Octigon Takes Partners On Path To Profitability

"We thought it was a nice product that would fit in with our consulting, which focused on how to improve culture and communications within an organization," Cook said.

But the software solution business soon took on a life of its own. Over the past five months, Cook and his partner took in more money than they had in the past two years of consulting. Now they're in the business of delivering Web-enabled business solutions.

The pair's new venture, Cincinnati-based Simplicit, recently landed a bank loan to open four offices and hire seven employees. They've also launched Web sites for about eight clients, including two Fortune 500 companies, a nonprofit organization and some schools. "For guys who didn't know how to sell software and spent the first four months learning, that's pretty good," Cook said.

In truth, selling software and associated services isn't hard,once customers see what they're getting for their money, said Cook, who gave 200 demos in his first 90 days of business. "Most of my clients have never really seen a piece of software at this price point," he said.

Octigon, a Birmingham- based developer named for its eight founders, charges a one-time fee of $20,000 for its Octane8 Web content management platform. There are no annual maintenance charges, but there is a monthly per-user fee of $50.

While partners can resell the Octane8 engine, they can also use the platform to build and host an unlimited number of Web sites for customers, who pay monthly user fees and for the solution provider's services.

In addition, Octigon sells about 70 prebuilt applications, from shopping carts to chat rooms. Solution providers can download an application, paying a one-time fee for the source code, and plug it into the prebuilt templates that come with the Octane8 engine. That makes building dynamic Web sites a snap, solution providers said.

Gold Zeppelin, an Octigon partner based in Los Angeles, rebranded its Octane8-based solution as Dynamic Click to emphasize the rapid deployment capabilities. "It can be used to develop a site for a company very rapidly and even to manage the site, which for a small business is key," said CEO Eric David.

Perhaps more important to David is that Gold Zeppelin owns the source code to applications it buys from Octigon. The company bought a shopping cart from Octigon for $2,500, customized it and resold it for about three times that amount. Best of all, Gold Zeppelin now owns the application and can sell it again without incurring additional costs.

Gold Zeppelin also developed a WebTrends integration application for Octane8, which Octigon is reselling to other solution providers at a 40 percent markup.

That's a key component of Octigon's go-to-market strategy, said James Smith, president of Octigon. While Octigon developed about 40 of its applications in-house, partners have developed the rest. "Not only are solution provider partners selling our software, but we're selling their software," he said.

While some may be skeptical, Octigon has already proven the feasibility of its business model, said Smith. Octigon brought in about $1 million in revenue last year,after just one full year of operation, Smith said, and he anticipates the company will generate up to $4 million in revenue this year.