Inforte Corp.: Looking for a Silver Lining

 
 
By eweek  |  Posted 2001-02-26 Email Print this article Print
 
 
 
 
 
 
 

Can the cloudy economy be offset by a well-honed sales engine?

For many of the e-business consulting firms competing in a tighter market, the manner in how they execute their strategies this year will define their ability to stay alive. Already, the early stages of Q1 have been streaked with the shadows of a slowdown in corporate spending. Many solutions provider companies have reported revised earnings, lackluster revenue, and are cautious about how they will perform in the months ahead.

Companies like Inforte Corp. are gunning to eke out the most they can from a business landscape speckled with uncertainty. Infortes top management has taken a number of steps to tighten its spending belt and is eyeing its sales engine as key to its success.

"The sales force we have been building will be a key weapon," says Philip Bligh, Infortes founder, chairman and CEO. "We have initiated a number of refinements to our sales process which is already pretty sophisticated."

Overcast Skies For its Q4 earnings, Inforte reported revenues of $17.4 million, which is up from a year ago and in line with Wall Street earnings. But like that of many of the companies in the sector, Infortes outlook for the rest of the year is one that is tempered with restraint because many clients have deferred the implementation of software that was purchased in the December quarter.

Still, Inforte executives like CFO Nick Padgett are quick to note that a deferred project in its specialties, like CRM and supply-chain applications, could turn into a "spend" later in the year.

Infortes Q4 results fared much better than some of its competitors—like Lante, Scient and Viant, all of which posted losses. But with the current business climate at hand, Inforte reduced its outlook for this years earnings to weigh in within the range of $64 million to $70 million, or 30 cents to 50 cents per share. The company is projecting earnings in 2002 to be between $74 million to $84 million, or 45 cents to 57 cents per share.

"We are adjusting our guidance to a more conservative level. Our forecast for the rest of the year is zero to 10 percent revenue growth," says Padgett. "We need to build in anticipation of economic conditions worsening."

For Inforte to combat a slump, says Bligh, it must increase its "number of at-bats" in front of customers and focus on its win-rate in the upcoming quarters. Because of a large number of competitors chasing fewer deals, Infortes win-rate was in the 40 percent range during Q4 2000, down from 50 percent in the previous two quarters. But Bligh says the way to change the current win-rate is to improve how the company competes in a field cluttered with many competitors willing to drop their prices.

A Sunnier Tomorrow? "The real answer is for superior execution on the demand side," says Bligh, adding that the company has retooled its client approach, taking a more team-oriented approach on each deal. That means having more presales face time with senior executives of prospective clients.

To reinforce its push, Inforte also has initiated a series of efforts to focus heavily on existing accounts, and will target areas such as financial services and healthcare. Inforte executives say they are confident of the firms technical skills in CRM and supply-chain implementations when pitted against pure-play Web-services firms.

"Customers told us they will be increasing their spending as a percentage of revenue focused on CRM, e-commerce and supply chain," Bligh says. "The silver lining is that a strategic solution may not be affected to a certain extent."

Inforte executives admit the company felt the downdraft of tightened corporate spending during Q4, especially as many customers put off the implementation of software they purchased. Inforte found that its top five clients made up 35 percent of revenue and that its top 10 clients contributed to 57 percent of the companys revenue during the most recent quarter.

Indeed, the company has focused its energies into sculpting a stronger sales team, and it also has increased its coverage of the Northeast region and the United Kingdom (with an office opened last year) to manage a climate marked by a spending slowdown. "We formulated a special plan for this environment," says Bligh, adding that to cut costs the company has reduced spending on recruiting and training.

 
 
 
 
 
 
 
 
 
 
 

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