations via a single script (which is also included). Contributions of benchmark results is encouraged—that is the idea of the package.

And from his paper on the same-

Analysts are often eager to reap the maximum performance from their computing platforms.

A popular suggestion in recent years has been to consider optimised basic linear algebra subprograms (BLAS). Optimised BLAS libraries have been included with some (commercial) analysis platforms for a decade (Moler 2000), and have also been available for (at least some) Linux distributions for an equally long time (Maguire 1999). Setting BLAS up can be daunting: the R language and environment devotes a detailed discussion to the topic in its Installation and Administration manual (R Development Core Team 2010b, appendix A.3.1). Among the available BLAS implementations, several popular choices have emerged. Atlas (an acronym for Automatically Tuned Linear Algebra System) is popular as it has shown very good performance due to its automated and CPU-speci c tuning (Whaley and Dongarra 1999; Whaley and Petitet 2005). It is also licensed in such a way that it permits redistribution leading to fairly wide availability of Atlas.1 We deploy Atlas in both a single-threaded and a multi-threaded con guration. Another popular BLAS implementation is Goto BLAS which is named after its main developer, Kazushige Goto (Goto and Van De Geijn 2008). While `free to use’, its license does not permit redistribution putting the onus of con guration, compilation and installation on the end-user. Lastly, the Intel Math Kernel Library (MKL), a commercial product, also includes an optimised BLAS library. A recent addition to the tool chain of high-performance computing are graphical processing units (GPUs). Originally designed for optimised single-precision arithmetic to accelerate computing as performed by graphics cards, these devices are increasingly used in numerical analysis. Earlier criticism of insucient floating-point precision or severe performance penalties for double-precision calculation are being addressed by the newest models. Dependence on particular vendors remains a concern with NVidia’s CUDA toolkit (NVidia 2010) currently still the preferred development choice whereas the newer OpenCL standard (Khronos Group 2008) may become a more generic alternative that is independent of hardware vendors. Brodtkorb et al. (2010) provide an excellent recent survey. But what has been lacking is a comparison of the e ective performance of these alternatives. This paper works towards answering this question. By analysing performance across ve di erent BLAS implementations|as well as a GPU-based solution|we are able to provide a reasonably broad comparison.

Performance is measured as an end-user would experience it: we record computing times from launching commands in the interactive R environment (R Development Core Team 2010a) to their completion.


Basic Linear Algebra Subprograms (BLAS) provide an Application Programming Interface
(API) for linear algebra. For a given task such as, say, a multiplication of two conformant
matrices, an interface is described via a function declaration, in this case sgemm for single
precision and dgemm for double precision. The actual implementation becomes interchangeable
thanks to the API de nition and can be supplied by di erent approaches or algorithms. This
is one of the fundamental code design features we are using here to benchmark the di erence
in performance from di erent implementations.
A second key aspect is the di erence between static and shared linking. In static linking,
object code is taken from the underlying library and copied into the resulting executable.
This has several key implications. First, the executable becomes larger due to the copy of
the binary code. Second, it makes it marginally faster as the library code is present and
no additional look-up and subsequent redirection has to be performed. The actual amount
of this performance penalty is the subject of near-endless debate. We should also note that
this usually amounts to only a small load-time penalty combined with a function pointer
redirection|the actual computation e ort is unchanged as the actual object code is identi-
cal. Third, it makes the program more robust as fewer external dependencies are required.
However, this last point also has a downside: no changes in the underlying library will be
reected in the binary unless a new build is executed. Shared library builds, on the other
hand, result in smaller binaries that may run marginally slower|but which can make use of
di erent libraries without a rebuild.

Basic Linear Algebra Subprograms (BLAS) provide an Application Programming Interface(API) for linear algebra. For a given task such as, say, a multiplication of two conformantmatrices, an interface is described via a function declaration, in this case sgemm for singleprecision and dgemm for double precision. The actual implementation becomes interchangeablethanks to the API de nition and can be supplied by di erent approaches or algorithms. Thisis one of the fundamental code design features we are using here to benchmark the di erencein performance from di erent implementations.A second key aspect is the di erence between static and shared linking. In static linking,object code is taken from the underlying library and copied into the resulting executable.This has several key implications. First, the executable becomes larger due to the copy ofthe binary code. Second, it makes it marginally faster as the library code is present andno additional look-up and subsequent redirection has to be performed. The actual amountof this performance penalty is the subject of near-endless debate. We should also note thatthis usually amounts to only a small load-time penalty combined with a function pointerredirection|the actual computation e ort is unchanged as the actual object code is identi-cal. Third, it makes the program more robust as fewer external dependencies are required.However, this last point also has a downside: no changes in the underlying library will bereected in the binary unless a new build is executed. Shared library builds, on the otherhand, result in smaller binaries that may run marginally slower|but which can make use ofdi erent libraries without a rebuild.

And summing up,

reference BLAS to be dominated in all cases. Single-threaded Atlas BLAS improves on the reference BLAS but loses to multi-threaded BLAS. For multi-threaded BLAS we nd the Goto BLAS dominate the Intel MKL, with a single exception of the QR decomposition on the xeon-based system which may reveal an error. The development version of Atlas, when compiled in multi-threaded mode is competitive with both Goto BLAS and the MKL. GPU computing is found to be compelling only for very large matrix sizes. Our benchmarking framework in the gcbd package can be employed by others through the R packaging system which could lead to a wider set of benchmark results. These results could be helpful for next-generation systems which may need to make heuristic choices about when to compute on the CPU and when to compute on the GPU.

