Cincom’s Early Years

On the evening of September 29, 1968, three men – Tom Nies, Tom Richley, and Claude Bogardus – gathered around a card table in the basement of Nies’ home. Their purpose was to develop the foundation of the company they had decided to form – the company that became Cincom Systems. Their assets consisted of $600 cash, their experience in the rapidly growing computer industry, and a shared vision of the importance of software in the information-based society they saw emerging.

Their original intent was to create a consulting firm that focused on providing software solutions to users of IBM computers. Nies had recognized the importance of software to the computer systems he was selling. Unfortunately, in those times, IBM was content to include software with the computers they sold and to provide as little service as was necessary. IBM believed that the opportunities were in the hardware, the problems in the software. Nies saw it differently. But try as he might, he could not interest IBM in the importance of software in any context but as a mechanism to “sell more iron.”

Frustrated with IBM’s view, Nies decided to leave IBM. Originally, he had no definite intention to start a business. And he had no other position when he left IBM. “It didn’t seem right to collect a paycheck from one company while also looking for a new job with another,” he explained. “So I resigned first and then began to develop an opportunity.”
Two of his former colleagues at IBM, Tom Richley and Claude Bogardus, understood and shared Nies’ vision. Both came from the technical side of the business and both of them had an affinity for the software component of the business. Their backgrounds and talents complemented Nies’; like him, their educational backgrounds, their experiences with IBM, and their vision of the computer industry’s future had also led them to grow frustrated with IBM.

Until Cincom revolutionized the way software was viewed, system programming was normally performed either by the computer manufacturer, who included it with the machines, or by the computer users who developed or tailored software to their own needs. The software provided by the computer manufacturers had a number of drawbacks. For one thing, it was proprietary. For another, it was typically so general that it did nothing particularly well. In addition, it usually required massive amounts of computer resources, and performed poorly. This software also excessively consumed the time of scarce computer programmers and analysts. Another damaging complaint was that the software often did not work as advertised. Manufacturers too often shipped software that contained bugs that turned up at the client site. The users were unwittingly functioning as test sites with the massive costs of this testing being borne in large part by the users.

With only a few exceptions, such as American Airlines, which wrote its own code when building the SABRE reservation system, few computer users were able or willing to create their own system software. That was the niche Nies thought he and his partners could exploit. He was confident they could fill this latent need and satisfy this dormant demand by creating superior system software packages, and then marketing and supporting these technologies. He believed that clients would pay for software if it would significantly outvalue and outperform the so-called free software it may be required to compete against.

The three men, sitting around a card table with assets of $600, were confident that even if IBM attempted to prevent such solutions, the value they were offering would be so great that they could take on IBM and win. So perhaps the moment just felt right. In any event, these three were determined to pursue the “impossible dream” of helping users to build successful integrated information systems.

While Tom Nies’ title was President, his focus was primarily on marketing and selling, not presiding. He laid the foundation for Cincom’s marketing and selling philosophy, structure, and organization, for its client service policies and compensation plans, for its approach to the marketplace and its long-range vision. Above all else, Nies developed the strategy of providing high-value, low-cost solutions. And, just as Richley and Bogardus based their technical work on the experiences and knowledge they brought to the company, Nies’ ideas were the result of his education and experience.

When Tom Nies was growing up in Cincinnati, his view of a business career centered around a specific image: Procter & Gamble. Going to work for Procter & Gamble represented the epitome of success. As he neared graduation from the University of Cincinnati, Nies had performed well enough in his studies to be offered a number of attractive job interviews. But the one he cared about the most was with P&G. His elation upon doing well in the interview and receiving an offer from P&G was so great that he began to excitedly tell some of his classmates about it.

“I was probably being a little too enthusiastic,” he recalls, “letting everyone know in a perhaps bragging way that I had received an offer from P&G. So another student challenged me: ‘If you’re so good, why don’t you go try to get an interview with IBM?’ I have to confess that I had never heard of IBM before he challenged me. I knew nothing about IBM, and had never before even heard of computers.”

But Nies decided to accept the challenge. He got the interview. Soon he was asked to go to IBM’s local headquarters for another interview, and then he was invited to meet with the Cincinnati branch manager for yet a third interview. It was clear the company was interested in him.

During his conversation with the IBM Cincinnati recruiting manager, Nies was asked what would be the minimum salary he could accept. P&G had already offered him $475 a month, and he didn’t want to accept less than that. So he told IBM he would appreciate $500 a month minimum. And, sure enough, he received a job offer from IBM for a starting salary of $6000 a year. IBM even then was not known to pay more than the absolute minimum salary necessary. But that didn’t matter to Nies. He was far more interested in the opportunity than the pay.

“Now I was really confused,” Nies said in an interview. “I’d always dreamed of a career with Procter & Gamble. But here was a company I knew little about, but which obviously had a very impressive reputation, offering me a job at a salary comparable to P&G’s offer.”

While growing up, Nies had often turned for advice and encouragement from a couple of elderly women, known affectionately as “the biddies.” The biddies were the mother and aunt of his boyhood friend Jerry Shawhan, who is currently a senior executive at Cincom. He went to them again and explained his dilemma. What should he do? The biddies listened carefully and asked a few questions about the two companies. Finally, they encouraged him to go with IBM because they believed it was the company of the future.

