Scenario Analysis

Taking the five drivers of technological innovation, consolidation of the enterprise software industry, increased focus of new competitors in high growth sectors, compliance requirements of customers, and the shift in software to becoming more knowledge-based, the future of Cincom Systems is highly dependent on strategic renewal (Agarwal, Helfat, 2009). Taking these five factors together and defining realistic, optimistic and pessimistic scenarios provides insights into the extent to which Cincom Systems needs to accomplish strategic renewal.

Under a realistic scenario, Cincom Systems can expect the pace of technological innovation to continually increase with SaaS-based competitors gaining market share in the key areas of CRM and channel management. The consolidation of the industry and increased focus of new competitors is under realistic scenario-based assumptions force Cincom to innovate from one product generation to the next with greater urgency. The two drivers of compliance requirements and the shift in enterprise software towards becoming more knowledge-based will also require Cincom to either acquire new companies in these areas or augment their own applications to stay current.

In an optimistic scenario, Cincom quickly moves into the SaaS market, dominating it with new technologies for compliance and knowledge-based workflows their customers need. The high...

The combined effects of this strategic transformation (Agarwal, Helfat, 2009) sees Cincom gain additional market share and revenue as a result.
In the pessimistic scenario the five drivers force Cincom out of key markets and into a defensive selling and product development mindset, looking to defend their annuity-based revenue streams. An onslaught of SaaS competitors gain venture capital funding and become an entirely new force of consolidation in the industry. The added funds for these competitors from venture capitalists turn SaaS-based networks into knowledge management hubs that capture compliance-based intelligence and create compliance networks. In short, through innovation, acquisition and consolidation an entirely new architecture of the industry is created. This leaves Cincom with a licensed model that is no longer seen as relevant over time.

References

Agarwal, R., and C. Helfat. 2009. Strategic Renewal of Organizations. Organization Science 20, no. 2, (March 1): 281-293,478.

Campbell-Kelly, M.. 2009. The Rise, Fall, and Resurrection of Software as a Service. Association for Computing Machinery. Communications of the ACM 52, no. 5, (May 1): 28.

Mitsuru Kodama. 2006. Knowledge-based view of corporate strategy.…