Thomas Nies Q & A
Q1: Tell me about the founding of the company?
A: I started to work int he IT industry in 1962 with IBM. At that time, there were still vacuum tubes powering the computer. I was lucky enough to get in on the ground floor.
I worked through much of the 1960’s with IBM, and we started our business in 1968. But, when we started, there was no software industry. We were one of the few software companies. Few proved to be viable.
Although several early companies helped to invent the software industry, Cincom was probably the company that proved our industry could be economically viable. Our successes began to attract venture capital to the industry in the mid ’70s. But remember, we started in 1968. In those earliest times, there was not only very little venture capital available, but even less debt financing. So, we had to lift ourselves by our own bootstraps. Profitability was demanded from the “get go.”
We started in Cincinnati. We’re still there; that’s our headquarters. I believe it’s an absolutely ideal location. It’s central to everything. It’s central in America. It’s an ideal city, Cincinnati.
Q2: How many locations does your company have?
A: Today we have about 30 locations around the world. Depending on changing currency values, we now generate about 40% of our revenues in America, about 40% in Europe, and about 20% in the rest of the world.
We started in Cincinnati. But, I realized the importance of international markets and wanted Cincom to get as much early international experience as we could. So we set up our first remote location in Toronto in 1970, and we began developing worldwide as fast as possible. We traveled to Europe and established operations in several locations in 1972.
By 1974 or 1975, we were operational everywhere we are today, except for China and India, which we’ve added in the last few years. But, we’ve been on the ground for the last 30 years as a worldwide international company. By the late 1970s, we were already doing almost two-thirds of our business internationally. Today, we have the largest percentage of international revenues of almost any American-based company.
Q3: How many employees does your company have overall?
A: We have over 700 employees.
Q4: What are some of your direct responsibilities within the company today?
A: I am the President and CEO, but my responsibilities span disparate requirements. I have both a management role, which is managing the current operations, and a leadership role, which is developing, supporting and encouraging new operations to pursue, and to achieve new opportunities.
Q5: To what do you attribute Cincom’s success?
A: The most important thing that’s helping us is the marketplace. The difficult economies are forcing customers to be more discriminating in their choice of product, suppliers and vendors, and to get the best value and return on their investments. With these forces at work, the demand for solutions that deliver high value and low cost is increasing dramatically. So too, are demands for rapid and significant ROI, high reward and low risk. And our customers want all of this to be realized quickly. Fortunately, these trends have been Cincom’s friends.
In boom times, like we had in the late 1990’s, too many choosers didn’t seem to care how much money they were throwing away. They bought heavily into what we call the high-fashion, high-cost providers. These were heavy marketing, heavy selling companies that too often delivered sub-optimal value to the customer at excessive overall costs typically four to five times Cincom’s cost for similar functionality and value. We have become better at articulating our comparative value proposition to our customers, especially at a time when they have become more concerned about receiving value for money invested. Because we’ve become adept at helping prospects see the difference between Cincom and competing alternatives, we are winning a higher percentage of sales competitions today than we did a couple of years ago.
Q6: Conversely, what major challenges has Cincom been facing recently?
A: One of the most difficult challenges for us, being a privately held company, is that we aren’t featured in the Wall Street Journal or on the TV business news, etc. So we have to generate our own market presence, largely unaided. This has to be done through marketing, merchandising, advertising and other things, which are primarily justified based on sales.
We can’t rationalize large-scale marketing and campaigning, but we look for opportunities to display our value. We we enter competitions, we often beat out competitors because the economic value we offer is better, while our functionality is just as complete, if not more comprehensive.
Q7: What strategies are in place to overcome that challenge?
A: We pursue a two-prong approach we call a “penetrate and radiate” strategy. Our marketing campaigns begin with our customers. We strive to help our customers maximize value and satisfaction, and we encourage satisfied customers to radiate Cincom through word of mouth or other means with the aim of helping us become present in the minds of other prospects. The second part of our strategy is to penetrate deeper into our large-scale customers’ companies. When we are successful at a specific location or division, we encourage our customers to help us extend these value gains to other divisions or locations.
