Cincom: A Software Powerhouse
Sep 8, 2006 5:00 AM PT
When most people are asked about software giants, they usually think of Microsoft. But I recently discovered that there is a company that is regarded as one of the largest international, independent software companies in the world. That company is called Cincom and has 40 offices on six continents. And, surprisingly, it has been around and prospered since being founded in 1968.
Doing further research on this company, I discovered that in size it ranks among the top 1 percent to 2 percent of software companies worldwide, and serves thousands of clients with 60 percent of its revenue from outside the United States. I also learned from an interview that the founder gave to the Smithsonian Institution that he is the longest-serving CEO in the computer industry!
With this knowledge, I decided to contact Cincom's founder and CEO, Tom Nies, and ask him for an interview. Given both the size of his company and the pressing business schedule that he must inevitably have, I was pleased to find him both cordial and friendly.
Listen to Ted di Stefano (8:47 minutes)
Here is what he had to say:
Q: When you started Cincom in 1968, computers were really in their infancy. What was your impetus to embark on such a risky venture?
A: Entrepreneurs typically do not see themselves as risk takers. We expect to succeed. I did not see myself as taking a risk. I was absolutely convinced that the future of the IT business would revolve around software. At that time, IBM was giving away what I was intending to sell. In fact, IBM was providing free software with its hardware, so that added to the challenge.
Still, I thought that the software would become the most important part of IT, and I did all that I could while I was an IBM employee during the 1960s to help IBM to see the immense importance and potential of software as a unique opportunity. But I was told by IBM management that 'the money is in the hardware, and that the problems are in the software.' I felt that IBM would come to its senses some day and then heavily promote software. But at that time, I had then already fallen out of love with hardware and had fallen in love with software. For me, software was really an affair of the heart. It was my belief that software would eventually come to dominate the IT industry. And I wanted to be totally committed to software opportunities.
Q: How would you rank Cincom when compared to other software companies?
A: I rank us as having the most successful track record because our customers have the most successful track record. Their success is our success. Since we rate ourselves by how successful our customers are, in that regard, we rank number one. We are, in fact, also the first software company still in existence. Insofar as revenue size, Cincom is ranked in the top 1-2 percent.
Q: How does Cincom differentiate itself from its competition?
A: We seek to provide our customers with the perfect customer experience. This is our vision. It is also Cincom's unique value proposition. Our mission statement is to deliver that vision and the relentless pursuit of that vision of consistently delivering the perfect customer experience.
We stress low cost, fast return on investment, high value and customer profit and minimal customer risk. These are our four pillars supporting the perfect customer experience.
According to our best estimates, our customers gain at least US$30 of profit for every dollar that they spend on us. We do everything that we can to provide the best that we can to the customer so that they not only realize the perfect experience, but also maximize their returns on their investments with Cincom.
Q: How would you describe yourself as a leader of people, and how would you differentiate your leadership beliefs with other major corporate leaders?
A: I believe that my leadership is best when I ask for input, advice and guidance from the people I was with. When they gave me that input, I synthesize what we had discussed. And before I made a decision, I would reaffirm these elements with our people. But this is not leadership by consensus. It is the synthesis of the best ideas and experiences of our people into some succinct vision that we can all share and energetically support.
Q: How do you keep your employees motivated?
A: First of all, I believe that motivation comes from within. So, we start off with high-achieving people. High achievers have a track record that you can almost always spot. Then I add to that our appreciation for the contribution that they make to our organization -- a recognition of the fact that they are important to this organization.
In other words, I try to specialize in giving lots of positive strokes of appreciation and recognition and very few criticisms. I believe that one must give out at least five positive confirmations for every constructive suggestion made.
Q: Where do you see Cincom, say ten years from now?
A: I want to continue to put the customer first and do everything that can be done to deliver the Perfect Customer Experience.
I primarily focus on the customer ROI as opposed to return on shareholder investment for Cincom.
I believe that when a provider focuses on the customer, everything else will usually take care of itself. Cincom's ROI over a very long term ranks among the very best in the entire software industry. So, as long as this continues, we won't change what, for us and our customers, has been a 'win-win' strategy.
Software should be able to be installed, used and supported with the least amount of risk and minimized waste. Companies today are spending far too much money on service costs. I think that it is a massive waste to see customers be required to spend between $5 and $10 of service costs for every $1 of software.
Our industry should do everything that it can to eliminate waste every way that it can. Some service costs are necessary, but it is the software that delivers much of the value.
Q: As a corporate leader, how would you want to be remembered?
A: I would want to be remembered based upon the ultimate success of the ideas and the successes of the people that I have served whether or not they are with Cincom, and what I did to contribute to a permanent legacy of a decent, fair-minded way of conducting business where it's a win-win relationship all around. Big winners everywhere! That's what I feel is important.
Thank you, Tom, for being so forthcoming and for sharing your unique success with us!
To the reader: I am always looking for new and better techniques of doing business. In reflecting on my interview with Mr. Nies, I was pleasantly surprised to realize that his philosophy is based upon so many old fashioned values -- the tried and the true in a very modern business pursuit.
Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which provides a wide range of investment banking services to the small and medium-sized business. He is also a frequent speaker to business groups on financial and corporate governance matters. He can be contacted at Ted@capitalsourcepartners.com.