Impressive Growth Driven by a Promise of Substantial Return on Investment

The bottom line, as presented by Thomas M. Nies, is quite impressive.

The president and CEO of Cincinnati-based Cincom Systems, Inc. is authoring an exceptional story in the software industry that speaks for itself.

It features growth between 500 percent and 600 percent in areas such as hosting services and the outsourcing of call centers.

"We provide better service at a lower cost," Nies said. "There's no magic to it."

Double-Digit Increases

The story also includes a 40 percent increase during the last two years in terms of overall corporate revenue with the growth in the return on invested capital averaging over 70 percent.

"Our goal, for every $1 invested with us in our software systems, customers will achieve a return on their investment of at least $10. That's a minimum."

The maximum ROI is nothing short of phenomenal for the company during the past 25 to 30 years.

"Our experience is that our customer return on investments with us range between 10- and 30-to-1 per dollar invested. If they're going to invest $1 million with us, they can expect, on average, a $20 million return."

Revenue in the Billions

When asked about the company's performance, Nies said it has generated about $3.5 billion in revenue since its founding in 1968. Assuming the average $20 return on each dollar invested, that equates to $70 billion worth of economic value or profit improvement generated for customers. At the high end, a $30 return for every dollar spent, the return equals more than $100 billion.

He said the company's strategy is simplification through innovation.

"More [firms are] focusing on the CRM field because companies today have taken care of the back-room requirements where they're cutting costs and they now want to have an extension to the marketplace. Our objective is to help customers to greatly simplify these effects through innovative solutions from Cincom."

Companies Asking Plenty of Questions

He added that companies are asking some fundamental questions: How do I get more customers? How do I improve my customer relationships? How do we interact better? How do I gain competitive advantage through marketing my products, goods and services through the various means available?

"Contact centers and call centers are increasingly important, and we want to leverage growth in that particular area. We want to innovate all kinds of new technologies to simplify interaction within the company and externally to partners, allies, customers [and] suppliers. [This is] all designed to break down costs and to increase presence and opportunities to move customers."

No Shortage of Challenges

When asked about challenges faced by Cincom, Nies said they are no different than those faced by others.

"Our ability to grow our knowledge, our capability, our skill and our capacity tends to grow on an incremental basis. But the challenge is the information available [and] the nature of the competition — all of this is growing on an exponential basis. Every year, even though we become stronger, the gap between the competition and the challenges and what we're able to do increases.

"We're increasingly less informed of all information available. Every year, even though we become stronger, the gap between one's capabilities and the challenges faced increases."

"We're increasingly less informed of all information available. Every year, even though we become stronger, the gap between one's capabilities and the challenges faced increases."

Topple Rate to Increase

Nies also described what he called a "world of extreme competition" in which "everybody must move fast and on a broad basis or be swept away."

He also mentioned the "topple rate," the point at which companies lose their leadership position in their industry. It is measured by the percentage of companies falling out of the top 20 percent of their industries during a five-year period. The topple rate more than 30 years ago, he said, was about 7 percent to 8 percent, according to McKinsey and Company. Today it is about 33 percent.

"Even well-established leadership companies can be swept away very fast now. That's good news for upstart companies and bad news for entrenched competitors since they can't always move as quickly [in terms of advancing] their product line and their people forward as more agile competitors. We see this in every industry. I expect in another few years it will be as high as 50 percent. Rich companies must become better able to defend their current markets and grow into new markets at the same time."

Becoming Bigger Without Becoming Better

Nies also said that too much effort is spent today on becoming bigger, and too little effort is spent on becoming better. He added that companies during the last 30 years in every industry have been focusing on transaction management, a "fair exchange of value" between contracting parties.

"We measure things on how effectively and efficiently we transact our business. Revenue per person, profit per dollar, all of these are measures of transaction effectiveness and efficiency.

"Companies need to think more about transformation of their business, moving from what they're currently doing to transform themselves to become something radically different in the future, not only to better protect the markets they're in and compete where they are, but also to seek out and grow new markets."

His suggestion: Realize the ideas we built our whole thinking processes around during the last 50 years have been radically changed.

"Unless we use simplification, innovation, integration [and] the best technology, we may not be able to compete in the globalized world now developing so rapidly."