Nies had an outstanding career at IBM, from his sales training class, where he graduated first with the highest marks anyone had received to that point, to his performance in sales, where he was consistently one of the top account executives. And yet just six years after joining the company, he left. Tom Nies no longer trusted IBM’s view of the future, centered almost exclusively on hardware. He had lost faith in IBM and its vision forward. And through his experiences there, he had fallen out of love with computers, and fallen in love with software – an area of little interest to IBM.

From his IBM experiences, Nies also grew to believe that an employee must be able to trust his employer. As he has said, “Employees need to know they can trust their company. They want to feel that the company communicates with them directly and honestly, and that they’re being treated as adults, not adolescents. But, they must also trust the company’s judgment of the future.” This philosophy is not only applied to the treatment of Cincomers, but also to clients, competitors, and everyone who comes in contact with the company. Cincom believes it is vital to continually communicate its vision of the future to all involved with Cincom, as well as to be true to its promises and ethical in all its behaviors.

For the same reasons, challenges were always based upon reasonableness and justice. It made more sense, he thought, to establish reasonable, challenging quotas and then reward people for achieving them, than to set targets beyond achievement. But, at IBM, Nies also learned that fair challenges were quite often beyond what people once thought possible. Although IBM’s sales quotas were often felt to be unreasonable, Nies always significantly exceeded them. Even at IBM he was one of those unreasonable men who create and facilitate change and grow through challenge.

Nies learned a lot of positives from IBM, ideas he adopted when he had the chance to lead Cincom. He saw that it was important to invest in people through training, to give them significant responsibilities early on, and to give them the opportunity to make as much of their jobs as they could. And IBM reinforced his Latin school understandings that good people, well led and well trained, can be counted on to exceed expectations.

“I’ve long believed that most people use only a small portion of their potential,” he has explained. “What we faced in the early years was the challenge of competing for people against much bigger companies with much larger budgets. But I believed that if we could hire good people, and help them use more of their potential, we’d accomplish a lot more than other companies could do with so-called superstars who were using less of their potential. Our goal was to help people become the superstars they might be rather than try to find superstars already developed.”

As a result, Nies spent a lot of his time in the early years inspiring and encouraging a can-do attitude among Cincomers, giving them an environment in which to grow and challenges to meet. In a sense, Cincom was empowering people long before the concept itself became popular.

Nies long felt that his primary mission was to help Cincomers to personally realize that they might be far less capable than they thought they were, but at the same time, had far greater potential than they ever imagined. The key was to open the eyes of their understanding to this reality – to encourage them to grow.

Tom Richley and Claude Bogardus had also been influenced by their experiences at IBM. After his military service, where he worked in data processing, Richley finished his college education and joined IBM. So unlike Nies, he had heard of IBM and its reputation before he accepted IBM’s offer of employment.

During his tenure with IBM, Richley went to work with Claude Bogardus. In fact, Bogardus was senior to Richley, both working as SEs helping to give birth to the modern data processing industry. In this process, the two began building software tools to make their jobs easier. Just as programmers today will create macros to handle frequently used tasks, so they recognized the value in building reusable standard sets of code modules.

In the course of working on their projects, both Richley and Bogardus saw that there were ways to do things better, to use the computer more productively. They saw opportunities to use software to sell the applications instead of the hardware. But they weren’t being paid to be creative, nor was their kind of innovative thinking particularly rewarded or even welcomed at IBM. Richley’s specialty was applications for manufacturing environments, and he began crusading for a new data-handling concept – a database. He tried for months to convince IBM management to investigate the field and market database technologies as stand-alone products. The answer was always, no.
One night, while Richley was working at a client site, he got a phone call from his wife.

“Tom, you just got an urgent phone call from Claude and some guy named Tom Nies,” she said. “Maybe you ought to talk to them.”

“That call,” Richley has said, “was actually the sound of reality – not opportunity, but reality – knocking at my door.”

So there they were a few days later, meeting in Tom Nies’ basement, with a card table and a phone among them, trying to figure out what they would do.

They divided the work among themselves. Nies would be President and Director of Marketing, Richley was to be Executive Vice-President and Director of Technical Support, and Bogardus was Secretary-Treasurer. They decided to call the company United Computer Systems and made a list of possible clients. They would go forth to solve problems, offering the highest possible quality computer support services and solutions to users of data processing systems at the lowest costs possible. The plan was to provide greater value at lower cost.

Each of them was doing everything they could to make the business a success, but there was a clear division of labor. Besides his primary responsibilities in sales and marketing, Nies was also responsible for general administration activities and establishing business goals and plans. He also scheduled and organized the others’ time. Richley was primarily responsible for doing the development work on the database and handling consulting assignments. Bogardus kept the books, handled consulting assignments, and did contract programming.

