There are two damning accusations commonly levelled at information technology companies. One is that they like to lock in their customers and the other that they'll cheerfully sell systems their customers don't need.

When Catalyst IT was set up by five partners in Wellington 12 years ago, those were slurs the company wanted to avoid.

To hear director Don Christie list the goals Catalyst set itself is to wonder that, with such high ideals, the company has made a go of it.

In fact it's thriving. Catalyst has grown to about 100 staff, with subsidiaries in Sydney and Reading, outside London, has annual sales of between $10 million and $20 million, and an international reputation as a specialist in education software.

"We wanted to prove that a technology-led company could deliver better outcomes for clients than a sales-driven company," says Christie, who describes himself and Catalyst co-founders Mike O'Connor, Gavin Thompson, Godfrey Hernandez and Andrew McMillan as technologists.

For all their idealism, they also appreciated that the firm needed to make money. They tried to set themselves apart from the prevailing model that making customers dependent on you was an acceptable way of doing business, as was selling them anything you could get away with.

"Our observation was that while that certainly did earn businesses quite a lot of money, it wasn't a particularly pleasant way of operating - you get a lot of frustrations on both sides."

That wouldn't have fitted with their aim of having fun as they did business. But all the worthy sentiments would have been pointless if the company didn't prosper.

"To prove all those things we obviously had to survive and be profitable and make money, so that's not exactly something we don't have our eye on.

"But I think if you want to make a lot of money, setting up and running your own business is not the way to do it. Being a middle manager in a large corporate is probably an easier way."

The prospects for pursuing your ideals - business and technology-wise - in a corporate setting would be limited, however.

Another of the Catalyst founders' goals was to prove that the internet was a viable vehicle for delivering business systems, at a time when the computer industry - including, surely to his eternal embarrassment, Microsoft's Bill Gates - barely considered the net had a serious future.

"I remember a couple of years before, one of my managers asking me whether I thought this internet thing was going to take off and I unequivocally said yes," says Christie.

At the time Christie and a number of Catalyst's co-founders worked for QED, a company that distributed Progress, a database management system and development language used by Inland Revenue and other big organisations. Those were the last days of centralised mainframe computers, with systems migrating to smaller machines organised in a "client-server" arrangement.

Encouraged by the arrival in the capital of fast internet access via a fibre-optic network initially built by Wellington City Council, and subsequently taken over by CityLink, Christie and cohorts were eager to take the system migration trend further. They succeeded in bringing some customers with them.

"One of the things that at the time was exciting and interested us was delivering business systems over the internet. We happened to start up at the same time CityLink was rolled out around Wellington and we essentially beggared ourselves to pay them the small amount of money to get a fibre hook-up to the building we were in.

"So we were very much looking at developing internet applications for businesses and proving that was the way they should go. At the time, businesses weren't that keen to spend a lot of money on something that they saw as risky and unproven."

The perception today might be that internet applications come cheap but, for pioneers like Catalyst, it was a case of building systems from the ground up. If a customer was prepared to gamble $30,000 or so to see what could be delivered, hardware and software licences took care of most of the money even before serious programming had begun.

"Those sorts of economics got us looking very quickly at open-source software," Christie says.

In the decade since, open-source software has become Catalyst's mainstay, helping it to stick to its founding principles.

"The more we used free and open-source software, the more we realised there were some fundamental philosophies underlying it that were similar to the philosophies we had in mind when we started the company," Christie says.

Those ideas haven't frightened away clients, which include Telecom and newspaper publisher Fairfax. With its roots in Wellington, the company concentrated its business development efforts in the city.

That inevitably means a significant number of public sector customers, including running the Government's election management and results systems, and the electoral roll system.

Since 2003, however, the education sector has been increasingly significant, to the extent that Catalyst is now recognised internationally as an open-source education software leader.

The software products with which it has made its mark are Moodle, a learning management system, and Mahara, a New Zealand-developed student portfolio management system.

Working with an Open Polytechnic-led consortium funded by the Tertiary Education Commission, Catalyst helped turn Moodle into an enterprise-scale system that could cope with tens of thousands of students.

Among the 70,000 or so institutions worldwide using Moodle are most New Zealand polytechnics and a handful of our universities. Moodle and Catalyst are now attracting the attention of Cambridge and Glasgow universities, among others.

"For a relatively small investment, not only did New Zealand get a learning management system that every institution can use but it actually encouraged Moodle, as a project, to get to the next step of its evolution. That in turn got much bigger organisations and countries involved."

If Moodle was commercial software, a back-of-the-envelope calculation puts the value it has delivered to users around the world at billions of dollars, Christie says.

He's not content just to base his business on open-source software, also acting as an advocate for the alternative to proprietary software. Christie is president of the New Zealand Open Source Society, a role which his Catalyst partners are happy for him to fulfil.

And why wouldn't they? As Christie says, wherever a user community of anything - free or not - forms, a community of commercial support organisations, such as Catalyst, won't be far behind.