Internet consultants invade old guard's turf
As little as a year ago, the new breed of companies known as Internet systems integrators bristled at any suggestion that they bore a resemblance to the Big 5 consultants. Now it appears they are scrambling to remake themselves in the image of the very same staid organizations they once ridiculed.
Consultants such as Scient, Viant and especially iXL are conducting large-scale layoffs of employees skilled in such areas as Web site development, marketing and design, and bolstering their staffs with consultants skilled in more traditional areas, such as supply chain management, Enterprise Resource Planning (ERP) and customer relationship management (CRM).
The change in focus is a matter of survival, but it also raises the question of whether the Internet consultants will be capable of competing against the likes of the big accounting firms, Electronic Data Systems and IBM Global Services on their own turf.
"Theyre in a difficult situation," says Tom Rodenhauser, principal analyst at Consulting Information Services, a research firm. "They know where the business is, but by becoming more like the established consulting firms, they create less of an incentive for clients to go to them."
Nowhere has the change in strategy been more apparent than at iXL in Atlanta. Since agreeing to take over the helm of the troubled firm in February, CEO Christopher Formant has slashed close to 700 jobs, or about half the work force, and realigned the company into five core practices: financial services, travel and transportation, manufacturing, retail and enterprise services, including CRM. Formant, who formerly headed PricewaterhouseCoopers global banking practice, also has raided the talent pool of the big consultants.
Among the additions is Jay Norman, who led PricewaterhouseCoopers financial services e-business practice and now heads iXLs financial services division. Patrick Kelley was lured from Cap Gemini Ernst & Young to head the firms manufacturing practice, and Janet McAllister, a 15-year IBM veteran, signed on earlier this month to head iXLs practice devoted to business-to-employee applications.
With its new old look, it would be easy to call iXL a mini Big 5, but Formant wont hear it. "We dont look anything like a Big 5 around here," he says. "We are targeting many of the same industries and companies that the Big 5 target, but we have a much different culture and delivery process were built for speed."