Source – DirkE’paper and blog http://dirk.eddelbuettel.com/papers/gcbd.pdf

Quite appropriately-,

Hardware solutions or atleast need to be a part of Revolution Analytic’s thinking as well. SPSS does not have any choice anymore though 😉

It would be interesting to see how the new SAS Cloud Computing/ Server Farm/ Time Sharing facility is benchmarking CPU and GPU for SAS analytics performance – if being done already it would be nice to see a SUGI paper on the same at http://sascommunity.org.

Multi threading needs to be taken care automatically by statistical software to optimize current local computing (including for New R)

Acceptable benchmarks for testing hardware as well as software need to be reinforced and published across vendors, academics  and companies.

What do you think?

Buying SAS Institute

At risk of annoying a lot of friendly people, I am going to ask an old question and try and answer it quantitatively.

Who can buy SAS institute?

Graph from-http://www.sas.com/news/preleases/2008Financials.html


As you can see from the graph (note the post 2001-2004 period) – which is a nice smoothed curve, textbook normal distribution on the left side, SAS Institute grew during the tough economic year of 2008 to show slowed but firm revenue growth. However if you use the same price/revenue multiple as for the SPSS acquisition ( 1.2 billion/ 300 million (2008) revenues) – that would put a price of 9.2 USD billion on SAS Institute.

Who has that kind of money? Well it seems the usual suspects are-

1) HP- from http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-IRHome



Cash and cash equivalents on 12.851 Billion USD as on April 30, 2009.

2) Oracle- Oracle would be hard pressed to integrate both Sun and SAS in the same year, but may have financial leverage to do both.

from http://www.oracle.com/corporate/investor_relations/earnings/4q09-pressrelease-june.pdf

Fiscal year 2009
GAAP revenues were up 4% to $23.3 billion, while annual GAAP net income was up 1% to $5.6
billion.  Total GAAP new software license revenues for the year were down 5% to $7.1 billion.
GAAP software license updates and product support revenues were up 14% to $11.8 billion.
GAAP operating income was up 6% to $8.3 billion, and GAAP operating margins were up 80
basis points to 36% in fiscal year 2009.

3) IBM -from ftp://ftp.software.ibm.com/annualreport/2008/2008_ibm_financials.pdf

Cash on hand was 12.7 Billion USD as on 31 Dec 2008, and the company repurchased it’s own stock in 2008

In the current economic environment growth can come through acquisitions of newer clients ( not much) or new companies. IBM has capabilities to acquire BOTH SPSS and SAS Institute and merge the strong R and D facilities.

IBM 2008

4) SAP – from http://www.sap.com/germany/about/investor/reports/gb2008/en/our-results/finances.html

various sources of loan capital:

profit after income taxes for 2008 was slightly lower than for the previous year, we increased cash flows from operating activities 12% to € 2,158 million (2007: € 1,932 million) through efficient management of working capital.

  • To finance the acquisition of Business Objects, we entered into an agreement for a credit facility that was originally for € 5 billion and is repayable by December 31, 2009 (amount outstanding on December 31, 2008: € 2.3 billion). We did not draw the full € 5 billion available under the facility because we paid part of the purchase price from available cash.
  • To increase financial flexibility, in November 2004 we obtained a € 1 billion syndicated credit facility through an international group of banks. We already had other lines of credit in place; the new line was arranged to provide additional financial flexibility. As in the previous year, we did not draw on this facility during the year.
  • At the end of 2008, the other, bilateral lines of credit available to SAP AG totaled approximately € 597 million (2007: € 599 million). We did not draw on these facilities during 2008 or 2007. Several subsidiaries in the SAP Group had credit lines in their local currency. These totaled € 52 million (2007: € 44 million), for which SAP AG was guarantor. At the end of the year, the subsidiaries had drawn € 21 million under these facilities (2007: € 27 million).

Given these cash positions it seems that almost everyone can buy SAS Institute if and this is a big IF- someone sells it. Microsoft which some years allegedly tried and lost at acquiring Yahoo ( only to realize huge savings!) and SAS, would be also another suitor for SAS- and Google also has the financial and operating synergies with the best text mining capabilities could also act as a white knight in merging it’s Google Applications and Enterprise solutions ( especially the cloud based OS and cloud based productivity suite) with SAS Institute. I personally would favor a Google- SAS Institute joint venture on enterprise software solely based on the common history and shared values ( Note Google has dual ownership stock including class A and class B shares)

Who is John Galt ?

Another option could be using the Google Way and for SAS Institute to go for dual ownership IPO, with class A shares for the common public and class B shares for the founders and executives. A substantial endowment to colleges and universities can also be expected in the future, given the philanthropic tradition of SAS Institute owners and executives. Also could SAS try and buy SPSS- it would lead to synergies in both software ( with the SPSS GUI) as well as new clients. At the very minimum it would boost the valuation of other stock in this sector as well make SPSS more realistic valued.

So who will buy SAS Institute?

I don’ know 🙂 and I am just brushing off my half a decade old financial valuation skills here