Cincom Systems' marketing mix and ERP strategy in enterprise software

Marketing Strategy and Practice

Marketing Mix and Strategy Analysis of Cincom Systems

Based on an analysis of the enterprise software industry and the unique position that Cincom Systems has within it, this firm has been chosen for an analysis of its marketing mix and international market entry strategy into China. Cincom has invested for over a decade in China, focusing on its Acquire systems for sales and product configuration (Asia Computer Weekly, 1998). The core business of Cincom is their Enterprise Resource Planning (ERP) system, CONTROL, which has achieved significant success in manufacturing and has a very stable technology platform on the Microsoft .NET architecture (Baer, 2002). The purpose of this analysis is to evaluate the market growth and trends influencing Cincom and their core ERP business, evaluating the marketing mix and international marketing strategies as well.

Market Growth and Trends

The majority of the growth in the Enterprise Resource Planning (ERP) market, which is a significant segment of the enterprise software market, is going to be in the areas of maintenance and subscriptions. These are areas that Cincom is well-positioned to excel in, as they have a large, diverse customer base in core manufacturing industries and have over time been able to attain a significant recurring revenue stream. ERP systems are used for orchestrating the many functions, processes and procedures throughout a manufacturing organization to guide the sourcing, supply chain, production planning and quality management of finished goods. Cincom has a unique niche in this market as it relies on a series of innovative mass customization strategies including configure-to-order and engineer-to-order process workflows that give its customers flexibility in how they product products for their customer bases. Cincom shares many attributes with the ERP market with its much larger competitors Oracle and SAP in that it supports the entire fulfillment and production process. Given the complexity businesses face in producing their products, ERP systems generate well over $50B in revenue globally a year. The Forecast for Global ERP market, 2011 to 2015 shows the growth of this area of the enterprise software market to the left.

Figure 1: Forecast, Global ERP Market, 2011 to 2015 source: Forrester

Key Competitors

Cincom faces competitors across many of its core manufacturing industries including Aerospace & Defense (A&D), Heating, Ventilation and Air Conditioning (HVAC) and Specialty Vehicles. Each of these industries has highly specific requirements, many of which Cincom's larger competitors including SAP, Oracle, Sage Group, Infor and Microsoft cannot reach. An analysis of ERP vendor's total revenue is to the right (source: Forrester and (U.S. Technology Report, 2011).

International Marketing Strategies

Cincom has for over a decade sold into the Chinese market (Asia Computer Weekly, 1998). Starting first with the Cincom CONTROL ERP system and later with Acquire, Cincom has continually invested in this region of the world as the pace of manufacturing growth has been far above the rest of the world. As a result, Cincom has had significant success.

One of the factors that has also helped Cincom move into the Chinese market is the remarkable number of ERP system failures by its competitors. It is well-known that the majority of ERP implementations within China fail due to a lack of culture fit or consistency (Xue, Liang, Boulton, Snyder, 2005). Cincom uses a variety of strategies for ensuring success in China, with the most common being partnering in Joint Ventures (JVs) to ensure those with more expertise in a given region of China can guide the company's success. Cincom also relies on the Hofstede model (Hofstede, McCrae, 2004) and other comparable cultural frameworks to gain greater understanding of core markets. Using the Hofstede Model of Cultural Dimensions, the cultures of the U.S. And China are compared in the figure to the right.

Source: http://www.geert-hofstede.com/hofstede_dimensions.php?culture1=95&culture2=18#compare

The Hofstede Model of Cultural Dimensions shows that the Chinese have a significantly greater tolerance non -- the Personal Distance Index (PDI) meaning they tolerate hierarchical organizations and their role in them much more than Americans do. The Long-Term Orientation (LTO) of the Chinese is also significantly greater, showing how time itself is perceived completely differently by this nation relative to the U.S. All of these factors are taken into account in how Cincom chooses a Joint Venture partner and addresses An emerging market.