Generally SAS reads The obseravtions in sequentiall manner.
it takes a lot of time .to aviod this we are using index.
ithis index concept usefull when we dealing with large 
datsets.

This is mainly useful for the fast retrival of data (For ex 
we have 559 in 1 lac obs then by index we can get the data 
with out reading all the observations

Index are 2 type:

1.simple
2.Composite


ex-for simple


proc datasets lib=college;
modify time;
index create class;
run;


ex-for composite:


proc datasets library=college;
modify time;
index create names(=(name school);
run;

index is separate file attached to dataset.
create index on variable that is used in 'by processing' 
or 'where processing'.
it will enhance the performance and fast retrieving the 
observations when you use indexed variable in where 
statement.
you need not to sort the variable if it is indexed when u 
use it in "by statement".
create an index on variable when:
-u have to retrieve observations not more than 15% of d 
dataset.
-create index on variable where 'by-variable' will have 
more than 8 disctint values.

index is of two types:
simple index-created on single variable.
composite index-created on 2 or more variables.
index can b created using proc datasets, proc sql and 
datastep.