Ann
When I talk about work space I'm not referring to a Workspace Server but to the area of the disk used for the SAS Work library and utility files. These utility files are often created "behind the scenes" by SAS Procedures and can contribute to you running out of work space.
I'm rather surprised that you estimate a file of reduced size taking so long - I would expect, for example, if you had a job which ran for 10 hours, that splitting the file in half so that you had File A and File B and then running the same job twice (once against File A and once against File B) the total elapsed time for each run would be a little over 5 hours (there's a certain amount of overhead associated with any job).
You can find out more about SAS file compression at this link - if you can get a good compression ratio then you will reduce the number of data pages the file occupies and hence the number of disk reads and this should help reduce the run times. My guess is with such a large file there won't be a single "silver bullet" and you'll have to use a combination of techniques.
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