In these early days, the support of Tom Nies’ wife, Suzanne, was invaluable. Even though she is often not mentioned today when discussing Cincom, the fact is that her contribution to the formation of the company was of great importance. From the very beginning, Suzanne covered home base, answered the phone, typed all needed correspondence, encouraged the effort, and always supported her husband, no matter what. In this, she played the part of a role model for all involved. Over the years, thousands of other spouses were to play similar roles of self-sacrifice as they too provided support, encouragement, and understanding to their mates as they dedicated themselves every day to the process of building the company.

The day after meeting in Nies’ basement, Richley called the data processing manager at Hillenbrand Industries, a man named Charlie Perkins.

“Charlie, I wanted to be the first to tell you, I’ve left IBM.” There was a long pause at the other end of the line. Finally, Perkins said, “Tom, it’s 10 o’clock at night. Be here tomorrow morning.”

The next morning, Richley drove to Batesville, Indiana, met with Charlie Perkins, and left with a contract for United Computer to do consulting work with Hillenbrand.
Meanwhile, Claude Bogardus landed a contract with a Cincinnati-based company he had worked with previously, and Nies was selling their services to American Tool, Champion Paper, and U.S. Shoe. They were underway.

On one of the first sales calls Nies made, to American Tool, he was able to show how the company’s five-year plan for data processing development might be achieved in a single year if certain database approaches were employed. That experience was repeated time and time again over the next decade, as the young company with its innovative technology helped clients make quantum leaps forward. The value of the solutions Cincom offered was immense, even though the price was quite modest.

In recalling the first few weeks of the company’s history, Claude Bogardus tends to downplay his own contributions. But he doesn’t minimize the role his two colleagues played.

“The entire software industry owes Nies and Richley a tremendous debt,” Bogardus said recently. “It all began with them, and they complemented each other perfectly.”

In Bogardus’ opinion, “Nies was in a class by himself when it came to interacting with people, organizing the business, marketing, and setting long-term goals. He had the insight right from the start to effectively organize marketing and technical support operations with the meager resources we had. The big challenge was to find good people, organize and train them, and have them become productive as fast as possible. In the beginning, there was tremendous pressure. But Nies remained calm and kept his composure throughout.”

As Bogardus recalls the early days, Richley operated in bursts. “He’d read, talk, think, and sort of hang around for awhile. Then he’d suddenly erupt into action and work 40 or 50 hours straight through, maybe grabbing ten minutes of sleep here or there. He was extremely creative in how he got the software to work and in the ideas he had. And he made sales calls, because we all had to. It was just the three of us. But it provided him with great feedback about how things were working.”

In fact, Richley drove around with the young company’s entire product line – a box of punch cards which contained the code that eventually became TOTAL – in the trunk of his car. He would visit a potential client, install the code, demonstrate it, try to close new business, then put the punch cards back in his trunk and go on to the next opportunity. One of the jokes in the early days was that a strong rainstorm or a leak in Richley’s trunk could have wiped out the company.

Bogardus himself had a solid educational background and experience in computer consulting procedures that added credibility to the fledgling company immediately. Particularly skilled in access methods, Bogardus supplied many customers with macro-driven IOCS systems for second-generation IBM hardware. He also developed a file organization system using an innovative concept of records chained on multiple linkpaths, with a directory to manage the chain anchors. This combined the concepts of the second-generation control sequential access method and a partitioned library. In addition, Bogardus authored several papers on randomization techniques.

One of the first contracts the company landed, with Nutone, was nearly their undoing. Eager to establish some cash flow and somewhat unaware of what the job would entail, the young company bid a fixed price professional services contract for $17,000 to Nutone to resolve some of their computing problems. Unfortunately, the scope of the job quickly got out of hand and it wound up eventually costing several hundred thousand dollars to complete.

“We could have reneged on that contract, or tried to renegotiate it,” Nies said, “but to do that would have established a pattern of doing business that way. So we went ahead and completed the project at a cost of 15 to 20 times of what we were paid for it. We believed that promises made must become promises kept, no matter what the cost, no matter what the pain.” It was imperative even then that the company keep principle before profit, and it was difficult situations like this one which tested principle. Early on, Cincom saw adversity as an opportunity to strengthen character.

That experience established a couple of principles. The first was that Cincom would stand by its contracts and honor the commitments its people made – no matter what. From that time forward, Cincom’s commitment to keeping its word has been a vital part of the corporate culture, though sometimes a painful and difficult principle.

The other principle was to avoid fixed-price contracts whenever possible. Other such fixed-price arrangements also proved to be bad business in the long run and it became apparent that the complexity of the industry made it extremely difficult to bid any such project on a fixed-price basis with much confidence in the accuracy of that bid.

In spite of the losses from Nutone, the little company did manage to grow. In fact, it even managed to show a profit during its first year – a profit of $1,000 on total revenues of $155,000. This record of making an operating profit continued on through each year of Nies’ initial 16-year presidency.

Cincom had established a fledgling corporate culture, one that was based on a pattern of principled management and ethical business practices, a culture that has grown stronger and more consistent over the 35 years since its formation. In the long run, that philosophical foundation proved to be more important than the initial $1,000 profit could ever have been, even had that first year’s profit been multiplied a thousandfold.