Cignex Opens Up

Having worked during the past few years at a number of consulting firms specializing in enterprise-level solutions, Navin Nagiah identified a clear pattern: All were promoting proprietary technologies, all were backed with ample venture capital and none were making their numbers.

But when he took over in June as CEO of Cignex Technologies, a start-up services provider founded in 2000 in the San Francisco Bay area that made $10 million last year, the company was already generating impressive revenue through pure, organic growth--without the crutch of venture capital. And, oh yes, one more small detail: The company was doing so largely based on the strength of open-source solutions.

With those facts staring him in the face, Nagiah made what appeared to be a bold decision.

"With revenues in open source going up enormously, the market was screaming at us that there is a huge opportunity to be had here," he says. "So we decided to focus the business solely on open-software solutions and consulting. Our goal is to become the Accenture of open source."

What also helped nudge Nagiah closer to the decision was the estimable power of the Internet as an inexpensive distribution vehicle with extensive reach. It didn't hurt, either, that larger companies such as IBM and Oracle were aggressively backing open-standards-based platforms, allowing smaller solution providers to compete purely on their particular value-add.

"With companies like IBM pushing a mix of open standards and open-source software, it allows smaller services companies to deliver solutions significantly faster and to compete primarily on what it does best in the market," Nagiah says.

While crucial standards are gaining the support of top-tier companies, there is always concern that those companies try to yank and twist a particular standard to benefit their own competitive agendas. It's important that companies learn from such past mistakes and remain disciplined enough to focus on the greater common good for VARs and users.

"The talk of standards about the Internet among companies has been constant. Take XML; the chemical industry alone came up with three standards," Nagiah says. "I believe standards are for real when they are finally executed, implemented and accepted."

Cignex has had a string of four profitable years, according to Nagiah. He says the company hasn't had any failed implementations among its customers in his tenure as CEO.

Nagiah believes other large proprietary vendors will eventually become as enlightened as IBM about open-source technologies, if only because an increasingly larger chunk of their revenues are being derived from supporting a mix of open and proprietary technologies.

"Most can't transition their technologies over too quickly because it adversely affects their [proprietary software] revenues," Nagiah says. "But if more money is being derived from open source, then they need to be seen as big supporters of it. It is a tightrope they have to walk."