Can Scient Survive?
When two drowning men latch on to each other, according to the old adage, they tend to sink faster. But in the case of Scient and iXL, company insiders are hoping to stay afloat by cutting costs and swimming upstream.
Scient and iXL, in case you havent heard, were hot e-consultants that flamed out during the dot-com meltdown. Hewlett-Packard took a close look at Scient in early 2001 but ultimately decided not to buy the company. "Scients business was deteriorating too quickly and HP didnt want to pay a premium for yesterdays fad," says a source close to HP.
Scient and iXL announced their intent to merge on July 31, and shareholders are expected to approve the deal on Nov. 6. The business combination, to be known as Scient, will generate about $100 million in annual cost savings, according to company estimates. The deal also allows Scient and iXL to pool their remaining cash reserves, which stood at $88.4 million and $25.8 million, respectively, as of Oct. 23. The company hopes to achieve positive EBITDA (earnings before interest, taxes, depreciation and amortization) in early 2002.
Still, the business combination wont be easy. Scient and iXL have lost a combined $239.8 million through the first half of the calendar year.
One key to Scients future is iXLs strategic-alliance team, headed by Lorin Coles, senior VP of alliances. In recent weeks, Coles has been traveling between iXLs former headquarters in Atlanta and the companys new headquarters in New York, meeting with top management to discuss branding, marketing and partnering initiatives.
"Scient never really had a go-to-market strategy that involved partners," says one iXL insider, who has worked on several projects with Coles. "We can bring a lot of that expertise to the table in the combined company. But we really cant talk about our strategy until after the Nov. 6 shareholder vote."
In the meantime, Coles continues to refine iXLs partner network. One of his latest projects involves the Association of Strategic Alliance Professionals (ASAP, www.strategic-alliances.org), a national organization that has opened several regional chapters in recent months. Coles and iXL helped to launch the ASAPs Atlanta/Southeast chapter on Oct. 17. Other chapter members include Intel and Siemens.
Content management partners are of particular interest to iXL. In one recent deal, iXL inked a partnership with iManage, which develops document management, workflow and portal software. The duo plans to jointly target the financial services sector, assisting companies with content creation, revision, publication and reuse.
IXL is also working closely with BEA to bolster its back-office integration skills. Had those skills been in place in 1999, Scient and iXL might have remained afloat on their own.