From Practice To Product

IT consultants who want to leave a lasting legacy should consider launching their own development products. But as David Sims learned, the risks can be as great as the rewards.

David Sims had been an independent consultant for about two and a half years when he decided to take a huge step to reshape his practice. His goal wasn't to generate higher revenue streams; rather, he was motivated by the desire to create something lasting.

Sims, president of Sims Computing Inc. in Billings, Mont., created a Java software component. Flux, an automatic job scheduler for Java 2 Enterprise Edition (J2EE), debuted Sept. 5. "If you're doing solo consulting in Java, you'll always have a paycheck," Sims says. "But I wanted to do something new and challenging and see if I could grow from just a one-man consulting business to something more."

Sims could have followed a traditional model of hiring other Java consultants and becoming a larger shop. But he was much more intrigued by the idea of making an imprint with his core competency: programming. Rather than continue to write programs for his clients, he wanted to create software according to his own unfettered vision.

"It was just something I'd always wanted to do. Consulting and working on other companies' projects is fine. But there's something special about having [a product] of your own," Sims says. "You have more control; it's the opportunity to build something that's uniquely your own and build it your own way."

A New Focus

Creating and launching a product brings with it a whole new set of realities, however. Flux has inherently changed the direction of Sims' consulting practice, added an array of new administrative issues and made significant financial demands.

Consulting is taking a backseat to refining, updating and selling Flux. Sims is already at work on Version 2, and he's no longer soliciting long-term consulting contracts. Instead, he's offering short-term training and mentoring services in enterprisewide J2EE application development.

Moreover, Sims is taking a backseat to Flux. Before, he focused on promoting himself and his skills. Now, he concentrates on promoting Flux. He relaunched his Web site (www.simscomputing.com) with no reference to his resume or to himself personally. It's all about the product, its capabilities and licensing fees.

"I think a lot more now in terms of the things a vendor has to be aware of," Sims explains. "In consulting, you try to build up your individual name. Now, I'm trying to build the product's name."

Marketing Overhead

Building the product's name is a job unto itself, requiring both additional work and expense. Sims hired Camille Griep, a sales and marketing director with experience in the San Francisco Bay area. Griep had recently returned to her hometown of Billings from Silicon Valley.

While her salary is undoubtedly his biggest marketing-related expense, it's far from being the only one. Next month, Flux will run its first national magazine advertisement, a full-page, color ad in Java Report. The professionally redesigned Web site - which replaced a homegrown site - cost "more than I ever thought I'd spend on a Web site," Sims says.

He also needed a new logo and other graphic design work. And next year, Flux will start making the trade show rounds, which will add the expenses of booth rental, product brochures and marketing collateral, in addition to travel expenses.

Personnel

So far, Griep is Sims' only new hire; he already had an office manager. But he'll hire more staff as sales increase. And with additional employees, Sims says, he anticipates additional overhead: He'll have more paperwork and management responsibility as he takes on the tasks of looking after employees' career concerns and job satisfaction.

In the absence of full-time staff, Sims is relying more than ever on professional services to get the job done. As an independent consultant, he already had an accountant and an attorney, but he has more work for them now - especially for the attorney. Both charge him on an hourly basis, but since Sims is in Billings, the fees are more affordable than they'd be in a large metropolitan area, he says.

Sims also contracted with a professional designer for his revamped Web site and logo and with an advertising agency to design the ad in Java Review. Next year, he may seek out additional services, such as trade show planning and management and even systems administration for his growing LAN.

"Those things take time away from what I need to be doing to get the product going," Sims explains. "Tweaking my network isn't going to help the product. Coordinating plans for a trade show isn't necessarily something I should be doing. My expertise is the technology."

Legal

Flux has added a range of legal tasks to Sims' to-do list. Especially important are those pertaining to intellectual-property protection, such as copyright and trademark registration and software licensing agreements.

Registering the copyright (which gives the creator exclusive rights to reproduce and distribute the software) was relatively simple, Sims says. Copyright registration forms are available at the U.S. Copyright Office Web site (http://lcweb.loc.gov/copyright/).

The completed form, a $30 registration fee and the first and last 25 pages of the source code must be sent to the Copyright Office. If the program is on a CD-ROM, that also must be sent in. While the creator of the software automatically owns the copyright, formally registering it is advantageous in that it establishes a public record and is useful in the event that anyone tries to infringe on the copyright.

Getting a trademark on the product name is considerably more difficult and expensive - a minimum of $325 for each class of goods or services, plus additional service fees for each. Sims says his attorney estimated that the total cost could be as high as $20,000. Since registering a trademark isn't required, Sims has decided to defer it until later.

The language of the licensing agreements also adds to his intellectual-property protection, Sims notes. One agreement covers a user's right to download and test an evaluation copy of the package. For that agreement, Sims used the industry-standard language that accompanies most evaluation software downloads. The purchase licensing agreement was trickier, he says, because it's as much a sales and marketing tool as it is a legal document.

"You're trying to attract people to your product . . . and if the licensing agreement is hard to comprehend or to apply [in their organizations], they may pause," Sims says. "And anytime there's a pause in their thinking, that may be a lost sale. So you have to make it easy."

Financing

Clearly, all of this takes money. "There's a huge advantage to living in Billings," Sims says, speculating that he might not have been able to launch Flux in a more costly locale. During the product development phase, he supported himself on his earnings from consulting. But to manage all the new expenses requires "a lot more than six months' savings," he says.

Sims wouldn't detail his monthly costs but says that so far, the business has been self-funding. "I'm very leery of getting a loan," he adds. "We have plenty of costs trying to market and support and sell Flux, and the last thing I want is a loan payment."

The Payoff

It's still early in the game, but sales started rolling in the second week after launch, from across the U.S. and as far away as Singapore. Moreover, Sims says, "the company now is actually worth something. A company based on the efforts of a single individual is not worth anything more than the physical assets of the company. Now, we have intellectual property. You can't put that in the bank, but it gives you a certain feeling of satisfaction, and it opens doors."

Sims says he's been approached by major vendors that are interested in using Flux to add functionality to their own products or in partnering with him to sell Flux in conjunction with their products. "I've gotten to talk with other companies that I wouldn't have in the past," he says.

The Long View

Sims says he has two fundamental goals for his business: to write "useful software that people can use to get their job done" and to prove to himself that he "can have a business that does well by providing both human labor and a product."

His personal long-term goal is grander than the mere success of his business, and it reflects the creative spirit that was the impetus for Flux: He says he aims "to write software that will still be running in 10,000 years."

Sims' goal was inspired by the work of the San Francisco-based Long Now Foundation (www.longnow.org), which promotes adopting a centuries-long view of society.

"The idea is to bring people together to look further than the next quarter or year or decade," Sims says. "I think that's a neat view - that the reason we're on earth is not to show a quarterly profit; it's something more. And the thing about Java is that it defines a virtual computer: the Java virtual machine. There's no reason why computers in 10,000 years couldn't still be running these [Java virtual machines]."

Goff is a freelance writer in New York. She can be reached at lgoff@ix.netcom.com.

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