To: M. Scott-Morton, F. Feist
From: Robert A. Dressler
Subject: Assessment of Cygnus Support
Why is this an interesting company?
Cygnus Support has carved an interesting and unusual niche in the computer hardware and software markets. Founded in 1989, Cygnus began modernizing the software development marketplace by delivering commercial support and Internet technologies for free “shareware” used by communities of Internet developers. Software technologies that up to that time were unsupported and only available to the Internet technical community were now made accessible to any software developer needing cutting edge innovations.
Today, Cygnus helps its customers deliver better solutions faster by providing world-class consulting and support services as well as robust development technologies. Cygnus is focused on the areas of embedded and native multi-platform development environments. Cygnus takes these development tools and tailors them for different hardware and software platforms used by their customers. Cygnus then delivers client specific solutions based on Internet standards and innovative technologies.
What makes Cygnus truly unique is the fact that they offer the tailored software free to their customers in return for implementation and support services contracts. The founders of the company believe that the structure of the software industry is changing because it is so easy to copy and redistribute intellectual property. Therefore the value of content is decreasing since no individual or organization can control its distribution. Cygnus is structured around the belief that value added service and customer relationships will be the profitability drivers in the software industry.
What is their value proposition?
The Cygnus Support value proposition is built around the services required to implement and support software solutions. There are a number of dynamics affecting the electronic marketplace today such as
Cygnus realized that many software developers rely heavily on common platforms that have little underlying support and are not tailored for all hardware configurations and operating systems. Optimizing and supporting these software packages shortens the product development cycle, time to market, and cost of development for software creators. By focusing on this neglected portion of their customers value chain, Cygnus has been able to build a successful and as yet unchallenged value proposition.
To attract customers, Cygnus offers a portfolio of middleware solutions, which are optimized versions of public domain software. One of these products is IDK, which allows turn-key Intranet development and Internet front end creation for existing company data platforms. Users can download versions of this software free of charge when they purchase a support contract from Cygnus. This product bundle is an example of Cygnus’ focus on the demand for Intra/Internet consulting, technology, and support.
Cygnus has focused on specific software development environments and developed the necessary skills to meet this critical need in the software development value added chain. One of the first products supported by Cygnus was GNU, a free software tool used to create other programs. Today, more than 100 clients pay Cygnus up to hundreds of thousands of dollars each year to ask Cygnus’ 40+ programmers how to make the best use of GNU. As a result, this privately held company has been profitable since it began 7 years ago.
Cygnus Support products have an emphasis on strategic technical consulting, shared software applications, unique applications development, and customized levels of support. Cygnus has cemented its place in the software development world through building long term stable relationships with customers based upon high levels of individualized service. Cygnus customizes solutions and support services for customers who request them, with its profits coming from the long run consulting and service agreements. The free software content provided by Cygnus acts as a vehicle for them to continually develop their expertise and build their own name brand in the industry. Both of these factors become critical as the industry continues its move from a product based orientation to a services business.
Another major factor in the success of Cygnus Support lies in its ability to supply a critical part of hardware manufacturers’ value proposition. Hardware manufacturers can add considerable value to their own product lines when they can provide customers with turnkey solutions consisting of integrated hardware and software and development environments. Cygnus has been extremely successful in partnering with hardware manufacturers such as DEC, Hitachi and Sun Microsystems because these partnerships bring customized solutions to meet each vendor’s unique business and technical requirements.
These partnerships increase the hardware vendors value proposition by making hardware more attractive to buyers. Cygnus is able to ensure optimized performance and portability of hardware solutions, and drive hardware products sales successfully in the marketplace.
Interesting uses of technology at Cygnus Support
As a user and supporter of high technology, one would expect a company such as Cygnus Support to be on the cutting edge of technological innovation within its own organization. This is indeed the case. According to one industry publication, “Cygnus ... has created one of the best sites on the World Wide Web.” Cygnus uses both internal and external Web servers to provide significant services and advantages to customers and employees.
The server available to external visitors contains all of the company’s pricing and product information, software documentation, back issues of its newsletters, press releases, and an employee directory with photos. Visitors can also join the Cygnus mailing list or take a customer survey. This Web site gets hundreds of visits per week and automatically logs where the visitors come from. This provides the company with valuable marketing data.
The external server is used in collaboration with other companies. Cygnus works extensively with hardware manufacturers and software developers. Joint marketing is possible through providing links from press releases that take visitors directly to the Web site of Cygnus partners. Partners also provide this type of link to the Cygnus home page, which substantially increases the volume of visitor access.
The internal Web server allows Cygnus employees to access information as varied as a company calendar, the employee policy manual, financial information, performance metrics, Dilbert comics, and the company snack food inventory. Even information such as the accounts receivable due to the company and the company cash bank balance (expressed as the number of months expenses) are made available because Cygnus is trying to make its employees “more financially savvy.”
From an operational perspective, Cygnus tracks the number of problems reported by its customers, and how quickly they are resolved. The operational metrics are then posted on the internal Web server for all employees to see. All of this information helps Cygnus to create cohesion and a common sense of purpose across a geographically distributed group of employees. Cygnus managers a large number of telecommuters and has offices in Mountain View, CA and Somerville, MA. According to Clare LaFond, Cygnus’ Chief Financial Officer, “this is one way to integrate a large number of remote employees.”