We are also pursuing a substantial expansion in our direct and indirect sales and marketing capabilities. We’re adding staff, significantly expanding our market presence, and putting “more feet on the street.” We hope to expand our sales presence by at least 50% for the near term. We produces a substantial amount of our own software. We’re a very committed software developer, and we probably have one of the biggest percentages of Research and Development to total revenue in the industry. We also have software-supplying partners and allies who build and develop Cincom technology. But at least 80% of what we offer we build.
Q8: How would you describe your company’s culture?
A: First of all, it’s one of total commitment. We call ourselves Cincomers. Our culture transcends national, religious and ethnic bounds, and we have a certain set of ideas, values and beliefs that we’ve developed over the years.
One of the most important of these ideas is that we exist to create and serve customers. That’s our purpose for being. The customer’s best interest comes first. And our motto is, we’ll do “whatever it takes” to serve that customer. This is not a fancy marketing slogan. The whole idea of the culture of our company is one of service orientation.
As the company president, I am the servant of the servants of our customers. I serve our managers and executives, they serve the rest of our people, and we all together serve the customer.
Q9: What plans does your company have for expansion into new markets? I know you mentioned that previously?
A: Our goal is to expand adjacently, not to pursue things where we lack adequate experience. We strive to grow from our core competencies and to expand outward accordingly. In the same way that we “penetrate and radiate” within our existing customers, we develop related technologies and related offerings. We constantly look for adjacent areas we can successfully leverage to intensify our new offerings into new geographies and new industries. More intense focus in specific industries is also a priority.
We have long been a provider in manufacturing and a variety of different industries. And, we have a lot of financial services customers. About two years ago, we began delivering industry-specific solutions for financial services industries: banks, insurance companies, etc. That’s another expansion that we’re working on now.
Q10: Are there any awards or distinctions that your company has received that you’d like to tell me about?
A: We’ve gotten some very significant awards and distinctions. During the early years of the Ronald Reagan administration, they developed the “E Awards” for emphasizing export. We were the first software company to receive an E Award, and later the first to earn the E-Star Award, which was for superlative levels of export.
We were proud to win these awards for an important reason: America is falling down badly on the need to balance trade and this is resulting in colossal trade deficits. So, the ability to compete in world markets and to be recognized by the American Government as a leader in this area of export endeavor is, I think, an important award.
Secondly, President Reagan himself came to Cincinnati in August 1984. He singled out Cincom and build a whole speech about our company. President Reagan suggested that high technology and software would become the future of America and that Cincom was a role model and exemplar for others to follow. The Smithsonian, America’s national museum, also recognized Cincom, along with just a very few others, as ones who first built the software industry. We’ve also received awards from national governments around the world. For example, the former Prime Minister of England, Sir Edward Heath, gave a presentation that talked about Cincom bringing the software industry to England and recognized the role that Cincom had played in helping to advance England and the British interest in high-tech fields.
Q11: What advice would you give other company leaders coping with this economy?
A: I would say that companies should put their customers first, and the people who are serving those customers a very close second. Shareholders should not be the primary focus for the company because this causes companies to put their customers and their people in second, third or fourth priority. Some companies have become so obsessed with shareholder value that they neglect, or even seek to exploit unfairly, their customers, and pay too little attention to their people. This, I believe, is a very dangerous game to play.
It’s almost impossible for many public companies to properly balance support for all their constituencies because the pressure for market share value is so great that they can’t find a way to do well all things at one time. It’s unfortunate. But, my advice would be to focus on your customer, their interests and desires, and on one’s own people. Focus on your products, deliver the best value you possibly can at the lowest overall cost, and provide the best environment you can for your people. In the end, shareholders will be well taken care of as a result, and not as a focus. In this way, all constituencies, or stakeholders, can be optimally served.
Q12: Is there anything that you wanted to discuss that I didn’t ask about?
A: I think it might be of interest to note that commitment to our company is one of the things I ask of our people. I try to do this by example and by encouragement. Because of my own commitment to the company, I am now the longest-serving CEO in the computer industry today.
I mention that because I seek no glory for myself. But as a result of that type of commitment by so many Cincomers, we have the longest average personnel tenure of any software company in the industry. We also have the highest returnee rate of people who may have left our company to pursue interests elsewhere and have returned to our company. The ideas our company stands for are embraced by our people. In an industry where turnover is the rule, stability of an organization is one of our great strengths. I’m grateful to our people for their faith in Cincom.