Innovation
Essays

The enterprise software industry is going through a series of disruptive innovations that are disrupting the economics of the industry while also shifting the balance of power away from the Chief Information Officer (CIO) to the line-of-business leaders including the Vice Presidents, General Managers and Directors of Business Units. As this balance of power shifts throughout enterprise software, many long-standing approaches to developing, delivering, monetizing, and supporting software are also changing. One of the most successful companies in the enterprise software industry, specifically in the Aerospace and Defense sector, is Cincom Systems. Cincom has been able to attain a highly profitable business model by creating very customized systems for customers' needs while at the same time creating maintenance agreements that ensuring highly profitable recurring revenue stream over the long-term. This strategy has been largely responsible for the company's ability to withstand the recurring recession globally that has occurred over the last five years. It has also given Cincom Systems, which is privately-held, a strong foundation for investing in new technologies and accelerating their Research & Development (R&D) spending as well. The one significant organizational challenge the company faces today is transitioning from its primarily on-premise platform to a Cloud-based one, specifically on the Software-as-a-Service (SaaS) architecture that the majority of its competitors are using today. The economics of Cloud Computing and SaaS specifically are completely reordering the competitive landscape of the enterprise software market and pose a very significant threat to Cincom over the long-term. There are many challenges that Cincom must overcome to deal with this shift in product strategy, and will also have a corresponding impact on their overall financials and profitability. The intent of this paper is to analyze and explain how Cincom can rely on leadership theories to overcome these challenges and capitalize on them over the long-term.

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