Since it was founded as a one-man bioinformatics consulting shop in 1998, Incogen has evolved into a full-fledged software firm with a suite of shrink-wrapped products and a staff of 25. But CEO and founder Maciek Sasinowski told BioInform last week that the company is returning to its origins with a renewed focus on professional services.
Incogen has always provided customization services for its products, especially its VIBE (Visual Integrated Bioinformatics Environment) data-pipelining tool and its GenePort bioinformatics portal, but Sasinowski said that the firm has downplayed this capability in recent years in favor of its off-the-shelf software products.
"We've been very much focused on trying to sell the software," he said, "and I think we're actually shooting ourselves in the foot by not capturing the value that we bring as a company, and the revenues that we can bring to the company, by going after what made [Incogen] happen, which are the professional services, the expertise, and the intellectual property that we have about how to do things how to set up people's labs, and how to help them provide the infrastructure that they need."
"We've been very much focused on trying to sell the software, and I think we're actually shooting ourselves in the foot by not capturing the value that we bring as a company, and the revenues that we can bring to the company, by going after what made [Incogen] happen."
Around three months ago, the firm decided to ramp up its professional services group and get the word out. Sasinowski said that the strategy won't require big changes in the way that Incogen operates, but is more of a marketing move. When Incogen was launched, he said, the consulting business grew primarily by word of mouth. Now that the firm has a reputation in the market as a software company and an established sales and marketing team, he said it's in a much better position to grow the services side of its business as a complement to its software business. "Now that people know us as a software company, let's make sure that they also realize that that's only one component of what we do," he said.
Incogen is also hoping that the services offering will give it a boost in the highly competitive market for workflow and pipelining tools. Sasinowski said that its services arm "is a way to set us apart" from other vendors in the space, such as InforSense, SciTegic, and TurboWorx. "In a way, competition is good because it keeps us on our toes," he said, "but we still need to make sure we continue to find an edge."
Sasinowski acknowledged that the bioinformatics consulting model is not without its drawbacks. One of the primary reasons the firm switched to a product model in the first place, he noted, was the lower costs associated with software development as opposed to one-off consulting projects. "It was a good business strategy to have a shrink-wrapped product because when you're doing consulting, or even some customization, the problem is that every time you do [a project], you have to put a lot of time into it, whereas with shrink-wrapped software, the cost that we incur as a company [is] much lower, and that way we can also charge a lower price."
In addition, he noted, "consulting doesn't scale" as well as software development. As a consulting firm grows, it needs to bring on "a proportional number of people" to tackle new projects, he said. Conversely, the development costs for a software product can be recovered fairly quickly, with the potential for an unlimited number of sales beyond that point. There is a danger for consulting firms to bite off more than they can chew, Sasinowski said, and take on large projects with fewer people than are necessary in order to boost their margins.
To avoid these risks, Sasinowski said that Incogen is taking a cautious approach to its consulting offering, which it intends to balance carefully with software sales. Before engaging a new client, he said "we need to make sure it's worth it for us as a business model." He added that the firm would turn down any projects that are beyond its capabilities or resources.
The company has already started on some contracts using its mixture of out-of-the box software and services. Joan Burnside, a professor in the Department of Animal and Food Sciences at the Delaware Biotechnology Institute, said that Incogen is currently building a custom microarray database for her lab based on its GenePort product. "They're tailoring it and customizing it for our particular needs," she said. "Because they developed GenePort, it's easy for them to adapt it."
Burnside said that Incogen also built a customized system for her group to manage chicken ESTs because a shrink-wrapped option "doesn't exist for what we're doing." She added that her lab has had "spotty" internal bioinformatics support, comprised primarily of postdocs who come and go. Incogen, she said, "gets the job done, and I think for a lot of people who have some bioinformatics capability in house, it can go on for a long time before they actually get the job done."
Sasinowski declined to make any projections about what portion of Incogen's business may eventually come from professional services." We're going to take it as it comes," he said. In the bioinformatics market, he noted, "the only companies that have survived are the ones that are able to adapt and be flexible."
Bernadette Toner ([email protected])